Finance Minister Bill Morneau rises during Question Period in the House of Commons Tuesday May 26, 2020 in Ottawa. The Canadian Association of Petroleum Producers says if bridge loans for smaller oil and gas companies aren’t ready to flow soon some companies will have to turn to less-safe options to survive the COVID-19 slowdown.THE CANADIAN PRESS/Adrian Wyld

Finance Minister Bill Morneau rises during Question Period in the House of Commons Tuesday May 26, 2020 in Ottawa. The Canadian Association of Petroleum Producers says if bridge loans for smaller oil and gas companies aren’t ready to flow soon some companies will have to turn to less-safe options to survive the COVID-19 slowdown.THE CANADIAN PRESS/Adrian Wyld

Federal aid for oil sector still in development, three months later

Global demand for oil plummeted by more than 16 million barrels a day this spring

The Canadian Association of Petroleum Producers says if bridge loans for smaller oil and gas companies aren’t ready to flow soon some companies will have to turn to less-safe options to survive the COVID-19 slowdown.

It has been more than two months since the Business Development Bank of Canada and Export Development Canada began working on bridge loan programs to help hundreds of Canada’s oil patch companies but there is still no certainty as to when the money can flow.

“We understand the importance of liquidity,” said Natural Resources Minister Seamus O’Regan in an interview with The Canadian Press. “We want to get it out the door.”

Ben Brunnen, CAPP’s vice-president of fiscal and economic policy, said as of right now not even one company has been approved for a bridge loan. Officially they aren’t even able to apply yet, with the agencies telling companies expressing interest to wait for more details.

Brunnen said he knows the two agencies are working hard to get the terms of the loans finalized but that it is taking a very long time. Both agencies are looking at programs that backstop loans from a company’s normal bank or lending company, which Brunnen says is making the design a little more complex.

“And as a result companies are increasingly concerned that liquidity won’t come in time,” he said.

Nerves are so frayed, and information about the programs so scarce, that last week, Conservative natural-resources critic Shannon Stubbs briefly couldn’t find even the two-paragraph note on the BDC website about its program and took to Twitter to ask if the government had decided to cancel them.

It turned out the information had just been moved to a different spot, but Stubbs is inundated with calls and emails from nervous constituents in her Alberta riding, some of whom are barely hanging on while they wait for help.

“It’s mind-boggling that this is just allowed to drag on and on and on,” said Stubbs. “Every day that passes without financing being available is a huge risk and a huge threat to the future of these companies and to the whole sector.”

Global demand for oil plummeted by more than 16 million barrels a day this spring, as planes were grounded, cruise ships moored and freeways emptied of commuters who were suddenly forced to work at home, if they still had jobs at all.

At the same time, a production war between Saudi Arabia and Russia saw supplies increase, which sent market prices for oil into a tailspin. For brief periods in April, some oil futures were trading in the negative, meaning the people normally selling oil were paying others to take it away.

The toll on Canada’s fossil-fuel sector has been drastic. Companies reduced oil output by more than one-sixth, exploratory drilling plummeted 92 per cent, and capital spending, predicted in January to grow for the first time in years in 2020, is now being reduced by billions of dollars.

READ MORE: CERB to be extended by eight weeks amid gradual post-COVID reopening

Stubbs is particularly angry that Finance Minister Bill Morneau said on March 25 that help was coming in “hours, potentially days” but that 84 days later help is still hypothetical.

O’Regan cringes a little as he remembers Morneau’s words, and says he doesn’t think it will be long now until the programs are ready but “I’m not going to say days or weeks or anything.”

O’Regan also said it’s not accurate to say no money has gone to help the industry because a number of fossil-fuel companies did take advantage of the federal wage subsidy, which covers up to 75 per cent of workers’ pay (up to $847 a week) for companies that saw revenues fall more than 30 per cent because of COVID-19.

