Notley says more debt not the answer as Ottawa announces $1.6 billion of financing help for Alberta oil and gas

Amerjeet Sohi (left), natural resources, and Jim Carr, international trade diversification. Photo: CBC

“The announcement today, it’s a bit of cut and paste from previous support announcements for the steel industry, the aluminum industry, and the forestry industry.” – Rachel Notley

The Canadian government is providing Alberta energy companies with $1.5 billion of loans while the oil and gas sector grapples with insufficient pipeline capacity, a provincially mandated 325,000 b/d production cut, and volatile prices. But Rachel Notley says the announcement is not the type of support industry needs nor is it enough.

Export Development Canada is making available $1 billion in commercial financial support from Export Development Canada available to exporters of all sizes to assist with investing in innovative technologies, addressing working capital needs or exploring new markets.

Another $500 million of financing will be available from the Business Development Bank of Canada through a new Energy Diversification fund designed to “help higher risk but viable oil and gas small business enterprises weather the current market uncertainty.

Rachel Notley, Alberta premier.

Alberta Premier Rachel Notley was not impressed.

“The federal government needs to listen to folks from Calgary. Based on our consultation with the folks right here, we made an ask to the federal government,” she told reporters at a provincial funding announcement with Calgary Mayor Naheed Nenshi that will see the BMO Centre double in size.

“We didn’t ask for the opportunity to go further into debt as a means of addressing this problem. What we asked for was for them to remove the handcuffs” on market access.

Alberta asked the Trudeau government to help with the $2.6 billion price tag for the new locomotives and oil tanker cars capable of delivering 120,000 b/b of oil to US markets, where supplies of heavy crude have tightened as a result of supply disruptions in competitors like Venezuela and Mexico.

Federal ministers Amerjeet Sohi (natural resources) and Jim Carr (international trade diversification) did not address a possible contribution from Ottawa at their morning press conference in Edmonton.

“One of the things we’d like to see is support to help the Government of Alberta with our plan to buy rail. But we’re not  going to wait for them to make that decision,” she said. “They can come in after the fact because, quite honestly, we can’t afford to dither.”

Notley called the new money a “cut and paste” and said she can only assume there is more to come.

“I anticipate there is more to come because, quite frankly, that’s what this industry, this city, and this province deserves for the many, many years it has given so much to the rest of Canada,” she said.

Her tone was particularly scathing when describing the focus on export markets.

“I hate to break it to you, but the whole world wants our product. The issue is not finding a market for our product, the issue is getting our product to that market,” she said.

“I don’t know that we could have been much more clear about that.”

The Alberta government has spoken to a few small producers who think easier access to financing might relieve some of the pressure caused by the production curtailment and constrained pipeline access, according to the Premier, but more debt is not the answer to industry’s short-term problems.

Tim McMillan, Canadian Association of Petroleum Producers.

The oil and gas industry’s biggest trade association took a more diplomatic tone.

“CAPP appreciates the federal government’s recognition of the crisis facing Canada’s oil and natural gas sector and the thousands of people directly and indirectly employed by it,” president and CEO Tim McMillan of the Canadian Association of Petroleum Producers said in an emailed statement.

“Today’s announcement will make resources available for the 150,000 Canadians out of work as a result of a suffering industry.”

McMillan repeated industry’s concerns with Bill C-69, which overhauls Canadian energy regulation and how environmental assessments are conducted.

“Market access and competitiveness remain priorities. Canada needs pipelines and the right investment climate, and we look forward to progress on this,” he said.

A clearly frustrated Notley returned several times to the theme that Ottawa is not listening to Alberta.

“We’ve been very clear about what will help the industry…this [announcement] does not reflect the kind of responsiveness we need to see,” she said.

Sohi, who is an Edmonton MP, tried to put a good face on the announcement, saying that the “investments will help protect jobs and restore competitiveness during this difficult time. We know that getting our resources to non-U.S. markets is the long-term solution to ensuring every barrel of oil gets its full value. That remains our focus, and we will continue to work hard to deliver results.”

Federal money also includes a $50-million investment through Natural Resources Canada’s Clean Growth Program in oil and gas projects and $100 million through Innovation, Science and Economic Development Canada’s Strategic Innovation Fund in energy and economic diversification-related projects.

De-bottlenecking the freight rail system and a “suite” of Employment and Social Development Canada services to help energy workers were also mented by Sohi and Carr, but Notley dismissed them as woefully inadequate and noted that only more pipeline capacity can solve Alberta’s crude oil takeaway problems.

“What I’ve described in the past is a 15-year long, slow motion car crash, where we failed to build capacity that we knew we were going to need,” she said.

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