Stories

The Undoing of Alberta

George Koch
September 15, 2017
In the hothouse atmosphere of any election campaign, there is so much noise and mud-slinging and flat-out lying that voters can hardly remember what happened yesterday, let alone a few years earlier. So for Albertans, and anyone else tuned into this critical provincial election, it’s worth revisiting George Koch’s excellent 2017 story about the early days of the accidental NDP government and the impacts its initial moves on taxes and energy regulation had on the province. Before Premier Rachel Notley became a faux pipeline and oilsands champion, she advanced a very different agenda indeed, and the provincial economy has been reaping the bitter fruits ever since.
Stories

The Undoing of Alberta

George Koch
September 15, 2017
In the hothouse atmosphere of any election campaign, there is so much noise and mud-slinging and flat-out lying that voters can hardly remember what happened yesterday, let alone a few years earlier. So for Albertans, and anyone else tuned into this critical provincial election, it’s worth revisiting George Koch’s excellent 2017 story about the early days of the accidental NDP government and the impacts its initial moves on taxes and energy regulation had on the province. Before Premier Rachel Notley became a faux pipeline and oilsands champion, she advanced a very different agenda indeed, and the provincial economy has been reaping the bitter fruits ever since.
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For a firsthand view of Alberta’s battered economy, consider attending a heavy equipment auction at the huge Ritchie Bros. yard in the Nisku oilfield industrial park just south of Edmonton. At one such event earlier this year, millions of dollars worth of the province’s resource-producing equipment were on the block. The on-line buyers were from booming energy-producing states like Texas and countries as far away as Vietnam and Cambodia. They snapped up a cementing company’s entire truck fleet, heavy earth-moving equipment, cranes, smaller machines like bobcats and zoom-booms, and much more. The literal and figurative shovels, gears and hydraulic pumps of Alberta’s economy were being sold off and sent to places eager to develop their natural resources and grow their economies – places where governments welcome investment and development.

One of the biggest prizes on offer was a towering triple drilling rig, a hulking piece of iron designed to drill the deepest, most technical and ultimately most productive wells into oil and natural gas reservoirs like the prolific Montney and Duvernay shale formations in northwestern Alberta. The rig had been manufactured locally at a cost of several million dollars. When the auctioneer attempted to open bidding at $500,000, the bidders were mute. The price was lowered, and lowered again. Finally, at $200,000, a lone bid came in.

“It felt like a mortuary in there,” laments Stefan Betkowski, an Edmonton-based field manager for a global supplier of mobile electric power. “People’s hopes and dreams were being flogged for pennies on the dollar while the sharks were circling in for the best deal.” The corpse metaphor might be applied to Nisku itself. Many of its once-bustling equipment yards – collectively holding many thousands of pieces – have been transformed into boneyards, where idled fleets of oil patch technology are cannibalized for spare parts or await liquidation. And the outside capital that was the lifeblood of those yards has dried to a trickle, as most of it now flows to other jurisdictions where it’s wanted.

As Alberta’s economic nightmare enters its fourth year, the anguish and anger of its victims are palpable. Not least when some politician, public relations flack or journalist chirps that things are getting better. Sure, there are still a few construction cranes perched atop the Calgary and Edmonton skylines, many of them assembling publicly-financed projects or commercial buildings planned long ago that couldn’t be cancelled when the bust hit. Sure, there are a couple more downtown high-rise mega-projects planned for Edmonton – possibly safe bets in a public-sector-dominated city whose growth is fuelled by the provincial NDP government’s $10+ billion-per-year deficit spending. And sure, the Conference Board of Canada is predicting a little over 3 percent economic growth for Alberta this year – as if this were anything other than confirmation of economic weakness. Any economy, especially one fuelled by natural resources, should come roaring back after a downturn. The steeper the fall, the more powerful the rebound. In past recoveries, Alberta casually racked up 6, 8, even 10 percent annual economic growth. These days, the deadwood outnumbers the blossoms in Wild Rose Country, and many are wondering if the province will ever bloom again.

