We don’t need to remind you that it’s been a rough few years for the province of Alberta. A commodities slump and steep oil price differentials created by lack of market access for its crude oil products have rendered the province and its residents a bit worse for wear. These issues have been compounded by onerous taxes and ever-increasing regulation imposed by various governments over the past decade. As a result, the province and its resource sectors have struggled to show the world that we are open for business. In November of last year, FirstEnergy President and CEO Jim Davidson told BNN that capital flight from Canada’s oil patch was “the worst I’ve ever seen.” A recent report from PetroLMI indicates that direct employment in the country’s oil and gas sectors (concentrated mainly in Alberta) has fallen by as much as 23 per cent since late 2014.
Albertans are resilient, but the last few years have certainly been an extreme test of the can-do spirit of this province. Enter the Honourable Jason Kenney, who, just two short years ago, took up the cause of uniting the province’s fractured right-leaning parties. It was a monumental task, one that many pundits thought was impossible. But (now Premier) Kenney was determined to implement his vision of an inclusive, business-savvy government that would repeal some of the more damaging policies left by its predecessors. In the spring of 2017 he ran for the leadership of the Progressive Conservative Party of Alberta, and won. That summer, he established a working group that successfully negotiated a merger with the Wildrose Party. That fall he won the leadership of the nascent United Conservative Party of Alberta and cruised to victory as the MLA for Calgary-Lougheed. And on April 16th of this year, he led the UCP to capture a remarkable 63 of the province’s 87 seats in the Alberta Legislature.
You could say Premier Kenney has been busy, but the work is just beginning for him and his fresh crop of MLAs. A key pillar of the UCP platform has been revitalizing Alberta’s struggling oil and gas industry through the implementation of a more efficient set of policies around project approvals, transportation, and a strong mission of advocacy for market access at the federal level.
The UCP policy platform also includes a number of measures specific to the drilling and service sectors, notably the reclassification of service rigs as off-road vehicles, and changes to some of the province’s permitting and certification procedures. The carbon tax repeal has also provided significant relief for our members.
What else does a UCP government have in store when it comes to our resource industries? The team at The Hitch was lucky enough to sit down with Premier Kenney to get his take on what the future holds, as well as some of the hurdles presently facing Canada’s oil and gas supply chain.
Premier Kenney, what are the primary challenges facing Western Canada’s oil and gas industry today, especially in terms of competitiveness with other jurisdictions?
I would say the biggest challenges are obviously lack of market access, and the inability to get pipelines built and the subsequent price differential. Another big challenge is what I call the red tape or regulatory differential, which has seen Alberta become one of the slowest moving and most regulatory complex jurisdictions in North America – the only province in Canada to get an F on the CFIB’s red tape report card.
It’s taking us up to 18 months sometimes to get a green light on a conventional oil well permit, when that can get done often, in Texas, in a few weeks. Taking us five years to get to a green light on major projects like Imperial’s Christina Lake. That’s why our government is so focused on reducing by at least one-third the red tape burden. Finally, I would say taxes are another significant problem with respect to competitiveness. Municipal property taxes are making it more and more difficult for producers to survive, particularly gas producers.This is one of the reasons our government’s proceeding with tax relief.
Further to that question, what will it take to get shovels in the ground on a pipeline project to tidewater for Alberta crude?
Obviously in the near term, it will take federal approval of TMX following the supplementary aboriginal consultations, and we are very optimistic about that. When I met Prime Minister Trudeau (recently), I left with no reason to believe the federal government will withhold approval.
Secondly, we need to ensure we move beyond talk into real action. The recent win at the BC Appeal Court, striking down their purported jurisdiction to prohibit bitumen shipments, was another important victory. I tend to look at this more strategically than just tactically. I think we’ve made a mistake by focusing single-mindedly on TMX.
