Copyright of the Daily Oil Bulletin 2017
Regulatory Uncertainty: Industry Needs Clear Rules, Says New Cenovus CEO
Companies planning to spend heavily on infrastructure need clear guidelines and a transparent regulatory process, says the head of Canada’s largest in-situ oilsands producer.
Alex Pourbaix, the new president and CEO of Cenovus, answering questions from the media. Photo credit: Deborah Jaremko.
Responding to a reporter’s question about regulatory uncertainty, Alex Pourbaix, the new president and CEO of Cenovus Energy Inc., said the issue is a significant one for the industry.
Pourbaix, who was appointed to the Cenovus job on Oct. 30, was previously chief operating officer of TransCanada Corporation. In that job he confronted unprecedented regulatory uncertainty.
In the United States, it took about seven years to get presidential approval for TransCanada’s proposed Keystone XL pipeline and the project is still in the Nebraska regulatory system.
And in Canada, TransCanada recently cancelled its proposed Alberta-to-New Brunswick Energy East pipeline, citing regulatory uncertainty as a factor. After the company spent about $1 billion on the project, a National Energy Board (NEB) panel, in effect, changed the rules mid-game by requiring TransCanada to account for upstream and downstream emissions.
“Everybody knows — whether it's the pipeline industry or the upstream industry — these are incredibly capital intensive industries,” Pourbaix said. “In my previous life and in my new role, I would say the same thing: no proponent of major infrastructure expects to get a free ride in the regulatory forum. I think we expect to be pushed — and pushed hard. And we have to make a compelling case for the infrastructure that we propose to build.
“At the same time,” he continued, “that process needs to be transparent. It has to have a beginning, a middle and an end. And I would just say it becomes extraordinarily difficult for any industry to make significant investments if there's a great deal of uncertainty as to what the outcome is.”
Any regulatory system needs very clear rules and guidelines, said Pourbaix, a lawyer. “You have to know what the process is. You have to know what requirements you have to hit for your project to get its approvals.”
“And I think just having the ground rules understood is very important. And it is a challenge to invest significant [amounts of money] in infrastructure when there's a great deal of uncertainty.”
He said this issue “was a passion I had in my old job and it's certainly an area of priority for me going forward.”