Alberta Politics
Oilsands extraction in Alberta (Photo: Flickr, American Petroleum Institute).

While Albertans panicked about state of the oilsands, the Big Five bitumen-extraction corporations made billions

Posted on November 08, 2018, 9:21 am
6 mins

While Albertans have been in flap over the state of the province’s oilsands industry, the Big Five Oilsands extraction corporations have been raking in billions.

“Despite the 2014 oil price crash and the ongoing hand-wringing over pipelines and the price differential, the reality is the Big Five oilsands producers have remained incredibly profitable corporations,” says one of the authors of a new study released this morning by the Parkland Institute and the Canadian Centre for Policy Alternatives British Columbia office.

Parkland Institute Research Manager Ian Hussey (Photo: Parkland Institute).

Last year alone, the five biggest oilsands corporations together either banked or paid out to shareholders $13.5 billion, said Ian Hussey, lead author of Boom, Bust, and Consolidation: Corporate Restructuring in the Alberta Oil Sands and Research Manager of the Parkland Institute.

The Big Five are Suncor Energy Inc., Canadian Natural Resources Ltd., Cenovus Energy Inc., Imperial Oil Ltd., and Husky Energy Inc.

The report – undertaken as part of the six-year Corporate Mapping Project by Parkland, CCPA-BC and the University of Victoria – analyzed the economics of the five largest oilsands corporations that together produced 80 per cent of Canada’s bitumen during the period from 2009 to 2017 as the industry went through cycles of boom, bust and consolidation.

Parkland Institute researcher Emma Jackson (Photo: Parkland Institute).

The analysis shows that while the bust was hard on some sectors of the industry and in particular workers – more than 20,000 lost their jobs in 2015 – things were just fine for the Big Five and their shareholders, thank you very much.

The Big Five:

  • Together paid $31.76 billion in dividends to shareholders over the period examined by the study
  • Paid $12.56 billion to shareholders since the oil price crash in late 2014 alone
  • Transferred $6.2 billion to shareholders – $4.16 billion in dividends and $2.4 billion buying back shares – in 2017
  • Had residual savings of $7.3 billion in 2017, while paying $4.72 billion in taxes and royalties to all levels of government
  • Posted aggregate gross profits of $46.6 billion in 2017

Parkland Institute researcher Susan Cake (Photo: David J. Climenhaga).

Last year’s aggregate profit for five companies was within spitting distance of total revenues collected from all sources by the Government of Alberta in the same period, which added up to $47.3 billion, Mr. Hussey noted.

Each of the Big Five corporations is a highly integrated multinational corporation with significant assets in the United States, Mr. Hussey explained, so they are able “to shift their operations in response to market conditions to ensure they remain profitable despite the issues that have been dominating headlines in recent months.”

As a result, says the report, the Big Five oilsands producers are “increasing production while squeezing costs and slowing down investment.” That in turn means “a significant chunk of Alberta’s (and Canada’s) carbon budget is currently reserved for a slow-growing, cost-cutting sector with weak fiscal, investment, employment and innovation benefits.”

Meanwhile – thanks to the carefully nurtured hysteria about the oil price differential in particular and the state of the Alberta oilpatch generally – the Big Five and other companies in the sector have been able to steer provincial and federal energy and climate policies their way and generate huge public investment in their business.

Parkland Institute researcher Eric Pineault (Photo: Université du Québec à Montréal)

As the report observes: “Canada will not be able to live up to its Paris Agreement obligations for the year 2050.” What’s more, the planet’s human occupants may not have even that long to reduce fossil fuel use enough to avoid catastrophic results.

“Despite this reality,” the report warns, “the Big Five all forecast an increase in total emissions in the future due to their plans to increase bitumen production.”

That’s probably in line with the policy wishes of most Albertans – even if it’s not in sync with those of the majority of people with whom we share the planet.

But as Mr. Hussey put it, “Albertans have to ask if it’s worth it to continue to bet on the cost-cutting sector with weak fiscal and employment benefits that has emerged from the crash, or if now is the time to put in place the policies to position the province to benefit from the ongoing global energy transition.”

The other authors of the study are Eric Pineault of the Université du Québec à Montréal, Emma Jackson, an MA candidate in the University of Alberta Sociology Department, and Susan Cake, who is pursuing a PhD in sociology at the U of A.