It’s essential that we change the game and push back against the foreign funded special interests that have so effectively landlocked our energy. The same groups behind the litigation and political strategy in Minnesota that has tied up the Line Three replacement. The same groups behind the political and legal strategy that has created endless delays on Keystone. The same groups that influenced the federal government to veto Northern Gateway, and effectively through new regs kill energy east. The same groups that persuaded the federal government to come forward with bills C-69 and C-48, and are essentially the same groups that have been running the campaign of obstruction on TMX.
That’s why we were elected with our fight back strategy, which includes a public inquiry into the foreign sources of funds behind the anti-Alberta Energy campaign, supporting pro-energy litigation by First Nations, and setting up the energy war room at the government of Alberta to massively increase our advocacy efforts, and many other measures.
I think the game changer is strong aboriginal financial participation in projects like this, which is why we will be creating the Indigenous Opportunities Corporation, backstopped with a billion dollars of Alberta Crown assets to facilitate First Nations ownership and financial participation in infrastructure like pipelines.
So short term TMX approval, midterm changing the debate, pushing the other side on the defense, and long-term serious aboriginal participation.
The Trans Mountain expansion is obviously top-of-mind when it comes to new energy infrastructure projects in Canada, but, as we are sitting on the world’s third largest oil reserves, do you believe a greenfield pipeline project is in the country’s future?
Well, yes. Like most Albertans, I am an optimist and we’ve seen the public opinion numbers moving in the right direction from British Columbia to Quebec and nationally.
We’ve seen some positive recent court decisions. We’ve been winning some fights in the Senate Committees on C-69, C-48. We just elected an unapologetically pro pipeline government here in Alberta.
We have a growing coalition of like-minded provinces. In fact, over the next couple of weeks I’ll be visiting with premiers in Quebec and Atlantic Canada, as I’ve done with Ontario and Saskatchewan as well. We have five or six provinces that are strongly aligned with us on these issues.
I am optimistic, particularly on the natural gas side. It’s great that we’ve got the FID on Shell’s thirty six billion dollar capital expense for LNG Canada. I’m hopeful that Chevron will get to a positive FID, and a couple of the other minor LNG proposals.
There seems to be serious interest in the government of Quebec for the Energie Saguenay concept. So I’m hopeful.
Albertans elected the UCP with a clear mandate to repeal the provincial carbon levy, which will benefit the province’s entire oil and gas supply chain. Do you see any challenges ahead in terms of fallout from the repeal?
One challenge will obviously be the Federal Government’s effort to impose their carbon tax, so-called backstop carbon tax, on us. We’ll be challenging that through an immediate reference to the Alberta Appeal Court on the constitutionality of the Federal Carbon Tax.
We’ll also be supporting Saskatchewan’s appeal to the Supreme Court of Canada and potentially doing the same in Ontario, because win lose or draw that will be going to the Supreme Court as well.
We believe we actually have a stronger case than our friends in Saskatchewan and Ontario, because of our forthcoming tier levy on major industrial emissions, which is essentially an updated version of the former SGER system.
That will show that we are really occupying the regulatory space over so-called carbon pricing in a way that will restrict 60 percent of emissions coming from Alberta. We estimate we’ll reduce emissions by 40 to 45 mega tons.
That’s real concrete action, and it will constitute just one part of our climate strategy. We believe that we’ll have a stronger case in court to say that Alberta is already occupying that regulatory space.
What other plans does the UCP government have for eliminating the red tape that currently impedes Alberta’s energy industry?
This is a key part of our red tape reduction action plan. We’ve already introduced supporting legislation in the assembly, appointed an Associate Minister for red tape reduction, and we will be shortly setting up industry panels, including one for oil and gas, to help inform our red tape reduction efforts.
The goal is to reduce by one-third the number of regulatory requirements imposed on the Alberta Economy within this term of government. We really do call on industry to help give us their granular specific technical input that can feed into our de-reg efforts.
I’m pleased to say to CAODC members, to folks in the drilling business, that we enumerated some very specific red tape reduction efforts in the drilling industry focused on particular on service rigs.
Let me put it this way, we’re well advanced in reducing the red tape and cost burden on service rigs in particular, and the drilling industry in general.