​Why things can only get better for Western Canada oil and gas: Peyto CEO

Peyto CEO Darren Gee. Image: Joey Podlubny/JWN

Darren Gee says that things can only get better because they can’t get much worse.

“The level of despondency that has befallen the Canadian oil and gas industry lately is unlike any I’ve ever experienced in my almost 30 year career,” the CEO of Peyto Exploration & Development writes in his latest monthly president’s report.

The cause for Gee’s optimism — apart from the reductive darkest-before-dawn scenario — is that, conceivably, supportive political leadership could one day return to Alberta, remove the roadblocks to oil and gas development, encourage investment in western Canada’s abundant undeveloped resources and potentially ride a decade-long wave of rising commodity prices.

“It’s not so far-fetched,” he writes.

His hope has an historical precedent. The National Energy Program [NEP] of the early 1980s coincided with a global recession and an oil price drop from $30/bbl to $15/bbl.

Industry historians have likened the current environment to the NEP era, with similar impacts on the industry:

  • Delayed development of the oilsands and other major resource development projects
  • American and foreign oil companies selling off Canadian assets 

  • Heavy job losses to Alberta 


A strong provincial voice for the industry and Western Canadian provinces eventually brought an end to the NEP, according to Gee.

“There is no reason to believe that Alberta cannot again elect a political leader to be such a voice, and advocate for the Alberta people and the industries that provide our high standard of living.”

Such a leader would fight to reduce the regulations and high taxes currently facing western Canada’s oil and gas industry.

After all, this is a well-endowed industry. In 2016, it was assessed with more unconventional and conventional ultimate recoverable reserves than ever before.

This is also a time when global natural gas consumption is at record highs.

“Since we do a superior job of sustainable and environmentally responsible resource development when fairly compared to any other jurisdiction, we should be promoting ourselves as the logical choice to provide those resources and be justifying why capital should be invested here versus elsewhere,” Gee says.

Reading the tea leaves of natural gas production, commodity pricing and hedging patterns, Gee also suggests that “perhaps we are at the beginning” of a reversal from a supply-driven marketplace to a demand-driven marketplace, which could usher in a decade of rising natural gas prices.

To Gee’s first point, though, any potential political change is still, at best, two years away.

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