Notley energy policy a big success, where are the Wildrose alternatives?

Marg McQuaig-Boyd, Alberta energy minister.

Alberta oil and gas industry is warming to Notley government as energy, climate policies bear fruit

In Jan. of 2016 I wrote a column entitled, “Is Notley NDP the most pro-Big Oil government in Alberta history?” Well, the verdict is in. The PCs may have spent 44 years giving the oil and gas sector what it wanted, but the NDP is now giving industry what it needs.

Rachel Notley, Alberta premier.

Let’s start this column by dispensing with the notion that the Notley government is anti-oil, a favourite talking point of the Wildrose.

“[T]he whole attitude of this NDP government is the opposite of what Wildrose’s attitude is – we are proud of our energy sector, and think our resources are a unique blessing that we need to take maximum advantage of,” energy critic Drew Barnes wrote in an email.

“Many in the NDP have been protesting the industry for years; for them the energy sector is an embarrassing problem to be managed. This attitude affects everything for business, and Wildrose would improve things immediately simply by being proud advocates, eager to grow our energy sector because we do it right and its products improve lives around the world.”

This is the Alex Epstein “fossil fuels are moral” worldview, the one that argues rising global carbon dioxide levels are great because they stimulate plant growth.

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And while Barnes is correct about some NDP MLAs and staffers not being oil and gas and pipeline friendly in the past, what counts is the view of the Premier and her relevant ministers, like Marg McCuaig-Boyd in energy and Shannon Phillips in environment and climate.

Their views on energy are very dissimilar to the NDP in BC, for example, where leader John Horgan is staunchly opposed to the Trans Mountain Expansion pipeline, approved last Nov. by the Canadian government. The Notley approach to resource development feels more like the pragmatic centrist NDP government of Roy Romanow in Saskatchewan from 1991 to 2001.

Minister of Environment and Parks Shannon Phillips

I interviewed Phillips in Feb. for a Markham On Energy webinar and the former economic policy analyst for the Alberta Federation of Labour spent the half hour explaining the Alberta government’s two-pronged approach to energy policy: lower costs for industry and lower greenhouse gas emissions.

“The push is towards lower cost of extraction, whether it’s on the labour side or on the exploration and production side, etc.,” she said. “Carbon [emissions result from fuels that are an] input cost and so what [the government is] trying to do is ensure that we have regulations that will push towards those lower cost areas where carbon is priced.”   

In her interview, McCuaig-Boyd told me the Notley government stands behind the whole industry, not just the oil sands. 

“We were just down in Houston [for CERAWeek 2017] and we heard that a lot of the refineries down there like our heavy crude, and they like the fact that we’re a stable country,” she said. “We know the world is going to need more oil so why not make it from Alberta?”

Another message that came through loud and clear at the Texas energy conference is that the world is decarbonizing its energy systems.

Saudi Arabia’s Energy Minister Khalid al-Falih talks about how the energy transition has begun at CERAWeek 2017. Houston Chronicle photo by Melissa Phillip.

“Many countries are looking at carbon pricing of sort or different policies. Oil and gas are not going away in the near future, but we do need to think about what clean tech can help us get there,” she said. “We can figure it out how to take carbon out of the barrel and still develop our renewables at the same time.”

The message is slowly getting through to the Alberta industry, the minister claims. Recovering oil prices have helped reduce the tension that was clearly in the air after the NDP’s surprise win in May of 2015.

“I was just at EPAC [Explorers and Producers Association of Canada], bringing greetings from the government two weeks ago and I sat with a couple of the executives. They’re very complimentary about how approachable our government is,” McCuaig-Boyd said. “We’re slowly getting through a bad situation together.”

 Industry apparently thinks the  strategy is working.

Cenovus and CNRL bought a total of $32 billion in oil sands assets from Shell, Marathon, and ConocoPhillips last month – a huge coming out party for the domestic oil sands sector. The oil patch is slowly getting back to work, even if the Statscan jobs report showed 20,000 new jobs for Alberta in March, but still more losses in oil and gas extraction, which may not be surprising as companies shed workers heading into the annual spring break up.

In late March, the Canadian Energy Research Institute released a study showing that new SAGD production technologies could not only reduce the carbon intensity of in situ oil sands crude to the same levels as conventional crude, but reduce production costs by 34 to 40 per cent.

And the Alberta government’s Petrochemical Diversification Program provided $500 million in royalty credits to two petrochemical plants. The Alberta Energy Diversification Advisory Committee reports in a few weeks and a fair bet would be that it recommends more support for petrochemical manufacturing, as well as partial upgrading, which a University of Calgary study showed can eliminate the need for diluting oil sands bitumen and save producers $10 to $15 a barrel in costs. 

Notley’s energy policies are working.

Drew Barnes, Wildrose Party energy critic.