Suicide by design

Alberta has suffered and recovered from cyclical downturns before – going back to its origins as a grain-producing vassal of Central Canada. An optimist would point out that today oil and gas constitute a significantly smaller share of provincial GDP than they once did. And there is a growing view – including within the provincial NDP and federal Liberal governments – that fossil fuel production is a sunset industry. Not merely bad for the environment, but unneeded for the economy. Alberta’s energy and economic policies should therefore be aimed at “getting off oil” and transitioning to a whole new industrial paradigm.

It’s nice to be ahead of a curve, unless everyone else is headed in a straight line. In 1995, 87 percent of the world’s total energy was provided by fossil fuels. By 2015, that ratio had slipped all the way to 86 percent. Today, worldwide consumption of oil, natural gas and coal is climbing and is projected to continue doing so. Competitive producers of these commodities should find hungry markets for decades.

If Alberta chooses not to be one of them, her prospects are dim. Although manufacturing, retail, agriculture, health care, universities, real estate, forestry and technology are all meaningful players in the province’s economy, the collective prosperity of Alberta’s 4.3 million people still depends greatly on the oil and gas sector. When the industry is healthy, the province’s economy grows, other sectors are spurred (downtown Calgary’s commercial real estate, for example, is basically an arm of the oilpatch, as is most of the province’s fabrication sector), jobs are created, newcomers stream into the province for employment, personal incomes rise, investors profit (including pension funds sending out cheques to retired teachers, nurses, and bureaucrats across Canada), housing values increase, consumers spend, and government deficits shrink or disappear.

But when hundreds of drilling rigs are idled, tens of thousands of field workers are laid off, capital flees the province, oil producers and service companies downsize, merge or go out of business, offices are emptied out, and so on, the opposite happens throughout the economy. That is precisely what happened after the most recent collapse in world crude oil prices, now three years back, as it brought the longest boom in Alberta’s history to a dead halt and threw the province into a two-year recession during which GDP shrank by over seven percent.

When Alberta falters, so does Canada. A recent study by the Fraser Institute calculated that in the period 2007-2015 the net tax contribution of Alberta individuals and businesses to federal coffers was $221 billion. By some measures, without the Alberta economic engine, Canada would have slipped into recession during that period. As for the future, a study by the Canadian Energy Research Institute estimated that Alberta’s energy sector could contribute 4.7 million person-years of employment and $2.7 trillion to Canada’s GDP in the period 2017-2027, of which more than $150 billion will accrue to Ontario. But that assumes policymakers in Edmonton and Ottawa don’t kill the golden goose. And judging by the coast-to-coast political indifference to Alberta’s woes, that is not a safe bet.

The last, worst bust

Commodity price booms and busts have been a fixture of Alberta’s economy throughout its 112-year history. Some produced more prosperity or pain than others, but they always ended eventually. Anyone who lived in Alberta for at least a couple of decades learned to endure these cyclical phases as natural and inevitable. But this time, there’s a deep worry that Alberta’s long downturn isn’t ending anytime soon, that this one really is different. Every time things seem to hit bottom, and every time a few modestly good things occur, there’s more bad news.

An 80-storey condo tower is announced for Edmonton, the largest building in Canada west of Toronto. But around the same time, a refinery on the city’s eastern edge lays off its 500 workers and advises that they can reapply for fewer, poorer-paying jobs in the refinery’s downsized workforce. Another struggling Canadian oil producer, Husky Energy, scraps plans for a refinery expansion at Lloydminster in favour of Wisconsin. Calgary’s downtown office vacancy rate climbs to 25 percent and is projected to rise at least another five points. From a historical fleet of 800+ drilling rigs that typically punched upwards of 12,000-15,000 wells annually, Alberta is down to 100-200 active rigs that may collectively drill 3,500 new wells this year. A recent Statscan report suggested personal and business bankruptcies are climbing slightly less steeply in 2017 than they did in 2016 – and this was touted as good news. A clutch of clichés have sprung up to describe the situation: “lower for longer”, “bathtub-shaped recovery”, “new normal”, along with one coined by NDP Finance minister Joe Ceci in late 2016: “green shoots” – which seems to have withered and died this year.

