OTTAWA — Representatives from Canada’s oilpatch said Thursday they don’t know of a single energy company that has yet benefited from any of Ottawa’s pandemic-inspired loan programs and many think the cost to access them is too high.
Finance Minister Bill Morneau has put billions of dollars on the table to help oil and gas companies, as part of the government’s massive COVID-19 aid packages.
That includes $750 million in what the government is deeming “repayable contributions,” to help companies meet new standards on methane emissions coming from oil production facilities.
There are also different kinds of capital or operating loans available for small, medium and large companies.
But several company owners and industry advocates told a virtual meeting of the House of Commons finance committee that the various programs have very high bars to qualify or are of no interest to the sector when it’s just trying to survive.
Loans for smaller- and medium-sized businesses from the Business Development Bank of Canada and Export Development Canada are also still not ready to roll out weeks after they were promised.
An emergency loan program for large employers has interest rates that are so high it’s almost predatory, said Adam Waterman, the president of the Lloydminster Oilfield Technical Society.
On top of that, applicants have to agree to very specific behaviours, including prohibiting dividends and restricting executive compensation, agreeing to have a government representative on their board, and providing annual climate plans that show how the company is contributing to Canada’s goal of net-zero emissions by 2030.
Waterman said it is ridiculous to ask oil companies to show a 30-year climate plan to get a five-year bridge loan.
“It would have been more direct to say that oil and gas producers and oilfield service companies need not apply,” said Waterman.
And Waterman said the repayable funds from the federal government to help oil producers curb their methane emissions are ill-timed. He said in normal circumstances they would be welcome but right now companies aren’t interested in taking on more debt to do something that won’t immediately improve their bottom line.
“Our priority is survival,” said Waterman.
Both Waterman and Tristan Goodman, the president of the Explorers and Producers Association of Canada, said the emissions fund might get more uptake if the money came through grants.
Goodman said he supports the intention of the loans from the development banks because they are meant to help workers keep their jobs. But weeks later, he said companies are still getting automatic replies to their emailed queries about the programs.
“I know of at least 30 companies that are trying to access those programs and are unable,” he said.
The industry representatives painted a bleak picture of Canada’s oil sector for the committee.
Waterman said in his region, an average of two jobs have been lost every day for the last five years, and that was before the combined economic missile of COVID-19 and an oil production fight between Saudi Arabia and Russia pushed up supply at a time when demand was plummeting. The effect was the collapse of world oil prices.
Peter Kiss, the president of Morgan Construction and Environmental Ltd., says he has laid off 80 per cent of his staff, watched his revenues crash 87 per cent and still considers his company one of the lucky ones because there is still some money coming in.
Kiss said his company is trying to apply for a loan from the Business Development Bank, and has been told they should qualify but has no more information at this point.
This report by The Canadian Press was first published May 28, 2020.
Mia Rabson, The Canadian Press