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Canadian Natural Resources president joins criticism of Ottawa's proposed cap on oil and gas emissions

cnrl-new-0804
cnrl-new-0804

Canadian Natural Resources Ltd. president Tim McKay called the federal government’s proposed cap on oil and gas emissions “unnecessary” Thursday, adding that Canada must balance environmental and economic objectives while pursuing decarbonization.

McKay made the comments during a conference call with investors after Canada’s largest oil and gas producer reported $3.5 billion in profit for the second quarter and announced a special dividend to shareholders.

McKay said the sector is already working to cut emissions by 22 million metric tons by 2030 through the Pathways Alliance — a consortium of six major oilsands producers that has proposed a major carbon capture pipeline and sequestration hub for northern Alberta.

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“In our view, this cap is unnecessary and overly ambitious in light of our stated preference for governments and industry to continue to work together through the Pathways Initiative to achieve an already announced emission target reduction,” McKay said.

“Canadian Natural will continue to provide input to the government on the importance of balancing environmental and economic objectives, as well as being able to support Canada’s allies with energy security.”

The comments come just days after similar criticisms were levelled at the Trudeau climate plan by oilpatch leaders including Cenvous Energy’s CEO Alex Pourbaix, Imperial Oil CEO Brad Corson and MEG Energy CEO Derek Evans.

While the federal government has not yet indicated where the ceiling on emissions could be set, a discussion paper released last month proposed either a cap-and-trade system or a modified carbon-pricing scheme to drive down emissions.

Meanwhile, high energy prices have sent profits soaring in the Canadian oilpatch this quarter.

CNRL reported approximately $3.3 billion in free cash flow during the three-month period ended June 30 and the company said it would be paying a special cash dividend to shareholders of $1.50 per common share on Aug. 31.

The Calgary-based oil major said its average realized price for oil reached $115.26 per barrel in the second quarter — up more than 88 per cent compared to the same period last year.

Tight global energy supplies and Russia’s invasion of Ukraine propelled crude prices above US$100 a barrel for benchmark West Texas Intermediate earlier this year — although oil markets have dipped recently on fears of a global recession and rising inventory levels.

CNRL also saw record quarterly natural gas production of 2.1 billion cubic feet per day (Bcf/d) — an increase of more than 30 per cent from the same period last year. Total production averaged 1.2 million barrels of oil equivalent per day (boepd) in the second quarter, a slight increase over last year’s 1.1 million boepd.

CNRL said Thursday it will have to hike its capital expenditures this year by $200 million to account for inflationary pressure on steel, manufactured goods, services and labour.

The company said it is also spending more on research and development for technologies to reduce CNRL’s greenhouse gas emissions and environmental footprint. The company said it spent 33 per cent more on research and development in 2021 than the previous year, according to the company’s 2021 environmental, social and governance (ESG) report released Thursday.

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