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Oil sands future may rest on Conservatives’ get tough strategy


April 12, 2019  


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Jason Kenney has had it with the passive approach to fighting for Canada’s energy sector.

The United Conservative Party leader, likely to become premier of Alberta in elections next week, is promising lawsuits, boycotts and tax cuts to revive an oil industry under siege, according to Bloomberg News. Whether he can do much to solve the sector’s intractable problems, many of which are beyond his control, remains to be seen.

Kenney’s bid to reinvigorate Alberta’s oil industry — which has suffered from a chronic pipeline shortage that’s led to low crude prices and a dearth of international investment — will have national and global implications. The province churns out about four-fifths of Canada’s oil, an industry that accounts for 10 percent of the nation’s economy and 20 percent of its exports. The province’s 3.7 million barrels of daily production put it roughly on par with the United Arab Emirates.

“We mean business — we’re no longer going to roll over and apologize and accept policies that damage our economy,” Kenney, 50, a former federal cabinet minister who leads the newly formed UCP, told reporters in Calgary on Tuesday. Most polls give Kenney a comfortable lead over Premier Rachel Notley and her New Democratic Party for the April 16 vote.

Kenney’s biggest challenge will be to get a pipeline built to ensure the increased oil-sands production planned for the next 50 years can get to market. Though he’s lashed out at Notley for failing to make much progress on new lines, the reality is that Canada hasn’t had a major crude oil pipeline built in about a decade. Notley is hardly the only one to blame.

TransCanada’s Corp.’s Keystone XL has been stalled for a decade by environmental protests and lawsuits in the U.S., while its Energy East project to the Atlantic Coast was dropped after opposition in Quebec. Kinder Morgan Inc., meanwhile, abandoned its Trans Mountain pipeline expansion to the Pacific Coast due to protests and legal challenges in British Columbia. Justin Trudeau’s government stepped in to buy it last year, though little progress has been made.

Despite Kenney’s fiery claims to get a pipeline built for Alberta, in the end it requires federal approval through the National Energy Board, not to mention tacit approval from other provinces, cities and indigenous groups.

“The biggest thing is always pipelines, and for that you need the federal government and the provinces to cooperate,” Laura Lau, who helps manage C$1.6 billion ($1.2 billion) in assets at Brompton Corp. in Toronto, said in an interview. “That’s the No. 1 issue, and there’s only so much Alberta can do on its own.”

Kenney is counting on a new pipeline to revive investment in the sector, which plunged by almost half between 2014 and 2017, as Canadian firms curbed spending and foreign operators including Royal Dutch Shell Plc and Marathon Oil Corp. pulled out in favor of lower-cost, lower-emissions areas.

The UCP election platform released last week says a Kenney government’s first bill will scrap the $30-a-tonne carbon tax Notley implemented after her surprise victory in 2015. He estimates the repeal will amount to a $1.4 billion tax cut that will create jobs, save families money and put Alberta’s energy sector on a level playing field with other jurisdictions.

If Trudeau’s federal government imposes a carbon tax on Alberta, as it has in other provinces that haven’t put forth their own plan, Kenney plans to sue to stop the imposition.

(Bloomberg News)