Thank you, Mr. Chairman.
Good morning, panel members.
I'm here today representing the Explorers and Producers Association, otherwise known as EPAC. I am the chair of EPAC for 2018-19, which is a volunteer position. My day job is chief executive officer of Canlin Energy Corporation, owned by a consortium of Asian entities. EPAC is pleased to be asked to present our views on the topic of economic growth and ensuring Canada's competitiveness.
EPAC represents Canadian oil and gas entrepreneurs. We have 150 members that operate 65,000 wells and supply approximately 20%, or one-fifth, of Canada's oil and gas. Our members invest about $15 billion per annum across British Columbia, Alberta, Saskatchewan and Manitoba, which supports employment for tens of thousands of Canadians, their families and communities, including indigenous communities. In short, our operators and our participants operate from Virden, Manitoba, to Fort Nelson, B.C.
Ongoing robust demand for both oil and gas globally should be a strong signal for Canadian energy companies. Unfortunately, it is not. Today, there exists significant and systemic competitive gaps relative to competing jurisdictions, particularly the United States. Canadian oil and gas—natural gas—remains trapped in western Canada leading to unprecedented differentials on pricing for both oil and natural gas. These pricing differentials are costing the Canadian economy tens of billions of dollars each year and have a significant negative impact on oil and gas economics leading to reduced oil and gas activity.
Canada's energy industry is one of, if not the largest driver of our economy. Our oil and natural gas resources are world class. Production of our energy is some of the safest, cleanest and most highly regulated in the world. The western Canadian sedimentary basin is a natural gas-prone basin, allowing Canada to play an outsized leadership role in the global transition to a lower carbon energy.
Why should our product be stranded and heavily discounted to world prices at great cost to all Canadians?
Our challenges on competitiveness and access to capital are many: the perception that we cannot improve oil and natural gas egress by building pipelines or liquefied natural gas facilities; the reality of a confused, ever-changing and never-ending regulatory process; multiple levels of government that appear less than supportive of this cash cow and the Canadian industry; and the lagging tax and fiscal regime that does not encourage spending or growth. The capital flows to the oil and gas business in western Canada have dried up. Even our large public sector pension plans are increasingly looking to invest in the U.S. The Government of Canada can and should help to enhance our competitive position.
Gary Leach, the president of EPAC, has contributed a written submission for pre-budget consultations that outlines five recommendations. These five recommendations are predicated around competitive deductibility for capital costs, innovative approaches to finance small and medium oil and gas entities, framing the leadership role Canada has taken with respect to greenhouse gas emissions on the carbon and methane fronts, and continual improvement and innovation on technology to ensure Canada's leadership on the energy front continues.
These recommendations have been developed in consultation with other industry associations and indicate five ways for the federal budget to support an improved competitive landscape so that our industry can get back to exploring for and producing our abundant, clean, safe energy in an efficient fashion.
Thank you very much for the opportunity to speak this morning. I look forward to answering any questions you may have about EPAC's presentation.