Nearly two years ago, when oil prices reached their most recent nadir, Calgary’s business community began debating whether this downturn might be as bad as the deep recession of the early 1980s caused by the one-two punch of former prime minister Pierre Trudeau’s National Energy Program and the collapse of world oil prices. Today, few even argue the point. Crude oil prices are still mediocre and natural gas prices remain at rock bottom. And the progressive governments that Albertans and Canadians elected in 2015 are only compounding the damage.

Climate conscious leaders Prime Minister Justin Trudeau and Alberta Premier Rachel Notley in Edmonton Alta, on February 2016. (Image: Jason Franson / CP)

“In the past, Alberta overcame commodity-based hurdles even at low price levels because we had an entrepreneurial spirit and we were governed by a free market society,” says the CEO of one of Alberta’s largest natural gas producers. “Today, I’m starting to lose faith that’s still the case. It doesn’t feel like in the past. Our society seems to be of a more socialist mindset. The entrepreneurs seem to be a dying breed. It’s making it much harder to compete in world markets.”

Pipeline paralysis

Canada’s inability or unwillingness to execute new export pipeline projects speaks volumes about its future as a carbon energy producer. The stalled or cancelled Northern Gateway, Energy East, and Trans Mountain projects were all designed to accommodate decades of future production growth and secure access to global markets beyond the U.S. Confidence in long-term market access is key to convincing international investors to commit further billions to Alberta’s energy sector. Many such investors seek to profit mainly through long-term growth rather than from current cash flows. Without new pipeline capacity, and new seaport infrastructure, what’s the point of funding new energy discoveries? Pipeline constraints keep Alberta producers dependent on U.S. markets and depress prices (as well as, incidentally, the provincial government’s energy royalties, which are price-sensitive), giving investors yet another reason to look elsewhere for optimal returns.

Not a single major new pipeline or port facility for the export of liquefied natural gas (LNG) has been built in the 11 years since former prime minister Stephen Harper first hopefully heralded the emergence of Canada as an “energy superpower”. Instead, almost every proposed project has been delayed or defeated by some combination of protestors, politicians, regulators and the courts. Each one represents tens of billions of dollars in foregone investment, procurement and construction, wages, tax revenues, spin-off benefits, and so on. Only two projects have moved forward. The Keystone XL pipeline to the U.S. Gulf Coast, restarted by U.S. President Donald Trump on his fourth day on the job, still has to overcome serious legal and political challenges. So does Kinder Morgan’s Trans-Mountain pipeline expansion to Canada’s west coast which, despite a green light from Ottawa, now faces a hostile NDP-Green government in British Columbia plus an army of environmental and aboriginal activists promising epic levels of civil disobedience.

This summer’s cancellation of the $36 billion Pacific NorthWest LNG project near Prince Rupert, B.C. cast a long shadow over Canada’s destiny as an energy producer. The project’s Malaysian owner, Petronas, politely blamed market conditions for the decision, which came after years of escalating demands and costs from federal regulators and the election of an openly hostile new B.C. government. Dennis McConaghy, a former senior executive at gas pipeline giant TransCanada Corp., mourned the decision as “a tragedy for Canada…a real condemnation of this country and the utterly unproductive entities in it that simply make any development virtually impossible.”

