Advocacy in Action: PSAC is Helping to Shape Canada’s Energy Future

By: Petroleum Services Association of Canada (PSAC)

Now more than ever, there is a need for the oil and gas industry to work together with government. With the global spotlight focused heavily on Canada, the world is waiting to see how the oil and gas industry here will respond to increasing worldwide demand for hydrocarbons, the need to drive down costs to stay competitive, and the increasing pressure to improve environmental performance. The Petroleum Services Association of Canada (PSAC) is working to open up dialogue with governments to show how PSAC members are making an important contribution to the energy industry’s ability to rise to the challenges associated with becoming a world energy leader.

Relations with government are ever improving, but that certainly has not always been the case. Rewind to 2007 when the Alberta government unveiled increases to royalties, signaling strongly to industry that the government and, as important, the public were not on its side. Many companies took flight to neighbouring provinces where operating conditions and government policy were more conciliatory to the profitable growth of the industry, and jobs went right along with them. The services sector was particularly hard hit by the shift in activity, and PSAC has since refocused and strengthened advocacy efforts to ensure that the unintended consequences that came from the changes to royalties are not repeated.

PSAC has made tremendous headway in gaining a seat at the table with provincial and federal governments alike, and is seen to be an integral player in the policy community. PSAC’s rise in profile has been helped along with the results of two studies commissioned by PSAC last fall showing the upstream petroleum services industry to be second only to the exploration and producer sector in terms of taxes paid, contributions to the national gross domestic product (GDP), and employment levels. When dealing with government, size matters and these studies show the enormity of the services sector.

“Gone are the days of sitting on the sidelines watching the producers be the offense, defense and coach for industry in talks with government,” says PSAC president Mark Salkeld. “The services sector has an important contribution to make in policy discussions because our members are where the rubber hits the road, and that means an up-close perspective on the direct impact of certain policies and regulations.”

With discussions around a Canadian energy strategy now taking shape, the voice of the services sector will be even that much more important in talks with government. As political leaders develop a framework to map a strategy that will enhance the competitiveness of Canada’s energy mix globally, they will need to have a fulsome view of the various sectors and what each brings to the table that will help a national strategy serve the long-term vision for Canada. The road to the development of that framework is already being constructed by policy initiatives underway, and PSAC has been active in the consultations and discussions to date.

In July 2010, British Columbia, Alberta and Saskatchewan signed the New West Partnership (NWP) agreement which will require each province to adopt similar rules related to goods, services and people. PSAC was consulted and continues to support the NWP vis-à-vis the Energy Memorandum of Understanding (MOU) signed by each of the provincial ministers of energy in late 2010. The MOU will work to remove regulatory barriers to help reduce the associated delays and costs that result from too much red tape, and work towards the larger goal of taking Canada’s resources to global markets. This will be particularly beneficial to the services sector by reducing costs associated with having to adopt multiple practices and policies under current labour standards that differ by province.

PSAC also anticipates many benefits to come from initiatives being undertaken by the Alberta government to streamline the regulatory framework governing the industry. Also in late 2010, the Alberta government unveiled the Regulatory Enhancement Task Force’s report which outlined the key recommendations coming from months of consultations with industry, landowners, environmental groups and First Nations. In the interest of reducing red tape, the reports major recommendations was the consolidation of regulations for the oil and gas industry into a single office, moving away from the current system of multiple regulating bodies who each monitor their set of regulations. While the greatest direct impact of the REP will be for producers, PSAC acted as an advocate of the single office proposal to streamline regulatory requirements and approval processes because what benefits producers, benefits the services sector.

“The fact that governments are working towards removing certain regulatory and policy barriers for industry will result in significant cost savings and efficiency gains,” explains Salkeld. “As important, programs like those being spearheaded by Alberta in cooperation with its western counterparts will help set the groundwork towards a Canadian energy strategy. The process to develop such a strategy must include a high level of stakeholder engagement as was undertaken in constructing the REP and NWP – the rewards and responsibility for sustainable resource and economic development will need to be agreed to and shared.”