One of Canada’s largest oil and gas companies announced it will be redomiciling in the United States, citing difficulty in attracting American investment.
Encana, which will be renamed as Ovintiv Inc., is among several energy producers that have scaled back activity in Canada or sold assets, such as Suncor Energy, ConocoPhillips, and Royal Dutch Shell. It is estimated that over the last three years, Canada has lost around $30 billion USD in energy assets.
Shortly after the re-election of Prime Minister Justin Trudeau, Husky Energy Inc. laid off hundreds of workers in western Canada after being forced to reduce capital spending due to the sector’s troubles.
While Encana CEO Doug Suttles has claimed that the transition will not affect Canadian workers, the company’s shares lost about 9.2 per cent of their value on the Toronto Stock Exchange on Thursday morning.
“A domicile in the United States will expose our company to increasingly larger pools of investment in US index funds and passively managed accounts, as well as better align us with our US peers,” said Suttles about the decision, which he claims is not political.
Encana’s former CEO, Gwyn Morgan, said: “The destructive policies of the Trudeau Liberals have left the company with no choice but to shift its asset base and capital program south of the border.”
Encana has been a household name in the sector since the 1800s when natural gas was discovered while building the Canadian Pacific Railway.
Faced with a minority government and NDP leader Jagmeet Singh, who opposes the $4.5 billion Trans Mountain Expansion, Justin Trudeau’s government is expected to continue having difficulties building much-needed pipelines in Canada.
A report by PetroLMI projected that Canada was set to lose approximately 12,500 oil and gas jobs this year. Among the reasons behind this projection are lower capital spending, troubles with getting product to market and declining commodity prices.
Mismanagement and resistance has plagued the Trans Mountain Expansion since its original purchase. After agreeing to buy the multi-billion dollar project from Kinder Morgan, the Parliamentary Budget Officer revealed that the Liberal government overpaid for the project by nearly $1 billion.
Since the project was approved by Trudeau earlier this year, the Federal Court of Appeal has agreed to see six challenges by various indigenous groups and First Nations who are claiming that the government didn’t properly consult them.
Despite the government promising to fight against the appeals, the Liberals “offered no submissions or evidence to assist the Court” in response to the filings.