Husky CEO Sees Canada-Only Carbon Tax as `Politically Suicidal'by
Energy company planning for $40 U.S. crude, Canada gas at $3
Executive says OPEC no longer able to balance oil market
Husky Energy Inc. Chief Executive Officer Asim Ghosh has a stern warning for Canadian political leaders considering changes to climate policy: don’t go it alone with a carbon tax.
The Canadian oil producer controlled by Hong Kong billionaire Li Ka-Shing would support a tax if it’s applied broadly and at least includes the rest of North America, Ghosh said Friday on a conference call to discuss third-quarter earnings results.
“It would be politically suicidal for us to do a mea culpa and hang our neck out in a way that disadvantages the industry here,” Ghosh said. “It has to be across the board and Canada as a jurisdiction or Alberta as a jurisdiction cannot be disadvantaged.”
Alberta Premier Rachel Notley is planning changes to the government’s climate policy after already raising an existing carbon levy on the oil-producing province’s biggest emitters. Her New Democratic Party took power in May. Canada’s Prime-Minister-Designate Justin Trudeau, whose Liberals won the federal election last week, committed his government to introducing stricter climate requirements nationally, while letting the provinces sort out specific mechanisms.
Canadian energy companies have yet to reach consensus on a solution. Husky wants to continue the existing regime and opposes a price on carbon unless other jurisdictions join in, the company said in recommendations to a climate panel advising Notley. Cenovus Energy Inc., Royal Dutch Shell Plc and Suncor Energy Inc. back a tax on carbon while the Canadian Association of Petroleum Producers, which represents most large companies, favors proposals to support new technology.
The focus on carbon, driven in part by a United Nations-led effort to strike a global accord on climate change, comes as energy producers are eliminating workers, delaying and scrapping projects and selling assets as they cope with the world’s worst oil price slump in decades. U.S. crude is hovering just above $46 a barrel, down more than half from its peak last year.
Husky said Friday it plans to reduce its workforce further after cutting 1,400 jobs this year, about 22 percent of its employees and contractors. The company will also start paying its dividend in stock and consider selling assets in Western Canada. Husky recorded its biggest quarterly loss, C$4.09 billion ($3.11 billion), in the third quarter, citing writedowns on the value of its assets with lower forecast prices.
Husky has structured its business to turn a profit with U.S. crude at $40 a barrel and Canadian gas not exceeding C$3.00 per gigajoule, Ghosh said. The Organization of Petroleum Exporting Countries, which in the past has held order in global oil markets, is now unstable, he said.
“Going forward, its ability to manage price is not something one should build a business plan on,” Ghosh said. “The downturn has turned out to be more protracted and more severe than even our conservative assumptions.”