Another major blow to the industry’s future came with this summer’s transformation of the National Energy Board from an independent and dispassionate supply regulator into a politicized carbon emissions policing agency. Responding to pressure from the Liberal government, including its threat to move the Board from Calgary to Ottawa, the NEB announced this summer that henceforth it will include assessments of upstream and downstream emissions in its reviews of pipeline projects. That prompted TransCanada Pipelines, sponsor of the Energy East mega-project, to suspend its application for an NEB licence, leading to speculation that the company may abandon the plan altogether.

Like an oil-laden ocean supertanker, the production momentum created by the tens of billions of investment by national and international companies that occurred during the Harper decade can’t be instantly reversed. So in spite of everything, Canada’s oil production – chiefly from the oilsands – is continuing to increase, and will do so for at least another few years, with or without new investment and infrastructure. In the absence of new pipelines, however, much of that crude will be moving by rail. This is more expensive and dangerous, but it hasn’t been targeted for “delegitimization” by the anti-carbon forces, yet. That’s why at least two major oil pipeline companies are now quietly investing in railway tanker cars and terminals.

“Canada is the world’s only energy-exporting country that fails to think strategically about its global position,” asserts Richard Dahl, the founder and CEO of Questfire Energy Corp., a junior oil and gas producer that, like many of its peers, became starved for capital in the downturn and was recently forced to merge with another producer. “Canada doesn’t promote its energy exports to the best markets, we hold them back, and so we are receiving much less for our commodities than we should. Getting the best price we can benefits everyone, not least the government in the form of royalties.” More energy sector jobs, he notes, would also mean more income tax revenue and lower social spending costs.

The anti-petrostate

Alberta used to be one jurisdiction in Canada that was reliably friendly to investment and development of its resources. That ended in 2015 with the election of the province’s first NDP government. One of Premier Rachel Notley’s first moves was to hire as the co-chair of an oilsands advisory group a career eco-activist who once referred to the oilsands as “Mordor”. Soon the province introduced a punishing carbon tax, effectively capped future oilsands production by placing a hard cap on the industry’s total CO2 emissions, launched yet another review of the oil and gas royalty structure, and accelerated the closure of Alberta’s coal-fired electricity plants, for half a century the province’s primary source of some of the lowest-priced power on earth.

The across-the-board provincial tax and regulatory crackdown on fossil fuels coincided with the Trudeau Liberal government’s introduction of a federal carbon tax, ban on oil tanker traffic off B.C.’s north coast, and scuttling of the Northern Gateway pipeline. The message to producers was unmistakable, and several of the international super-majors that built Alberta’s oilsands industry sold their interests as quickly as they could. The repercussions were also felt outside the oilsands sector; it has now become exceedingly difficult for any energy company to obtain capital on reasonable terms. That is very bad for the “capital-carnivorous” oil business, which requires a constant inflow of money to find new oil and gas reserves to replace its ever-depleting asset base.

International investors have always had numerous options besides Alberta, and now they’re exercising them. Even at today’s weak oil and gas prices, tens of billions in capital are flowing into Texas’s Permian Basin. It is one of the state’s original oil-producing regions, long in decline but being revitalized by the same modern technology – principally, drilling wells horizontally through the reservoir rock and then using hydraulic pressure to fracture the rock in multiple stages – that has opened up similar “unconventional” reservoirs in Alberta. In scale, quality and productivity, the best of these – the Montney, Duvernay and Deep Basin plays – are considered world-class.

Merely having the resource isn’t enough, however. As the impoverished masses of oil-rich Venezuela know all too well, you also have to have a stable, predictable, competitive tax and regulatory regime. And right now, Alberta and Canada do not. “When an international investor sees that in Canada a single level of government aided by activist groups can stop a project that has been officially approved after years of regulatory process, they’re going to conclude that Canada is not a stable and reliable place to invest, that its risks are effectively on the same level as those of a Third World country,” says Questfire’s Dahl. “We’re starting to operate like a banana republic, but one that doesn’t even want to sell its bananas.”

