If Canada’s petroleum producers are to remain globally competitive, they must find ways to reduce their production costs and also better ways to deliver and market their product, says the president of the Canadian Association of Petroleum Producers (CAPP).

“The fact is, when you look at the cost to produce oil and natural gas in Canada, it is much higher than just about anywhere in the world,” Pierre Alvarez told a predominantly aboriginal audience attending Resource Expo ’04 here last week.

While noting he wasn’t making a “plea for tax reductions,” Alvarez said that the industry paid $18 billion in direct royalties and taxes last year while attracting capital investment of $31 billion.

CAPP is comprised of 150 companies that collectively produce more than 98 per cent of Canada’s natural gas and crude oil, as well as 125 upstream service companies.

CAPP’s Pierre Alvarez says stewardship is important.

Alvarez said that while the current oil price of $50 per barrel isn’t expected to last, few believe that it will ever get back to the $9 or $10 level.

“That’s great news for Canada economically,” he added, and a positive incentive for marketing Canadian crude worldwide, an important endeavour as Alberta’s oilsands increase production.

Forecasters are confident that carbon-based fuels will continue to play an important role in supplying the world with energy, although Alvarez noted some like to label it a “sunset industry.”

While technology is helping the petroleum industry to go further and faster, he said, it is also competing for capital on a global basis as never before. Stakeholder issues are also becoming more complex and expectations – including those of First Nations – are increasing as resources are developed. “We are looking for more government leadership,” Alvarez noted.

Alvarez said CAPP is proud of the progress it has made through its stewardship program over the past five years, which has resulted in improvements such as reduced flaring and groundwater usage and direct expenditures on environmental machinery and processes of more than $1.2 million. He said the industry intends to quantify and track more clearly how it intends to invest more in aboriginal communities.

“It’s a response to a changing business world. It’s a requirement to changing expectations from the community.”

Alvarez said another 20 years of energy infrastructure building is important to the Western Canadian economy, and especially to native communities. “You are looking at an opportunity for long-term development along with technology that provides opportunities for tremendous community participation over a long period of time.”

Aboriginal community involvement and partnerships in Canada’s resource companies and industries were the recurrent themes throughout Resource Expo ’04, which brought together First Nations and non-aboriginal representatives.

The event was co-hosted by Dave Tuccaro, president of the National Aboriginal Business Association, and Rob Hunt, senior vice-president of Akita Drilling Ltd. of Calgary. Speakers represented local, provincial and national business, native and political interests.

Jeff Pardee, general manager of the Northeastern Alberta Aboriginal Business Association (NAABA), told delegates about a new partnership with the Fort McMurray Chamber of Commerce and the Fort McMurray Construction Association, called the Regional Economic Development (RED) Link.

Pardee said the initiative will further the goal of increasing business opportunities, and providing jobs and training for the advancement of aboriginals in the region.

Meanwhile, Michael Shaw, managing director of Global Enterprises for Calgary-based Atco Group, told conference-goers that the opening of new frontiers in British Columbia’s resource sector and the opportunities presented by the 2010 Olympic Winter Games “offer unmatched potential for government and industry to build an even stronger foundation of understanding that will meet the needs of all partners.”

Shaw, who oversaw his company’s significant participation in the 1988 Winter Olympics in Calgary, said aboriginal companies that provide goods and services to the Olympic effort should include training and development as part of their business strategy to ensure they keep benefiting after 2010.

“Eyeing the 2010 Olympics simply as a short-term money-making venture is an opportunity lost,” he suggested.

Shaw said Atco’s successful joint ventures with native groups spans the past 30 years.

The company’s partnerships include Nasittuq Corp., Tli Cho Logistics, Torngait Services Inc. and Arctec Alaska.

Organizers of Resource Expo ’04, which included the Nexus Trade Show, say they haven’t yet decided if next year’s will be moved back to Calgary, where it drew significantly larger attendance over the past two years than it did in Vancouver this year.

“Some of the concern we had leading into the conference was the fact that there weren’t really that many B.C. corporations involved with the conference,” Tuccaro said.

“You can see from this conference the Alberta companies are really supportive of aboriginal business development and actually partner with them to make sure they move forward together in partnership.”

“I think it would be a sad situation if B.C. corporations don’t get onboard with understanding the aboriginal community, coming to a conference like this and mixing and mingling.”

Tuccaro noted that EnCana, an Alberta company, purchased $385 million worth of leases in northeastern British Columbia a couple of years ago and is partnering with aboriginal communities there.

“These projects and development of resources are going to happen anyway, with or without the B.C. corporations,” Tuccaro added.

(Jan Mansfield can be reached at jan@businessedge.ca)