More is coming, according to Phillips and McCuaig-Boyd, and perhaps more could be done, but it’s thus far it’s a damn sight better than simply being “proud advocates” for industry, which appears to be the Wildrose strategy.

Frankly, the Alberta oil and gas industry has all the advocates – and boosters – it needs. What Alberta could use is an opposition party with some energy policy ideas.

Last Dec. the Wildrose issued a press release setting out a “five-step plan” for the energy industry. The entire plan consisted of reversing NDP policies. Not a word about what Brian Jean and company would do instead.

I interviewed economist Trevor Tombe at the time about the Wildrose plan and he also noted that it appears to be all about politics, not policy: “The plan lacks a lot of novelty in that it merely says what they’ve said before – call a referendum for the carbon tax, for example, end the litigation related to the PPAs [power purchase agreements], stop renewable energies, that sort of thing…those are more of a political decision than something I can comment on for objective [policy] grounds.”

It’s time for the conservative parties – may as well include the PC party and Jason Kenney – to put forward market-based policies as an alternative to the NDP approach.

If their alternative is a hands-off, laissez faire strategy, then they should say so. If they have another approach in mind – like Texas, say – then they should explain how it will be better than the NDP.

Simply being the anti-NDP parties isn’t enough. Especially since the NDP is actually pretty successful, despite Jean and Kenney claiming otherwise.

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  1. The G&A industry will forget she even existed once she is voted out office in the next election which can not come soon enough.

    • The oil industry won’t forgive brian jean of jason kenney if they get rid of the carbon tax if they get elected!! Can’t wait for a second majority term in 2019!! Bye bye wrp and pc…?❤

  2. I do think Albertans have suffered enough from the 44-year roller coaster, being orchestrated behind the scenes without Canadian controls, please restrain using voters for one’s political purposes but help preparing for a long sustainable period.

    Human beings have wasted what God-given, the sun, the wind, the water… for so long while kept exploiting what God-reserved deep down in the ground.

  3. Hmmm… seems to me -The N D P have only tried to pick winner and looser business. You have increased corporate taxes, imposed a CARBON tax and 3 major international oil companies have sold billions of dollars of oil properties and have taken their investable dollars out of Alberta, there by hurting ALL Albertans with no potential new mines and oil wells. Your carbon tax imposed on Alberta citizens makes us more uncompetitive . Your only growth industry is NDP beuricrats — so sad .. we citizens deserve better. Stop driving up expenses and the DEBT , balance the budget and cut the needless business regulations . Your government people don’t pay taxes — you are PAID taxes .. right ?? You and Mr.Joe should live within a balanced budget ..

    • You say that the purchase of those assets, by Canadian companies, does not represent an investment and does not represent potential for new mines and development?

      Those Canadian companies bought the assets precisely because they are far, far more efficient operators than the foreign firms. The carbon tax does nothing to the investment potential of Alberta. Nothing.

  4. So the mounting and no end in sight deficits are a good thing? How about the unemployment rates that are the highest we’ve seen in years? Their policies and political tactics are doing nothing but hurting average Albertans. Going after “socially acceptable” policies, such as the carbon tax, are why we lost Shell, Connoco, and Marathon. The loss of international oil companies is huge loss for our economy, even if the media shows it as a good thing that CNRL and Cenovus picked up the assets. The loss of international cash flow and investment is a huge blemish on the NDP economic policies, even if people don’t see it that way.

    • Mr. Prentice was predicting a string of deficits, too, in his tabled but never debated March, 2015 budget. When AB produces employment in oil booms, you can expect the opposite to occur in oil-price slumps. The roll of government is to counter the business cycle, not amplify it. This was something the PCs never learned, despite previous downturn experience. The balance in the HTFund was $14b in 1985 and $14b in 2009 – no savings for the future. The loss of multinationals had nothing to do with the carbon tax – as they all clearly noted, had you been paying attention. They all had reasons for leaving, the main one being that there are easier, faster, and cheaper ways to earn money in the oil business than the oil sands. They can be in and out of Permian-type shale-plays and have earned some profit in the process. There was no loss to the Alberta economy because there has been no disinvestment, merely a change of players. The oil sands are now a regional play instead of an international one, but there’s nothing wrong with that.

    • Cenovus and CNRL financed much of their purchase through US finance, same as Shell, Connoco and Marathon.

      How is sending profits out of Canada a win?
      How is providing incentives to foreign companies a win for Alberta?

      What net investment has been lost due to policies versus net investment lost due to high-cost production and low WCS?

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  1. Fact checking Drew Barnes: Ain't no sunshine in that man's talking points - The American Energy News : The American Energy News
  2. Oil sands players back Notley's energy/climate policies - sticky politics for new conservative party? - The American Energy News : The American Energy News

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