Civil war in the oilpatch

One of Canada's largest oil companies says it quit a major industry lobby group for refusing to join the Saskatchewan premier's war against a carbon tax.

The decision by the firm, Crescent Point Energy, to quit the oil industry group, the Canadian Association of Petroleum Producers (CAPP), has stunned industry watchers and sparked a war of words between the premier and a federal Liberal member of Parliament over the decision.

Crescent Point, described as “North America's busiest oil dealmaker,” has long supported Saskatchewan Premier Brad Wall's provincial political party, making hundreds of thousands of dollars in corporate donations, election returns show.

The company's president has also registered to lobby Wall on government climate change policy, according to provincial records. Both the company and Wall deny that the firm's political donations had any influence over the province's climate policy.

Its abandonment of fellow member companies in CAPP, several of which have supported Alberta Premier Rachel Notley’s plan to tax carbon pollution and have urged Prime Minister Justin Trudeau to follow through with federal carbon pricing, shows that a civil war is taking shape in the fossil fuel industry.

“CAPP has often been able to speak with one voice, and when they do so, they’re a powerful organization as a lobbyist and policy influencer. But often, their members are divided,” said Gaétan Caron, a former chair and CEO of the National Energy Board.

“What we see is different people having a different perception of the opportunities and risks of Canada moving forward constructively towards achieving the Paris targets (to reduce greenhouse gas emissions).”

Wall has traded barbs with Notley over her tax, inviting companies to flee her province for his, and has also rejected a new federal government plan to price carbon pollution nationwide, threatening to take the government to court. He can now count on Crescent Point, a large oil company to publicly back him.

The premier told National Observer through his office that he had heard the company was considering pulling out of CAPP, and confirmed he had discussed the province's position on a federal carbon tax with Crescent Point "as well as many other resource companies."

The decision by Crescent Point to align themselves with Wall's approach to climate policy caused Liberal member of Parliament Will Amos to call the firm a “black sheep” on the issue of carbon pricing.

“The vast majority of their energy industry colleagues do not adopt the same position, and it’s because their position is backward-looking,” said Amos, MP for the Ottawa-area riding of Pontiac who is also an environmental lawyer.

Almost all Canadians live in provinces that have a price on carbon pollution already or are working towards one, said Amos. “Canadians know that polluting isn’t free.”

Wall shot back that Amos "should actually talk to more Canadian oil companies, because that's not what I have been hearing."

"Big oil lined up behind the carbon tax, but many of those companies, including Royal Dutch Shell and [ConocoPhillips], are now leaving the country for carbon tax-free Texas," Wall said in emailed comments.

Shell and ConocoPhillips sold off billions of dollars of assets in Alberta's oil patch this spring. Wall also pointed to comments by former Suncor CEO Rick George to BNN, where he argued that Ottawa's carbon tax risked losing investor confidence in the sector.

For its part, the company said it's not against climate action, but was just looking to support an "efficient climate change policy" that "focuses on innovation, and focuses on reducing emissions at source," said David Gowland, manager of government and stakeholder relations at the firm.

“People look at Saskatchewan generally and think that it’s a bunch of climate deniers and a backwater province,” said Gowland in an interview. “Really it’s more, ‘How do we do it in a way that makes more sense?’”

Big corporate donors to Wall’s party, active lobbyists

Crescent Point Energy’s embrace of Wall’s politics puts the focus on a decade of donations that the company and its subsidiary, Crescent Point Resources, have made to Wall’s Saskatchewan Party, and the potential lobbying of government officials.

Crescent Point has donated to the party every year it has been in power, totaling over $133,000 from 2007 to 2016, according to fiscal period returns filed with Elections Saskatchewan.

While many corporate donors contribute amounts in the hundreds of dollars, Crescent Point has donated at least $1,000 each of those years, including $6,200 in 2016.

Five years ago, the firm was listed as the largest corporate donor to the party with a $55,000 donation for 2012. It also stood in third place for corporate donations in 2011, with $51,200.

The firm is also an active lobbying registrant with the Saskatchewan government, according to provincial records. It lists 50 in-house lobbyists, including Scott Saxberg, the company's president, chief executive officer and director.

Saxberg and others are registered to target dozens of senior public office holders and three government ministers including Premier Wall himself, the filing shows.

They are set up to lobby on a wide range of issues, including the subject of "climate policy," where the company would speak on the "development and implementation" of provincial climate change "policies and programs."

Asked about contact between the premier, his party and the company on carbon pricing, Wall stated that "we have discussed our position on the federal carbon tax with Crescent Point as well as many other resource companies."

But he denied that the contributions influenced government policy or positions in any way. "Absolutely not," he said.

Gowland, who said Crescent Point had budgeted “about $5,000” for political donations for 2017, also said the firm’s donations had nothing to do with the province’s position on carbon pricing.

“No, there’s no kind of tit-for-tat on that front at all,” he said.

“As a company, we look for regulatory certainty. So for us, having this issue be an outstanding discussion presents a fair bit of uncertainty that can be a challenge for us.”

Gowland called the firm’s two large donations in 2011 and 2012 “anomalies,” pointing out that since 2012, the firm’s average donation has been about $4,000.

