Communities near oil and natural gas operations from Fort St. John, B.C. to St. John's, NL, depend on Canada's energy industry as a critical source of jobs and economic opportunity. Recent events like the 2020 oil price crash, COVID-19 pandemic and Keystone XL cancellation have hit rural oil and gas communities especially hard.
Energy Examined host Tracy Larsson speaks with Kelly McTaggart, community engagement advisor at CAPP. She works in these communities, and discusses how they've managed through multiple crises, the key issues they're dealing with, and what's giving some hope for the future.
Transcript of podcast
Tracy: Hello and welcome to the Energy Examined podcast, covering all kinds of topics right across Canada's natural gas and oil industry. I'm your host, Tracy Larsson. Now, it's no secret 2020 was a challenging year for the industry. There was the crude oil price war between Russia and Saudi Arabia in March of 2020. And, of course, the global economic impacts of the COVID-19 pandemic. Both contributed to an unprecedented drop in investment in the upstream natural gas and oil industry that wiped out about $12 billion of planned spending that just did not happen. This, of course, has far-reaching implications throughout the Canadian economy and can pose huge challenges for local communities that depend on industry jobs and revenues. So, that's what we're going to explore today and find out how some of these communities and the people who live there are faring. Kelly McTaggart joins me for the discussion. Kelly is a community engagement advisor with the Canadian Association of Petroleum Producers (CAPP). Hi, Kelly. Welcome to the podcast.
Kelly: Hi Tracy. Thanks so much for having me. I'm looking forward to it.
Tracy: Now, you work with many oil and gas communities. Tell us about these communities and what you do in your role.
Kelly: Yeah, so I've been with CAPP for about three years and I've had the privilege of executing CAPP's stakeholder engagement program for the duration of this time. And my main focus really has been outreach in Western Canadian operational communities. So, communities that are impacted by oil and gas development and this extends across Saskatchewan, Alberta and British Columbia. And mostly my focus is on municipalities, chambers of commerce and community organizations like Rotary Clubs that have an interest in industry. I also do quite a bit of advocacy at provincial and national events like the Canadian provincial chambers of commerce and municipal associations and more recently, also academic institutions that have interest in oil and gas activities and what the future for the industry looks like. So, yeah, as a general rule of thumb, if there is interest from the public for us to engage, I'm happy to have the discussion.
Tracy: And a large part of that then is the educational component.
Kelly: Yeah. Information and also market forecasts and current policy issues. And of course, this past year, where we are in light of the COVID-19 pandemic.
Tracy: OK, well, when we look at the impacts of the downturn and then with covid-19, a particularly challenging 2020, what are you seeing in these communities?
Kelly: So, if you had asked me a year ago where we'd be right now, I think my answer would be very different than our current circumstances, which, of course, are a result of the global pandemic. You know, our original forecast at the beginning of 2020 was quite encouraging, with an expected investment total of about $37 billion. And the reality was more like $25 billion at the end of 2020. So, yes, it has been especially hard for operating communities and we've seen downsizing across the sector, which affects all aspects of operating communities, including the service industries, as well as professional services that support the oil and gas sector.
So, in the majority of these operating communities, there is likely zero to one degree of separation to the industry and community members. It's either you working for industry, a family member or somebody who's quite close to you elsewhere in the community. So, the effects have been wide felt. That being said, and I do like to keep some optimism because I think there is a component of that, the Canadian industry that we need to keep in mind. And the optimism here, the silver lining is, is that the Canadian industry was already very nimble as a result of the 2015 downturn. And this is an advantage to us that our southern neighbours in the U.S. just haven't had. And that's put us in a position for growth in the near future.
And I think we're starting to see that in our 2021 forecasting. So, one quick mention on that point is, is that the federal government's business credit availability programs that have been introduced are now providing liquidity support to companies that need it. And these liquidity measures do have a direct correlation to communities because the liquidity that's being provided to these producers is sustaining other businesses. It's a sustaining aspect of support in local economies because of the employment preservation and also the preservation of existing supply chains. So, the production levels vary across provinces. Of course, you know, we have the highest number of production in Alberta, the least in Saskatchewan, and then in second would be British Columbia. But the common denominator is that people are working together and working towards the light at the end of the tunnel. And I think these mechanisms that are in place have been able to provide a bit of that hope and that guiding light.