“The Americans think we’re shooting ourselves in both feet,” concurs Scott Dawson, formerly CEO of a junior gas producer, now a corporate director. “The markets do follow the news. What we’re doing up here has gotten through, and they have no interest in investing.” Dawson knows of several companies that have managed to scrape together enough money for some exploratory drilling that has produced excellent new oil or natural gas discoveries. In the past, outside investors would be falling over one another to fund their further development. Today, nada.

“Access to capital has gotten more choked off even in the past couple of months,” says the vice president of a small, privately held Calgary-based oil producer. “Even the top-10 companies, the market darlings, are under water in their share prices versus a year ago. Capital is exiting the country for better returns elsewhere.” One knowledgeable industry insider says that international hedge funds have actually “shorted” the Canadian energy sector: “Global investment capital is not only uninterested in Canada, it is actively betting that we’ll continue to decline and destroy wealth.”

Both Alberta’s NDP government and the Liberals in Ottawa insist Canada is still open to energy investment and development. They publicly advocate the Trans Mountain pipeline and send emissaries to the world’s financial capitals offering assurances that Canada still wants to be a player in the carbon energy market. On the ground at home, meanwhile, the industry is struggling under an ever-tightening net of regulations, restrictions, mandates, process hurdles and taxation imposed at the municipal, provincial and federal levels.

Weapons of deindustrialization

“The provincial government claims their policies are not driving capital away,” says one Calgary entrepreneur. “But it’s a lie.” He notes that in the pre-Internet era, when documents moved by fax or courier, a provincial licence to drill a new oil or gas well was typically issued within seven to 14 days. Today, despite all parties wielding modern information technology, one month is typical and government regulators can take six months to issue certain well licences. In Texas, the same type of permit can be obtained within 24 hours of application.

Another example of regulatory sclerosis: for years Alberta has been tightening its restrictions on “flaring” or burning off unneeded natural gas that often comes up as an uneconomic by-product in an oil well. Flaring remains a common practice elsewhere, but even the world’s tightest flaring rules weren’t enough for Alberta’s NDP government, which now demands that literally any volume of gas be “tied-in”, or brought on production. Because the cost of doing so is prohibitive, the new policy has resulted in uncounted numbers of wells being shut-in and not producing oil (or generating government royalties). Next up are new federal rules requiring the capture of even minute leakages of methane, which will further raise costs at virtually any existing well, pipeline site or processing facility. Originally planned jointly with the U.S. when President Barack Obama was in power, the Trump Administration has dumped the rules, leaving Canada with yet another competitive disadvantage.

U.S. President Donald Trump eliminates Obama-era climate change regulations by signing an executive order on “Energy Independence”. (Image: Carlos Barria / Reuters)

On the taxation front, in addition to the new carbon tax and higher corporate and personal income taxes, oil and gas companies face dramatically higher property taxes levied on the tens of thousands of oilfield sites scattered around Alberta after the province granted municipalities the power to increase property value assessments. Oil producers have been hit with massive new tax bills that, unlike provincial royalties, are not tied to commodity prices.

Among the most onerous of the recently imposed provincial measures is the new Liability Management Rating. The LMR is part of a complex policy created to deal with the tens of thousands of old and no-longer-producing but not-yet-abandoned oil and gas wells across the province. It requires each producer to safely abandon a certain proportion of its wells each year by cementing in the wellbore and restoring the site. This is a significant but, under normal conditions, bearable cost. But to prevent a potentially failing company from escaping these obligations, the province now also imposes stringent financial requirements based on the ratio of a company’s current assets to the projected future costs of abandoning its wells. Those requirements have artificially caused hundreds of companies to appear to be at or near default, essentially paralyzing them.

The LMR has thrown many potential investors, notably banks, into a near-panic. As a result, the capital well has dried up for hundreds of junior and mid-sized companies. “The LMR has completely hung up the industry,” says the vice president of a small, privately held Calgary-based energy producer, “When commodity prices fall, it creates a double hit, requiring cash of companies when they have none. That just crushes them. Nobody else worldwide does it this way.”

