U.S. tax reform only a minor investment risk for the oil patch

Alberta’s oilsands may take a blow from investors taking advantage of the recent U.S. tax reform, but it won’t exactly be hurting according to one research group. Arc Energy Research Institute said it may appear that investors will get a better deal upfront but they’re also considering bigger picture results from their capital investments in Canada.

“When you think about that affect on the return on investment, things like the wider oil differentials in gas prices that we have today really trump the impact of those tax changes,” said Jackie Forrest, who participated in a Calgary Chamber of Commerce panel earlier this week. “So I think money coming to the U.S. or Canada is going to be more dependant on us getting better prices on our products.”

Forrest noted oilsands investment is very different from investment in the U.S. where there are more shorter cycle projects compared to the construction of sites that may take years. She also said spending on energy has been consistent even without new pipelines in the works for 2018.

“We still see a fair amount of capital investment, about the same level as last year, about $45 billion between oilsands maintenance capital, finishing up capital projects and this large amount of investment that we are expecting to see around shale gas and tight oil.”

The Chamber event also featured keynote speaker Dr. Robert Johnston, the CEO of Eurasia Group. He also said cheaper taxes offered in the U.S. are only a short term risk for losing investors. Johnston forecasted the price of oil to hover around $65 to $70 US a barrel.

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