Deep divisions hinder Canadian crude industry in fight of its life

Bloomberg

Amid the worst crude-price environment in its history, the Canadian oil industry is being ham- strung by internal divisions that are making it harder to rally around potential solutions.
That draws a stark contrast to the US, where a less divided industry wields more clout. Most notable is the split between Canada’s pure producers, who are being devastated by plummeting local prices, and the large, integrated energy companies that have been mostly unscathed. There’s also a rift between oil-sands producers — a target of climate-change activists around the world — and the frackers and conventional drillers that have been suffering from the pipeline bottlenecks brought on by those environmental opponents.
Reflecting these divisions is the industry’s two main lobbying groups: the Canadian Association of Petroleum Producers, the larger organisation, which is dominated by the giant oil-sands producers; and the Explorers & Producers Association of Canada, consisting mainly of smaller firms. That split is hampering the sector’s ability to lobby the government with a consistent message.
“There is definitely a lot of concern around whether it’s really appropriate that one body is representing what has become a very complex industry with varied products and interests,” said Rafi Tahmazian, who helps manage about C$1 billion ($760 million) in investments at Canoe Financial
in Calgary.
The Canadian divisions bubbled to a head late last month, when top executives from 15 of the nation’s top oil producers met with Alberta Premier Rachel Notley and, instead of presenting a unified front and a list of demands, they were said to have sparred with each other in front of her. At issue was whether to press her government to mandate industry-wide production cuts that might help clear the province’s glut of oil.
Companies that focus mostly or solely on production, including Cenovus Energy Inc, Canadian Natural Resources Ltd and Nexen Energy ULC, favour a mandated cut spread among the country’s producers that would bring supply down below pipeline shipping
capacity. They argue that could clear the glut within weeks and bring prices back into a more
normal range, helping their income statements as well as the government coffers.