Brunnen agreed with O’Regan on that point, saying the subsidy has helped oil and gas companies keep people on their payrolls, estimating about $300 million has been made available to the industry through that program.

He also said banks have been helpful by deferring the usual May renewal period for reserve loans by at least one month, as companies wait for the federal aid programs.

Mia Rabson, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Coronaviruseconomyoil and gas

Just Posted

Mounties cover a burgundy truck with a tent at Buckerfields in West Kelowna on Monday, June 14. The RCMP is investigating after a woman’s body was found inside the truck. (Amandalina Letterio/Capital News)
West Kelowna RCMP investigating suspicious death after body found in truck

Police responded to a truck parked out front of a Main Street business where the body was found

David Larsen, left, and co-host Tony Peyton. (K96.3/Twitter)
Popular Kelowna radio host dies after battle with cancer

David Larsen was half of the longtime Kelowna morning-show duo David and Tony

A storm watch has been issued for the Okanagan, Kootenays and Columbia regions of B.C. (Calvin Dickson photo)
Another severe thunderstorm watch issued for the Okanagan

Conditions are favourable for thunderstorms that may produce strong wind gusts, hail and heavy rain

Craft Culture Events hosts its first of four summer markets at Prospera Place in Kelowna (Craft Culture Events/Contributed).
Kelowna’s Prospera Place summer market a success

Craft Culture Events hosts its first of four summer markets and vendors were ‘excited’ to be back

Kierra Smith (Contributed)
Kelowna swimmer headed to Toronto hoping to qualify for Olympics

If she qualifies, it will be Kierra Smith’s second time swimming at the Olympics

Singer-songwriter Jann Arden is pictured with a draft horse. (Canadian Horse Defence Coalition)
Jann Arden backs petition to stop live horse export

June 14 is the International Day to End Live Export of Animals

Penticton Overdose Prevention Society co-founders Desiree Franz, Shane Surowski and Stephanie Lines have created the city’s first unsanctioned public overdose prevention site using an old wine-tour bus. The site began operations in June 2021. (Desiree Franz/Facebook)
Volunteers launch Penticton’s first public supervised injection site

2021 is on pace to be the deadliest year for overdoses in Penticton on record

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Kelowna-Lake Country MLA Norm Letnick, assistant deputy speaker at the B.C. legislature, presides over committee discussions. The legislature is completing its delayed spring session this week, with most MLAs participating by video conference. (Hansard TV)
B.C.’s daily COVID-19 infections dip below 100 over weekend

Only 68 new cases recorded Monday, four additional deaths

B.C. ambulance station in Revelstoke is expected to get a new system called the Scheduled On-Call (SOC) this fall. (Liam Harrap - Revelstoke Review)
B.C. ambulance changes could put Revelstoke residents at risk, warn local paramedics

Paramedics said to expect a substantial increase in ambulance response time starting this fall

This goose family went for a leisurely stroll down Vernon’s Main Street Saturday, April 25. (Dave Deshane photo)
Controversial Vernon goose cull won’t fly this year

Necessary permit procedures held up at a federal level

The BC Ferries website went down for a short while Monday morning following a provincial announcement that recreational travel between health authorities can resume Tuesday. (Black Press Media file photo)
BC Ferries’ website crashes in wake of provincial reopening announcement

Website back up now, recreational travel between health regions to resume as of Tuesday

The Kamloops Indian Residential School is photographed using a drone in Kamloops, B.C., Monday, June, 14, 2021. The remains of 215 children were discovered buried near the former school earlier this month. THE CANADIAN PRESS/Jonathan Hayward
Communities grapple with what to do with former residential and day schools

Some tear them down as a tool to help healing, others repurpose them as tools for moving forward

Four golfers from Fairview Mountain Golf Club in Oliver will golf from sunrise to sunset to raise funds for ALS on June 29. (Submitted)
Golfing from sunrise to sunset in Oliver for ALS

Four golfers from Fairview Mountain Golf Club have taken up the challenge June 29

Most Read