Licenced to kill

In addition to raising taxes and imposing increasingly suffocating regulations, both levels of government, aided by the courts, are granting aboriginal and environmental groups more influence over regulatory approvals and more capacity to hold projects to ransom. Their demand for endless consultations and escalating economic benefits in a time of low commodity prices is multiplying the squeeze on the industry. Regulatory expenses, economic benefit packages for favoured groups, and municipal property taxes are all fixed costs that come off the top regardless of a company’s actual cash flows and ability to pay. “We’re trying to milk more for everyone at a time when there’s less to go around,” notes one industry CEO. “We’re fighting over a shrinking pie. We can only fix that by growing the size of the pie. But for that, we would need a competitive business environment.”

Premier Notley and her apologists insist the multi-faceted throttling of the energy sector is necessary to obtain a “social licence” to develop Alberta’s oil and gas resources. But in spite of everything that’s been done to get the licence, the current state and future prospects of the industry are bleaker than ever. “Rachel Notley’s dream that if Alberta became more ‘environmentally and socially responsible,’ everyone would embrace us and allow our projects to proceed, has failed,” says Dahl bluntly. “Our opponents don’t want us to do a better job, they want us dead. No matter what we do, all they think of is the next way to stop or slow us down.”

In the U.S., our main competitor for investment capital and the continental energy price-setter, the industry has shifted fossil fuel economics through efficiency gains that have driven down break-even costs sufficiently to make formerly uneconomic hydrocarbon reservoirs profitable at current prices. Moreover, the country’s first two LNG export facilities have come online and additional processing “trains” are under construction. The Trump administration is reversing Obama-era anti-energy policies, reopening federal lands to drilling, attempting to shrink the size of vast federal wilderness areas where drilling is off-limits, promoting pipeline construction, and reopening coal mines.

Closing in on its decades-old dream of “energy independence”, the U.S. has become the world’s number-one producer of crude oil and associated liquids like propane, is a major exporter of refined products, and will soon be a net exporter of natural gas. The new U.S. policy goal, in fact, is “energy dominance”. Oil and gas are geopolitical weapons, and with high U.S. production keeping global prices low, it helps domestic industries and energy-importing allies while hurting petro-state adversaries like Iran and Russia. The U.S. considers Canada virtually a domestic supplier and would love more Canadian oil and natural gas to consume, process, re-export or upgrade into manufactured products like fertilizer or plastics. U.S. energy policy, then, should hold vast opportunity for Canada. Except Canada seems bent on doing everything in its power to avoid that opportunity.

Ground zero in Canada’s apparent plan for energy self-destruction is Alberta. Can anything be done to halt and, ideally, reverse the plan? Or is it possible that, this time, the Alberta economy just won’t come back, that it isn’t just temporarily capital-starved but has grown fatally burdened by regulations and high-cost industries, terminally sapped by waning entrepreneurial spirit, and neurotically obsessed with politically correct causes?

Sayonara Alberta

Some think so and are voting with their feet. Among the 100,000 oilfield workers who lost their jobs during the last three years, representing one-third of the workforce, many are now applying their vast experience and skills in more business-friendly countries. Others have quit looking for work, sold their possessions, and retired to a life of travel and leisure.

Betkowski has seen more than a few oilpatch friends and colleagues decamp for more hospitable jurisdictions, including the natural gas fields in Turkey. “The government there actually likes businesspeople, wants them to succeed, and goes out of its way to be helpful,” he says. “These folks are happier in Turkey than at home in Alberta, and they say they’ll never do business here again.” In other words, a country with a coup-prone Islamist regime that’s facing a constant threat of domestic terrorism, a major war across its southern border, and an armed rebellion in its eastern regions, is today considered a friendlier and more reliable business climate than Alberta.

