Alberta oilsands producers 'incredibly profitable' during recent economic downturn

The five companies that dominate the oilsands industry have remained "incredibly profitable" despite low oil prices and delays in building new pipelines, according to a report from the Parkland Institute.

"Despite the 2014 oil price crash and the ongoing hand-wringing over pipelines and the price differential, the reality is that the big five oilsands producers have remained incredibly profitable corporations," said Ian Hussey, lead author of a report released Thursday by Parkland Institute and the Canadian Centre for Policy Alternatives.

Last year alone, the companies banked or paid out to shareholders a total of $13.5 billion, he said.

"These companies have been able to continue to transfer sizeable amounts of money to their shareholders or to their bank accounts, while at the same time in 2015 cutting almost 20,000 jobs from the Alberta economy," Hussey said.

The report analyzed the business economics of Suncor Energy, Canadian Natural Resources Limited, Cenovus Energy, Imperial Oil, and Husky Energy, who together produce 80 per cent of Canada's bitumen.

The economic numbers used in the study included a 10-year oil boom from 2004 to 2014, when prices were high, and the bust period from 2014 to 2016, he said.

"They've been able to continue to pay out high dividends to their shareholders when they're crying poor to the public and in the media," Hussey said. 

From 2009-17, the five companies paid $31.76 billion in dividends to shareholders, including $12.56 billion since the oil price crash in late 2014, the report said.

In 2017, the companies transferred to shareholders $4.16 billion in dividends and $2.04 billion in share buy backs, it said.

At the same time, the companies had residual savings of $7.3 billion, while paying out $4.72 billion in taxes and royalties to all levels of government.  

Industry response

Those in Canada's oil industry say the comparison of money paid to shareholders and money paid to governments in taxes and royalties shows the system is fair.

"Both companies and the governments are sharing in the benefits of the development, which is actually quite consistent with the nature of the royalty and resource development system that was built in Alberta," said Ben Brunnen with Canadian Association of Petroleum Producers. "So I would sort of make the case that we see here is an example of the system working quite well."

Brunnen said it's important for oil companies in Alberta to reward their shareholders, or investors will go elsewhere.

"We live in a very competitive market for capital, and that money has been leaving this country," he said.

The aggregate gross profit of the five companies in 2017 was $46.6 billion, which was close to the Alberta government's revenues of $47.3 billion, the report said.

The multinational corporations — all with significant assets in the U.S.— have been able to shift their operations in response to market conditions to ensure they remain profitable, Hussey said. 

The data used in the report was gleaned from "dozens of data sets," including company annual reports and Statistics Canada, he said.

Parkland Institute is a public policy research institute at the University of Alberta.