Looking to the Future: Tim McMillan Reflects on His New Role at CAPP

An interview with Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers

Tim McMillan, President and CEO of CAPP

Tim McMillan, President and CEO of CAPP

The new president and chief executive of the Canadian Association of Petroleum Producers, doesn’t hesitate to state he is taking the influential group in a slightly new direction, one promoting the industry at the grass-roots level.

Tim McMillan sees the very people who work on the ground – on rigs, in the service industry, on fracking crews – as being the best ambassadors of the often-maligned Canadian oil patch, to Canadian themselves.

“We in the industry need to empower the people that have that expertise to talk about it,” McMillan said in an interview with Energy Magazine.

A former Saskatchewan energy minister who ran his own oilfield service company for years, McMillan noted while western Canada has a long history of energy development, the industry is relatively new in most other parts of the country. He believes people working in the oil patch who come from areas such as the Maritimes or Quebec can help create a better understanding of the oil and gas sector back at home.

Oil field worker

Oil field worker

“I think that we’ve had a record of doing national ad campaigns to talk about our industry, to talk about our values. We are going to continue to do that, but far more on the ground, face-to-face work engaging people that may work in our industry to be advocates for us, finding expertise beyond the traditional voice, to have more voices that can speak knowledgeably about how we operate. And we think that will be powerful for Canadian who are interested in this topic.”

“The association has an important role to play in building trust and increasing understanding about the energy industry overall.”

The development of multi-stage fracturing to help “crack” so-called tight oil and gas formations has led to a massive increase in the use of the high-pressure, fluid intense technology. With the increase in use has come rising concerns about groundwater contamination and fracking related earthquakes, leading to provinces such as New Brunswick, Quebec, and Nova Scotia, as well as some regional parts of Newfoundland and Labrador to issue moratoriums on its use.

The association has an important role to play in building trust and increasing understanding about the energy industry overall, McMillan said.

“What we see over and over again is in parts of Canada where our industry operates, that is where we have the highest acceptance – people who understand us the most, like us the best. But Canada is a very big country and we have to bridge that geographic space, and that’s where CAPP has a role.”

Canada’s oil and gas industry has been facing more immediate challenges, chiefly the dramatic fall in commodity prices since last summer. The drop in oil prices to below US$50 per barrel from highs of US$104 last June has seen an estimated C$25 billion chopped from capital budgets and predictions of a $50-billion loss of revenues.

The association, which represents the bulk of Canadian oil and gas producers, is focusing on ensuring the industry remains cost competitive in a global context, and meets infrastructure challenges to ensure access to markets.

“The Canadian energy sector has a long history of dealing with price fluctuation, and it’s built in to the business model of companies that are successful in the long term, he said. “It’s a very entrepreneurial industry, it’s one that adapts and adjusts accordingly.”

“Demand for natural gas as a fuel in Asian markets has seen numerous projects around the globe spring up.

McMillan sees liquefied natural gas as a great opportunity for Canadian producers to sell growing natural gas supplies into new markets. Demand for natural gas as a fuel in Asian markets has seen numerous projects around the globe spring up in attempts to capture higher prices tied with oil for the resource.

“But we do have to be conscious that we are not alone, that Australia and the United States share some of the characteristics that Canada does for investors and we need to be competitive,” he cautioned. “If we want to be competitive, we have to be cost competitive, ensure that we do what we can to position ourselves to get these final investment decisions, if we want to develop an industry that would have a very long and sustainable life in Canada.

Tim McMillan speaking at the recent Canada’s Building Trades Union event in Gatineau, QC.

Tim McMillan speaking at the recent Canada’s Building Trades Union event in Gatineau, QC.

CAPP believed tax changes in the recent federal budget around the treatment of the capital depreciation on LNG facilities were crucial, and was pleased to see them.

As crude prices have started creeping up in reaction to producers shutting down rigs and reducing supply, the election of a majority NDP government May 5 has the industry concerned their gains could be erased by Premier-elect Rachel Notley’s vow to increase corporate taxes, review royalty rates and tighten environmental regulations.

“While some groups continue to suggest Alberta should increase the royalties and corporate taxes paid by the industry, adding more costs of any kind would be irresponsible and would put more jobs at risk,” McMillan wrote in a CAPP website post immediately following NDP’s landslide victory.

For the association itself, McMillan noted “There are opportunities across the country, and we need to continue to tell that story, explain how we operate and that we have the appropriate regulatory structure, in fact we have one of the best in the world. Canadian should ask these questions and we have good answers for them.”

Dina O’Meara is former business writer with the Calgary Herald and is now a communications consultant.