Asked to explain why the firm made such large donations those two years, he said the company was “growing at a significant rate back then” thanks to high oil prices at the time.

The firm has a “governance plan” in place to manage political donations, he added, including a “donations committee” that approves contributions.

Firm wanted 'stronger messaging' supporting Wall

Behind the scenes at CAPP late last year, Crescent Point pushed for a big show of support for Wall’s criticism of climate action, said Gowland.

When CAPP members couldn’t agree to that, and the organization began looking at renewing memberships for 2017 around the new year, Crescent Point decided to quit instead, he said.

“CAPP was in a position where they needed to speak for the broader industry,” said Gowland.

“Where Crescent Point felt there needed to be some stronger messaging was on supporting Brad Wall in his move to come up with an alternative mechanism that would achieve the same outcomes as a carbon tax, or a cap-and-trade system, but do it in a kind of Saskatchewan-made way.”

He said Crescent Point wanted to “align” with “where Premier Wall was going” but that was something that CAPP, as a national industry association, “couldn't really comment on.”

“It’s just unfortunate that there’s kind of one issue that rubs Saskatchewan and the industry there the wrong way,” he said.

Gowland said the firm had “always considered Saskatchewan to be a bit of a leader” after its investment to create a carbon-capture storage capability at the Boundary Dam coal-fired power plant.

“We’ve got a whole list of innovation projects that will reduce emissions, reduce our power and water consumption, and we’re taking action on those as we speak," he said.

"We’re not necessarily waiting for a carbon framework to be in place. We think it’s the right thing to do. And we’re taking action to reduce our emissions and our impact on the environment."

Gowland himself worked for CAPP as its manager of Alberta operations for two years before heading to Crescent Point in March this year. He said that was a “separate opportunity that came about” and “completely unrelated" to the firm's departure.

A spokeswoman for CAPP, Chelsie Klassen, also confirmed that Crescent Point did not renew for the 2017 year, but directed other questions about the departure to the company.

Asked for comment, Prime Minister Justin Trudeau's office directed questions to the office of Environment Minister Catherine McKenna. The minister shrugged off criticism last week from Wall and said the federal government has the “right” to protect the environment.

In a statement, the minister's spokeswoman Marie-Pascale Des Rosiers said pricing pollution will lower emissions while providing predictability to businesses.

"As some of Canada’s largest employers have pointed out: putting a price on carbon pollution is just good ‎business," she wrote in an email.

"Nearly 30 Canadian employers have come out strongly in support of a price on carbon pollution. And that includes energy companies like Suncor, Enbridge, and Shell. They know pricing pollution will encourage innovation that will bring new jobs for middle class Canadians."

Meanwhile, questions to Notley's office were directed to provincial energy minister Margaret McCuaig-Boyd.

"Whether a company is a member of a certain association or not has no bearing on the treatment they receive in engaging with our government," wrote spokesman Mike McKinnon in an email.

Energy industry "leaders" support Notley's carbon pricing plan, wrote McKinnon, because they know it's "driving innovation" and new technologies that are reducing the carbon (pollution) in every barrel of oil Canada produces, while also securing responsible pipeline development.

"On the other hand, Premier Wall's plan ensures a price on carbon will be imposed on Saskatchewan by Ottawa. We'll continue with our made-in-Alberta solutions that are creating jobs and diversifying the economy, making life better for Albertans."

'Growing pressure' to do more on climate

Crescent Point’s move comes at a critical time for the fossil fuel industry in Canada and around the world. Last week, the director general of the International Renewable Energy Agency said the market is abandoning fossil fuels.

China, the European Union and Canada are trying to maintain the Paris climate agreements as the Trump administration has moved to dismantle the Obama legacy on climate action.

Amin Asadollahi, climate change mitigation lead for North America at the International Institute for Sustainable Development, said any fossil fuel firm that opposes climate policies at this point in time is hedging their bets.

“In a world that is becoming increasingly carbon constrained, there will be growing pressure on governments to do more on climate than less,” said Asadollahi.

Firms in the oilsands, he said, are giving up an opportunity to lower their own costs, since he argued energy costs can be lowered with emissions reductions.

“Companies have a choice: increase their competitiveness through climate action, or deny science and become increasingly obsolete in a carbon-constrained world,” he said.

Progress Alberta, a non-profit organization focused on progressive issues that has examined Wall’s political contributions, said Crescent Point’s departure from CAPP shows how the oil and gas industry is split over carbon pricing.

“Crescent Point leaving CAPP is a big blow to the organization,” said Progress Alberta’s executive director Duncan Kinney.

“I think it also shows a real divide in the approach of a company like Crescent Point, and that of [CAPP], a pretty large umbrella organization for oil and gas companies.”

Asked for CAPP's reaction to the federal government's carbon pricing position paper, Klassen said the group believed that "any government action" on climate "must also advance Canada's competitiveness to attract capital and position Canada as a viable choice to meet global energy needs."

"An ongoing commitment to invest funds from carbon pricing into technology and innovation to allow substantial progression in a lower emission energy system will generate more revenue for government, communities and industry," wrote Klassen in an email.