Imagine if the Canadian Pacific Railway said one day it was picking up stakes, moving its headquarters from Calgary to Denver, and changing its name to Gobbledegook.
That would be Gobbledegook which expressly removes any connotation of Canada making up part of its name.
Well, in a way, that’s precisely what happened. Because Encana, which draws its roots directly from the CPR for most of its history, did exactly that.
Natural gas was found at Langevin, Alta., west of Medicine Hat, in 1883 while railway workers were searching for water. Founded in 1958, Canadian Pacific Oil and Gas developed railway-owned mineral rights. It eventually became PanCanadian Petroleum in 1971 after merging with Central Del Rio Oils (which founded the Weyburn Unit 65 years ago).
PanCanadian was spun off in 2000 and after a merger with Alberta Energy Company in 2002, became Encana. And now Encana is Ovintiv.
Heads have been exploding ever since the announcement, and for good reason.
We’re still smarting from TransCanada, also based in Calgary, changing its name to TC Energy. At least they haven’t moved tateside, yet, but as was noted at a recent conference I attended, the majority of their operations are now in the U.S. Therefore, I don’t think we should be surprised if they jump ship, too.
After all, there would be a lot less opposition to Denver-based TC Energy building the Keystone XL pipeline than Calgary-based TransCanada doing the same.
While there are enormous amounts of blame to be heaped on the federal Trudeau government for this, there’s one aspect we’re not thinking a lot about: Donald Trump. (I’ll get back to Trudeau in a minute.)
Does anyone think Encana would be moving to Denver if he had not made that massive cut to American corporate taxation? Would this have happened if a Hillary Clinton White House was in charge? Hell no.
Trump is eating our lunch, and our corporations. The billions of dollars that have fled Canada, only to be invested in the U.S., totals more than the GDP for many small nations. Now not only is the investment is leaving, but the companies, too.
On my desk I have a Post-It with the name of a man who heads up a drilling company which made its move to the U.S. from Alberta. A friend gave it to me, suggesting I call up his friend, the owner of that drilling company. I had been meaning to call him up, but I see CBC beat me to the punch last week, much to my chagrin. I need not worry, however, as I’m sure there are more examples to find.
This comes after several years of our “yellow iron” being sold off at auction, to be loaded onto lowboy trailers, headed south. First the iron, then the companies.
Some would say “this is simply because of low oil prices.” Yeah, well, the low oil prices exist in the U.S., too. Why are they sucking us dry?
Wake up, Canada!
We have done this to ourselves. When Trump made a massive corporate tax cut, we just sort of ignored it. We can’t do that.
What happens when departures like Encana become a flood? Who will our pension plans and dividend funds invest into on Canadian soil? Who will CPP pour money into?
What happens if TransCanada and Enbridge are the next to go? Is Suncor going to follow? Will Canadian Natural Resources change its name to CNRL, or better yet, North American Natural Resources, before it, too, moves to Denver?
We know who isn’t going anywhere: Bombardier. But you knew that already, didn’t you?
Encana is the canary in the coal mine. If we don’t make some serious changes, we could see a hollowing out of corporate Canada the likes of which will make your head spin.
These changes are getting well worn out. I should just keep them on my computer clipboard to paste them in. Build pipelines to the West Coast and East Coast. Get rid of the tanker ban and Bill C-69.
Bring some hope back.
But I can see we also need to do something on corporate taxation, lest we have no more corporations to tax. I would like to know how much revenue Canada would lose, at the federal, provincial and municipal levels, if we lose the corporate headquarters of Encana, TC Energy, Enbridge, Suncor and CNRL? What if Bell goes next? Telus? The power companies? What will be left?
Whose stock tickers will remain on the TSX?
There’s forever been talk about Canada being a branch office in the corporate world. Yet we’ve seemed to come up with our own corporate champions in one way or another. When foreign companies sold out of the oilsands, Canadian companies largely stepped up. But this can’t, and won’t, go on forever.
We need to stop the bleeding. Prime Minister Trudeau needs to do something, now.
But I hear he’s surfing these days. Makes sense to me.
Brian Zinchuk is editor of Pipeline News. He can be reached at email@example.com.