Thank you, Mr. Chair.
Committee members and fellow witnesses, I thank you for your time today.
I appear before you representing the Lloydminster Oilfield Technical Society. The society’s founding aim nearly 40 years ago was to provide a forum to discuss technical issues within the industry, along with promoting the industry’s successes. For many within our membership, oil and gas has been the family business for two and three generations.
Our first well blew in on May 4, 1934. This industry is not a passing fancy or an employer of last resort for our membership or the people of this region. It shapes our very identity.
In the five years prior to COVID-19, we lost an average of 600 jobs in direct industry employment per year. This in a population catchment area of 80,000 people. This is equivalent to Oshawa’s GM plant closing this past fall, with the exception that it happened in a population a fifth of the size. That means two people were coming home from work every day to have the hardest of conversations over their kitchen tables—every single day—for five years. That's 10 families' futures cast into doubt this week, and 15 more the next.
This Damoclean sword of financial ruin has hung over this region’s collective head for nearly six years now, and with it, comes the mental toll it's taken on this industry’s participants and their families. Then came COVID-19.
There is no hyperbole that can adequately capture the non-existence of economic activity currently. Medium-sized companies are down to only the owner working. Equipment is being sold at auction to make payroll. In a period where my employer would have had 17,000 rig hours, we had 40. We are finding new depths of desperation daily.
I was asked here today to provide testimony on the Canadian government’s response in support of the oil and gas sector following the economic crisis of COVID-19. To borrow from Mahatma Gandhi when he was asked for his thoughts on western civilization, I think it might be a good idea. Just as Gandhi was remarking that he hadn’t yet witnessed a civilized west, I have yet to witness a plan for oil and gas from this government.
Outside of the CERB and some CEWS benefits, our membership and the industry at large has not experienced much help. As evidenced by Alberta Energy being inundated with applications for the site rehabilitation program, industry possesses a high-volume of shovel-ready projects that can get people back to work today. The industry has not paused because of the virus. The industry has paused as it realigns with the demand picture of a COVID world and into recovery.
However, the federal government waited until April 14 to announce anything industry-specific. It waited until two weeks ago to release inactive well funding and we still wait for a liquidity backstop. Meanwhile, it has been 10 weeks for five full pay periods without an hour of work for the workforce of this country’s second-largest industry and largest first nations employer. With asset retirement funding moving forward at a dawdling pace, the only response from the liquidity prong of the federal government’s April 14 policy détente remains an auto-generated email from the BDC. This is not good enough. People are suffering as a result of this inaction.
The benefits of the large employer program are contingent on an open-ended and vague commitment to the recipient having net-zero emissions in 30 years' time for a one-year bridge loan with a five-year amortization. It would have been more direct to say that oil and gas producers and oil field service companies need not apply.
Furthermore, the terms of the program appear spurious. There is no clarity on effects to the current lending hierarchy. The potential for equity conversion stands to make the federal government the largest shareholder in some of these companies. I’m sure you can appreciate this comes with a hefty dose of apprehension and mistrust from my side of the business.
The statement that the Canadian oil and gas sector is a world leader when it comes to climate change progress, GHG emissions and responsible development seems overplayed, but it’s a base fact. This government’s attacks on oil and gas, in absentia of real supports, has only served to deepen regional divides and worsen climate outcomes worldwide.
In the pursuit of partisan politics, this government has let the opportunity of COVID-19 pass by. It could have renewed the trust of the region’s largest industry, and western Canada at large. Instead, the status quo has been preserved. We remain painted as the contra side of a political dichotomy to serve political interests. We remain convinced the government’s ultimate pursuit is a slow-motion cod moratorium on our industry.
I will leave you with a quote from one of my members, which I feel captures where we're at locally:
I own a small drafting business trying to make it. So, yes, everything I have hinges on decisions that are made now. We do not want hand-outs, we want to work and earn every penny we make. We want to sit down and brag about working 20 days in a row.
It would be a sin to let endeavour like this “rust unburnish'd”.
Thank you for your time, Mr. Chair.