Tracy: It's nice to talk about things a bit more at the community level because a lot of the time when we talk about natural gas and oil, you know, we're talking about things like GDP growth, Canadian employment forecasts, major pipeline projects, and all of those are big, important discussions. But how does that translate then into life at the community level in terms of that real and personal impact on people?
Kelly: Yeah, it's a great question. You know, when we talk about GDP growth, GDP-to-debt ratios and unemployment or employment, sometimes all we see is numbers, which doesn't always translate into the human experience. And, you know, this is really what it's all about. I mean, industry in Canada provides jobs, but jobs translates into livelihoods and supports for families and futures that people wouldn't otherwise have.
I'll give one example, and that's northeastern B.C. I lived there for quite a few years working in the community with a pipeline company. And, you know, this year, northeastern B.C. had the second lowest unemployment rate in the province, which is really remarkable. And I think sometimes we take for granted our rural communities. And it's a big part of Canada. You know, geographically, Canada is a huge place. And sometimes the focus really goes to the urban areas where industry that exists in these smaller places, the rural, is really supporting the broader Canadian economy.
To bring that down more to a local level, it kind of goes back to that degree of separation. There just isn't one in a lot of the communities that we engage with and, you know, this particular example I'll give, which is when I was working in northeastern B.C., I worked quite closely with a number of Indigenous communities. And, you know, at the end of the day, it's not just about the job, it's about the career, the bigger picture, the support and the meaning that you have from getting up every day and doing something that you're invested in and one individual that I worked with quite closely was able to get on one of our projects and to actually do his apprenticeship for a trade, which is something that he was coming into quite a bit later in life.
So, when you're living in a community of 500 people, you're supporting your family, but you're also supporting the broader community as well. And I think just that purpose for me as well, for anyone who can get up every day and have something to go to and be able to provide for your families or to be able to innovate or to be part of the bigger picture, I think is really key to kind-of these figures. So, yeah, that's my example for that.
Tracy: Yeah. OK, thanks. You're working primarily in Western Canada, but there are oil and gas communities across the country. So, how do you explain to people the actual reach of industry?
Kelly: The first thing that I'll say is, I actually grew up in Ontario, southwestern Ontario, and I've lived and worked in five different provinces and across the natural resource sectors. I worked in forestry for quite a bit. But one of the biggest points of personal interest and investment that I always come back to with the oil and gas industry is that it is a Canada-wide industry.
Just because we're not producing oil and gas in every province and territory doesn't mean that the reach isn't there, that the scope doesn't exist. And I'll use Ontario as an example. You know, our supply chain spend on manufacturing and services out of the province is close to $2 billion dollars every year. And this is money that is supporting individuals and families, but also supporting and providing the fiscal side of things that provides opportunities for sustainable growth and green innovation, which we know is extremely important to Canadians right now.
So, it's important to have a unified voice and inclusion in industry across the country, and that ensures Canadians' priorities are met and we're on the path for a healthy economic, environmental and socially responsible future. Industry provides over half a million jobs across Canada. And again, this is another number, another figure, but that's half a million people. That's half a million households potentially that cast a wide network for impactful and successful livelihoods. So, very much a Canadian-wide industry.
Tracy: As a whole, the industry has faced challenges and recovered before. And I'm wondering, are you seeing that same kind of resilience now at the community level?
Kelly: Yeah, of course. People have been down because of COVID-19, we're disconnected and there are hardships associated with that, which is a direct result to how this has impacted our broader economy. But, you know, one thing that I would mention is, is that we are starting to see the light at the end of the tunnel now, which I think creates a different kind of environment and energy, no pun intended, to kind-of look forward to things.