The Corporate Mapping Project is funded in part with a $2.5-million grant from the Social Sciences and Humanities Research Council of Canada, which was awarded in 2015 during the final months of Stephen Harper’s Conservative government. I mention that final factoid only in case someone imagines the study’s revelations are part of some sort of Liberal or environmentalist plot.

13 Comments to: While Albertans panicked about state of the oilsands, the Big Five bitumen-extraction corporations made billions

  1. Geoffrey Pounder

    November 8th, 2018

    Need a good laugh? Check out daily online comments on The Calgary Herald condemning Trudeau’s and Notley’s “genocidal” policies against the oil industry.
    Meanwhile, big oilsands firms are raking in billions, while creating a massive liability for taxpayers.

    “Thanks to the carefully nurtured hysteria about the oil price differential in particular and the state of the Alberta oilpatch generally – the Big Five and other companies in the sector have been able to steer provincial and federal energy and climate policies their way and generate huge public investment in their business.”

    Not a word of criticism for the politicians and governments that enable this corporate rape and pillage? For the industry-captured politicians and regulators who serve their corporate masters, not the public interest?
    How many readers of this column will rant and rave over the oil industry’s stranglehold on our economy, energy and environmental policy, and democracy — but applaud when a certain NDP Premier shamelessly shills for the same industry, ignores the science, chastises her federal colleagues and throws erstwhile supporters under the bus for voicing their concerns?
    Cognitive dissonance, much?

    Reply
  2. Political Ranger

    November 8th, 2018

    Studying, ferreting out and then reporting on the state of the global environment is some sort of environmentalist plot. A plot to help save humanity from the worst of themselves.
    Doing something about it, is, in fact, a Liberal plot, by definition. Again, a plot to help save humanity from the worst of themselves.

    What seems to be missing, at least from your report David, is the dollar amount of direct subsidy these petro-corps receive from governments provincially and federally.
    Also missing is any kind of analysis of royalty levels. Just on first glance, one would expect royalty payments to the owners of the resource on the order of 3-5 times profits. In this case, royalties seems to be less than 1/10th the profits. Seriously out of whack!

    What is plainly obvious is that these corporations are no friend of Alberta or Albertans.

    Reply
    • David Climenhaga

      November 8th, 2018

      I’ll ask my research staff to look into it. DJC

      Reply
      • tom in ontario

        November 8th, 2018

        And the one man research staff will be reporting back to itself.

        Reply
        • David Climenhaga

          November 8th, 2018

          Glad someone noticed. Sarcasm so often fails with the literal minded. DJC

          Reply
          • Bob Raynard

            November 8th, 2018

            So those dozens of attractive young women I see following you are just groupies then, David? Here I thought they were your research staff.

          • David Climenhaga

            November 9th, 2018

            The only people who follow me are on Twitter. DJC

      • Political Ranger

        November 9th, 2018

        Sorry David, don’t take it personally. My comments are not meant to criticize you or you’re hard-working staff. These are legitimate and important questions though.
        It’s not like it’s the natural order of things that Albaturda petro-corps make $1 for every dime the province receives. Most petro-jurisdictions, the vast, vast majority, receive multiples of the Alberta take. Why this is accepted, even celebrated, is beyond me.

        Reply
        • David Climenhaga

          November 9th, 2018

          You’re accusing me of sarcasm? Say it ain’t so! DJC

          Reply
  3. Sam Gunsch

    November 8th, 2018

    Only Lougheed pushed back on the ‘poor me’ propaganda from the oil/gas/oilsands industry.

    Alberta now doesn’t have a functioning democracy with regard to the petro-sector. The industry governs AB.

    Pure corporatism, where industry is the senior partner with a veto over our elected gov’ts.

    Royalties under Socreds: 17.8% (1962-71)
    Royalties under Lougheed: 27% ( a peak year – 37.7%)
    under Klein 15.2%
    Stelmach was fatally politically wounded due to industry outcry over his royalty review proposing increases.
    Royalties under Redford 9.1%

    Data above from AB economist in 2015 here:
    https://www.anielski.com/alberta-continues-to-have-a-revenue-problem/

    Since Redford… royalties have crept lower.

    My NDP saw what happened to Stelmach and appointed an industry friendly royalty committee.

    Reality is Alberta’s gov’ts have been suckered out of our one-time non-renewable resource lottery win.

