Friday, May 11, 2012

Environmentalists claim oil sands mainly foreign owned

ForestEthics Advocacy, a spinoff of an environmental charity, has released a report saying that 71% of all the companies in the Fort McMurray area are foreign. It doesn't say "oil companies" but it's implied, although I suppose they could be including things like Walmart and McDonald's. They also say that the oil sands only employ 118,000 people in Canada, out of a total workforce of something like 17.5 million people.

ForestEthics' claims seem to be in direct response to the federal governments "crackdown" on foreign funding of environmental activist groups being classified as charities. The reason ForestEthics Advocacy was spun off of the original group, in fact, was so that the main group could continue to be listed as a charity and the new group could conduct advocacy work.

The Canadian Association of Petroleum Producers (CAPP) disagrees with the analysis, as do I, as outlined after the break.
CAPP estimates that 60% of oil sands companies are Canadian controlled, which they define as having most of their employees and board in Canada and making most of their decisions in Canada. He points out that although oil sands employment may be similar to what ForestEthics says, that overall oil and gas employment in Canada is more than half a million people. Not clear if he means direct employment excluding the oil sands or not.

My view is that these comparisons of how many companies are foreign is largely meaningless. You can't count the number of companies that are Canadian and those that are foreign and expect to have a good view of the overall system, because the companies vary enormously in size and the investments they've made. If you were to calculate company contribution to oil sand production, I expect you would get a sample far more weighted towards Canadian companies, because large established Canadian producers like Suncor, Syncrude (a JV owned in large part by Canadian companies), Cenovus and MEG, would dominate. The only foreign companies that come to mind as big bitumen producers at the moment are Devon, ConocoPhillips and Imperial. And maybe Shell with Albian. There are plenty of foreign firms that have little or no oil sands production at this time, like StatOil, CNOOC, JACOS, Total and so on. There are also plenty of little Canadian companies not producing very much.

So I don't think 71% is anything near realistic. But even if it was a high number, I think it's foolish to see foreign ownership as a bad thing. These companies pay Canadian taxes and royalties and employ thousands of Canadians. More to the point, they invest vast amounts of capital into our economy, and provide technology and expertise. If Canada were to ban foreign ownership of oil and gas companies it would have the effect of slowing the industry's expansion to a crawl. Like examples of nationalization around the world, such as in  Mexico or Venezuela, removing foreign capital and know-how can have a devastating effect on oil production. Further, how could we expect Canadian companies to operate in other people's countries when we bar them from our own?

1 comment:

  1. Drunken MonkeyMay 11, 2012 11:43 pm

    Obviously ignores the larges portion of oil sands supported employment, also known as the spin off jobs, such as the entire town of Fort McMurray (health care, education, law enforcement, criminal justice, banking,...), most of Edmonton, Calgary and Fort Saskatchewan.

    Other examples would include environmental opposition groups. Did ForestEthics Advocacy include themselves under the employed column?