And I think, you know, more than ever, communities have adapted to new challenges. This isn't just a downturn. This looks very different than what we went through in 2015. It's altered our ability to connect and share information. And for people in small communities or operational communities, we like to get together in person. That's really the platform for information sharing. And that hasn't been possible.
So, I think that's one kind of key indicator of resilience that I've seen is, it's not just about adapting to virtual platforms, it's about actually having meaningful discussions with people. And, you know, from my perspective, I think in some ways that's actually -- it's gotten better. I think people are more engaged. They're more invested in policy discussions and also just how their neighbours are doing. You know, we're looking out for each other and we're finding ways to make it work.
Tracy: You touched on this earlier, but let's actually take a minute and talk about the forecast for this year. CAPP has forecast an increase in planned capital spending in the upstream industry for 2021. Does that news resonate at the community level that the economy may now be on its way to recovering?
Kelly: Yeah, so our forecast just came out not too long ago. I would definitely encourage people who are listening to this to go take a look at that. But, you know, as we start messaging in communities and across Canada, I think it is starting to resonate. One part of the forecast that really resonates with me is that we're actually starting to see a stabilization of industry. And what this means is that we're going to be able to see increased capital spending come in. We've had political changes to the south of us that I think will create an interesting path moving forward. But, you know, we adapt, we readjust, and we go with the flow, as they say.
I think that is something that is resonating with people. In terms of capital spending and also some successful changes that have really resonated is the red tape reduction measures that have come into place. And one area of that, that we've seen across Western Canada is the dual regulation of methane emissions at the federal and provincial level. We've had a lot of progress with that and in each of the provinces. And I think that is something that's resonated at the community level. And, you know, as we start sharing our forecasts and priorities as well, I think that for me, it feels good to say that things are going to get better and that quantifiably they are getting better, which is really great. So, yeah, that's where that's where I would leave that.
Tracy: Just before we wrap up for the podcast, I want to give you a chance to add any other important messages that you would really like to take out to these oil and gas communities in the first part of this year.
Kelly: To add to my last kind-of comment about forecasts and the path to recovery, I would say that we have the opportunity to make big changes on the global stage. And I think that's something that is resonating with Canadians, especially in terms of emissions and climate responsibility and now more than ever, creating the path for success in that context. And there's a few areas that I would say that we should be paying close attention to, and that's in the natural gas space, in the liquefied natural gas opportunities that exist within that side of the sector.
So, a few things on that, LNG prices are at an all-time high. We've seen record-low temperatures in China. We haven't seen temperatures like this since the 1960s. It's very cold. And what we've seen from this is, is that energy security and responsible energy development is a very real thing. And so, when we see shipping delays due to increased demand, prices start to skyrocket and we look globally as to where the best source of this energy is. And Canada is definitely at the top of that list. And I think, you know, we're kind-of blessed with very rich basins in B.C. alone.
We have over 500 trillion cubic metres of natural gas availability, which I think is going to be a key indicator in some of these long-term contracts that are going to come up with the Asian economies and elsewhere in the world. All that being said, there is opportunity. And I think the path towards success is really talking to each other at a community level. I mean, grassroots advocacy and support goes a long way. And sometimes it's really just a matter of having that discussion with your neighbour, no matter what part of Canada you live in and looking at things critically. So, I would say, look at the opportunities, look at Canada in the broader, kind-of the broader sector and energy kind-of environment. And I think there's a lot of opportunity to see and a lot of space to move forward for everybody.
Tracy: Kelly, it's been really nice to talk in some optimistic terms about the opportunities ahead. So, thanks very much for this.
Kelly: Thanks, Tracy.
Tracy: And thank you to our listeners for being part of the Energy Examined podcast community. We'll be back soon with the new episodes, so please tune in again. I'd also like to give a shout-out to our friends at Canada's Oil Sands Innovation Alliance, or COSIA. They recently started their own podcast called Innovative Minds. It celebrates the fresh perspectives and passion of the next generation of scientists who are bringing their talents to clean tech innovation in the oil sands. Innovative Minds -- search for it on your favourite podcast network. And until next time, have a great day.