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We've lagged behind the US and now we need to catch up, says Capp

The Canadian Association of Petroleum Producers says changes to Alberta's oil and gas royalty system are needed to encourage investment

ALBERTA's energy sector has been on the back foot for too long and must regain the agenda if it is to cope with a shift in North American market fundamentals, says David Collyer, president of the Canadian Association of Petroleum Producers (Capp).

Changes to the royalty system to restore the province's reputation as a safe place to invest are necessary, says Collyer. But the industry must do more to assure consumers that energy supplies will remain robust and that environmental concerns associated with production in the province can be addressed.

The advent of new US gas production in areas historically supplied by western Canada has brought an "inflexion point" for producers in Alberta. Collyer says the Marcellus Shale, in the US northeast, could soon be supplying 4bn-6bn cubic feet a day – meeting demand in a large market that once relied on imports from Canada.

It leaves Canada's energy sector hoping for a rapid rise in natural-gas consumption in both electricity generation and transportation, probably resulting from measures to fight carbon emissions. "To the extent that carbon is priced and that this flows through more transparently to the consumer, that would drive changes in behaviour that would benefit natural gas," says Collyer.

Meanwhile, Capp says it is gearing up to fight another battle: one on behalf of oil-sands producers under pressure from green activists south of the border. Some US states have sought to curb consumption of synthetic crude from the oil sands on the grounds that it is more carbon intensive than other imported crudes.

Capp says that on a well-to-wheels basis emissions from fuel sourced from the oil sands is comparable with other grades used in the US. But winning that argument is a public-relations exercise. "We have a job to get that message out more effectively on a federal level," says Collyer. The US should set low-carbon fuel standards across the board and make it a "level-playing field", he added. "Set your standard and the oil sands will compete."

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