There is optimism for the future of the oil industry in Canada, but there are some major challenges that need to be dealt with first, said Weyburn oilman Dan Cugnet in an interview.
The president of Valleyview Petroleums and vice-chair of the Weyburn Oil Show board also expressed his ongoing support for the industry in southeast Saskatchewan, and the part that the Oil Show plays in Weyburn and in promoting Western Canada’s oil industry.
“I think the Saskatchewan Oil Show in Weyburn has always been the premier energy industry event in the province and that will continue moving forward. I think this year and in future years, we will see increased advocacy and the Show becoming more of a platform for education and for the energy industry to have a voice and promote itself. We have a great story and we need to start telling it,” he said, noting the two keynote guest speakers will be playing a role in this regard.
Researcher and blogger Vivian Krause will be the speaker on Wednesday, June 5, and journalist and commentator Rex Murphy will be the featured speaker on Thursday, June 6, at the industry luncheon.
“People in this country and province don’t understand where their energy comes from, where the food comes from and how it’s grown, and there are some misconceptions out there and false rhetoric from outside sources that want to hurt our markets, and build theirs up,” he said.
Asked how important or significant the Oil Show has been for the community, and for the SE oil industry, Cugnet replied, “I think it had been incredibly significant in showcasing the talent, expertise and innovation Saskatchewan and Canadian individuals and companies possess. Ag and oil are absolutely the foundation of the western economy and diversification is great and all business is good business, but these last few years have really highlighted that energy is the economic engine that not only drives our economy, but the Canadian and global economy.”
He pointed out that the Oil Show provides an opportunity for people to get up close to a service rig, or learn about fracing, and also to recognize what environmental leaders this industry is compared to the rest of the world.
“This show breaks down those walls and lets everyone peek inside. And it’s a great chance to visit with friends, competitors and share that knowledge as well,” he added.
Cugnet shared some thoughts about where things are at currently in the oil industry, expressing both optimism and some critical views of the government in power in Ottawa.
“Currently the price of oil is good for industry, government, manufacturing etc. It’s at a point that isn’t too low or too high, where it’s good and steady,” he said, adding, “I think the industry is slowly being crushed under the weight of current federal domestic policy. Investment is right out of the sector. The funds and pensions and foreign investment is all but gone until the Liberals are out of power, plain and simple.”
Cugnet thinks the changes politically in Alberta bode well for the industry as a whole, but Saskatchewan needs to do a better job of supporting local companies and industry.
“We really missed an opportunity to attract and siphon investment away from Alberta into Saskatchewan under the previous government there. Government is by nature slow to react and there was a missed opportunity for us.
“I think our government is doing a good job, but we need to do much better, especially in the climate we’ve been faced with the last five years. Premier Kenney is going to be very aggressive in attracting investment and Saskatchewan needs to get more aggressive as well, or risk getting left behind,” he said.
Asked if he is seeing signs of a return to some level of activity here, he said, “No. There is some, but the Americans raising sanctions on Iran last fall really stalled things out the last three quarters. We may start to see some things picking up in the next couple months, but until it’s happening, it ain’t happening.”
On the question of whether the oil price sustainable, or if the differential still a factor, Cugnet said, “Oil is at a great price point right now. It’s sustainable. Government is what is failing the industry currently. The differential had really tightened up under the cuts of the previous Notley government. People may have a different opinion than me on this, but I think what Premier Notley did was the right thing on the cuts and I will give her credit there. I have been critical of most of what she did regarding energy, but I do think that was the right decision.”
He added that the differentials are starting to widen out in the forward curve for heavy oil and is already back over $20 per barrel for the fourth quarter of 2019.
“So this story isn’t going away really for the foreseeable future and I would say the next decade. There will be ups and downs based on what happens globally, such as with Iran, Venezuela, Libya and with consumption levels.
“Many are predicting that the diff is going to swing the other way with large capital