Canadian Natural Resources Ltd., the nation’s largest heavy oil producer, is considering a shift in investment away from Alberta as the province plans to increase corporate taxes and review royalties.
Pledges by the newly elected New Democratic Party government may stifle spending by energy companies and kill jobs, Canadian Natural President Steve Laut said on a call with investors Wednesday and subsequent interview. While about 73 percent of Canadian Natural’s assets are in Alberta, it could devote more spending to operations in Africa, the North Sea, Saskatchewan and British Columbia, he said.
“We consider it and we’re looking at it,” Laut said. “Obviously we have a lot of assets in Alberta that would be impacted.”
Jobs were lost after Alberta changed royalty rates in 2007 and after the U.K.’s tax overhaul of 2011, he said.
Premier Rachel Notley’s party swept to power last month, ending 44 years of Progressive Conservative rule in Alberta. This week, Notley said the government will push ahead with a tax increase for corporations, to 12 percent from 10 percent currently, before the Legislature’s summer recess.
The province will also disclose how a review on royalties will proceed by the end of summer and will “listen” to the findings, if they indicate it’s not a good time to raise rates, she said.
Laut is among energy executives, including Cenovus Energy Inc. Chief Executive Officer Brian Ferguson who have publicly warned the government to tread carefully when considering a change to its royalty policy.
“We believe the government understands that there are a significant number of jobs at stake and their intent is not to create an environment in which job losses will be the outcome,” Laut said. “The conversations we’ve had with the government to date, as well as the statements that were made, lead us to believe that the government will be pragmatic.”
The government will balance the needs of industry, workers and Alberta families, and a modest increase in corporate taxes is fair, Energy Minister Marg McCuaig-Boyd said in an e-mailed statement.
“Our government will carefully review Alberta’s royalty regime, working with industry during this period of low oil prices and increasing international competition,” McCuaig-Boyd said.