    EXCERPT: ‘By contrast Norway in 2012 collected US$68 billion in royalties and other taxes or 72.4% of the total of Norway’s oil and gas sales of US$94.2 billion. The majority of these revenues were in turn invested in Norway’s Government Pension Fund that in 2014 was estimated at US$857 billion). In contrast Alberta’s Heritage Fund, which was founded by Lougheed in the late 1970s, many years before Norway’s fund, was worth only $17.4 billion in 2014.’
    ====

    Alberta based academics and political observers like Adkin, Taft, Urquhart and others have done the analysis of ABs politics… the petro-industry owns ABs RW political class, RW media and has made hostages of about 2/3rds of AB public opinion, and thus has forced the NDP to pander to industry as well.

    ==============
    First World Petro-Politics examines the vital yet understudied case of a first world petro-state facing related social, ecological, and economic crises in the context of recent critical work on fossil capitalism.

    https://www.amazon.ca/First-World-Petro-Politics-Political-Governance/dp/1442612584
    ==========================

    ‘Taft is not the first author to criticize Alberta for being a willing hostage to the oil industry, but he doesn’t call the province a petrostate. He calls it an “oil deep state”: “Petrostates are conceived in petroleum, while oil deep states are captured by petroleum.”

    In other words, we had democracy in Alberta until we discovered oil.’
    https://edmontonjournal.com/news/insight/graham-thomson-oil-deep-state-controls-alberta-former-liberal-leader-kevin-tafts-new-book-says

    ==============

    Urquhart: ‘Costly Fix examines the post-1995 Alberta tar sands boom, detailing how the state inflated the profitability of the tar sands and turned a blind eye to environmental issues.’

    https://utorontopress.com/ca/costly-fix-2

    Reply
    • Sam Gunsch

      November 9th, 2018

      re petro-industry takeover of AB politics… I forgot to include this book:

      Alberta Oil and the Decline of Democracy in Canada

      http://www.aupress.ca/index.php/books/120251

      EXCERPT: ‘In probing the impact of Alberta’s powerful oil lobby on the health of democracy in the province, contributors to the volume engage with an ongoing discussion of the erosion of political liberalism in the West. In addition to examining energy policy and issues of government accountability in Alberta, they explore the ramifications of oil dependence in areas such as Aboriginal rights, environmental policy, labour law, women’s equity, urban social policy, and the arts. If, as they argue, reliance on oil has weakened democratic structures in Alberta, then what of Canada as whole, where the short-term priorities of the oil industry continue to shape federal policy? In Alberta, the New Democratic Party is in a position to reverse the democratic deficit that is presently fuelling political and economic inequality. The findings in this book suggest that, to revitalize democracy, provincial and federal leaders alike must find the courage to curb the influence of the oil industry on governance.’

      Reply
  4. Sam Gunsch

    November 9th, 2018

    FWIW from 2016… stuff that AB citizens won’t see very often in AB’s RW media ecosystem.

    Tough to have a functioning democracy with systematic omission of key political facts.

    excerpt: ‘Canadian Taxpayers Fork Out $3.3 Billion Every Year to Super Profitable Oil Companies
    Aug 31, 2016 3 min read

    Some of the largest, most profitable companies in Canada are collectively receiving an estimated $3.3 billion in subsidies every year from Canadian taxpayers, according to a new analysis.

    The report, released today by the International Institute for Sustainable Development, a Canadian-based think tank, outlines how billions in federal and provincial tax breaks and corporate incentives benefit companies in the oil and gas sector like Imperial Oil, whose earnings in 2015 were CDN$1.1 billion. ;’

    https://thenarwhal.ca/canadian-taxpayers-fork-out-3-3-billion-every-year-super-profitable-oil-companies/?fbclid=IwAR2SIHkulio4h9VSea1Jvh037sPxco81urykxfv3ja2g_Yxz5Ll2gO8HnY8

    Reply
  5. Jerrymacgp

    November 10th, 2018

    Another question for your “research staff” 😉 … this discussion, like so many on this topic, is focused solely on the oil sands. Where do conventional oil, which is still dominant outside the Wood Buffalo area, and natural gas, which is a major factor in the northwest part of the province, come into this discussion? You can’t swing a cat in the Peace Country without hitting someone whose livelihood depends in whole or in part on natural gas or crude oil exploration and extraction, or on industrial service businesses connected to it. Many of these jobs are with teeny tiny businesses working on contract with the big players, rather than with the big corps themselves.

    Just something to think about …

    Reply

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