OTTAWA — Ottawa is expecting a new wave of oil and gas investment in Alberta as faster project approvals, federal tax changes and anticipated provincial royalty measures begin to converge.
The outlook follows the federal government’s introduction Monday of Bill C-39, the Building Canada Strong Act, and Harvard Media News’ exclusive interview Tuesday with Federal Energy Minister Tim Hodgson.
Hodgson told Harvard Media News the government’s new approval framework is only one part of a broader effort to attract capital into Canada’s energy sector.
He pointed to the federal productivity mega deduction, which includes oil and gas investment, as another significant piece of the strategy.
“This means that new investment in Canada has the lowest effective tax rate of any major country in the world,” Hodgson said. “The effective tax rate is just over 6%. It’s less than half the tax rate in the US and that’s gonna attract a lot of capital to the oil sands.”
Hodgson said the inclusion of oil and gas in the deduction was deliberate.
“When I talk to the major oil and gas companies in this country, they are ecstatic and they’re ecstatic that we specifically included oil and gas in that deduction this time,” he said.
“And so it’s a clear signal that we want people to invest.”
Bill C-39, introduced Monday, is intended to speed federal reviews for major projects by moving toward what Hodgson describes as “one project, one review, one decision within one year.”
Hodgson says the investment climate could be strengthened further by upcoming changes from the Alberta government.
“The government of Alberta has got some new initiatives they’re gonna roll out with respect to royalties,” he said.
“When you combine what Alberta is doing on royalties with what we’re doing on one project, one review, one decision, and you combine that with the productivity mega deduction, I believe you are going to see massive new investment in the oil and gas sector in Alberta.”
The comments come as oilsands producers consider potential expansions at existing operations and governments look for additional pipeline capacity to reach new markets.
Hodgson also pointed to recent discussions with international investors as evidence of growing interest in Canadian energy.
“What I saw at the investment summit the prime minister hosted last week is every major investor in the world is looking at Canada as a great place to invest,” he said.
He described Canada as a reliable supplier with resources sought by trading partners and allies.
“Our trading partners and our allies all over the world wanna buy our resources,” Hodgson said. “We’re taking the steps to make sure they can do that.”
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