“What I’m really afraid of is that we’re wiping out a generation of venture capitalists and entrepreneurs,” says Questfire’s Dahl. “Alberta for decades was by far the most business-oriented, entrepreneurial place in Canada. The NDP is making as many people as it can dependent on government. We seem to be creating a generation of young people who feel that all good things flow from government. Added to that are the stresses and risks of a business career, and seeing a generation of older businesspeople essentially failing and forced into early retirement. If we lose our entrepreneurial culture in Alberta, we’re finished.”

Others are more hopeful – though cautiously so. “Yes, it’s becoming harder to do business in Alberta, and the industry is suffering from lack of capital,” says Scott Birchall, CEO of Longbow Capital Inc., a Calgary-based company that manages private investment funds focused on western Canada’s oil and gas sector. “But we are still a very entrepreneurially-minded culture and we have a lot of smart minds who have worked very hard to navigate their companies through the downturn.” Birchall thinks the industry has wrestled its costs down from the boom years far enough to be competitive at oil prices of US$50-$60 per barrel – somewhat higher than today’s mid- to high-$40s, but not sky-high. Still, to lure back serious amounts of international capital, Birchall believes, would require a major energy bull market created by some kind of price shock. Absent that Godsend, he cautions, Albertans will have to be patient: “This isn’t just a short-term blip. Nobody should think we’ll soon be back to the heyday of sky-high commodity prices and balanced government budgets despite continually record spending.”

Waiting and hoping for prosperity to return on the wings of a commodity bull market or the green fantasies of the solar and wind evangelists would make Albertans spectators to their own fates. At best, such passivity all but guarantees several more years of malaise. Crude oil and especially natural gas prices are still low and pricing on futures markets suggests they will remain there for some time. In any case, the farther Alberta slides in its competitiveness, the weaker the impact when commodity prices finally rebound.

Alberta doesn’t just need to pull even with jurisdictions like Turkey and Venezuela, much less Texas or Saskatchewan. The high quality of its natural resource base is offset by several unalterable physical disadvantages. The cold climate, remote landscape, and long distances from consuming markets make it intrinsically harder and more expensive in Alberta than in many competing jurisdictions to produce and market oil and gas. Texas’s producing fields, for example, virtually adjoin the Gulf Coast’s massive demand centre of refining, upgrading, manufacturing, power generation, export and end-use consumption. For Alberta’s energy sector to achieve overall competitiveness, the province’s fiscal and regulatory regimes need to be not merely comparable to those of other jurisdictions, but more attractive.

The challenge is formidable. This is, after all, the first time in Alberta’s history that the province’s key industry doesn’t have a single strong advocate at any political level. Even the big-city mayors are left-leaning, focused on trendy causes, and allergic to oil. At best, the current crop of Alberta political leadership pays lip service to the petroleum sector. Ditto for Liberal Ottawa. Governments in B.C., Quebec and Ontario will remain implacably hostile for the foreseeable future. So Alberta must do what it can to save itself – presumably by electing a new, non-NDP, provincial government. This will not likely happen before 2019 or even 2020 if the NDP decides to hang on to the bitter end. Thus Albertans appear fated to endure at least two more years of sagging incomes, high unemployment, an eroding standard of living, and an ever-shrinking share of the international carbon energy industry.

A roadmap to recovery

Current polling suggests, however, that a large majority of Albertans are unhappy with these prospects. Among decided voters, according to a mid-summer poll of 2,100 Albertans by Mainstreet Research, nearly 60 percent support the United Conservative Party, a two-month old entity that won’t elect a permanent leader until October 28. The NDP is hovering below 30 percent, as is its leader, and both are saddled with Donald Trump-sized negative approval ratings. The UCP won’t even hold its founding policy convention until next year, but its aspiring leaders are all promising to roll back NDP carbon taxes and regulations and to restore the “Alberta Advantage” that was once so attractive to energy investment and conducive to growth. If the UCP does form a government, it will have no shortage of corrective policy options to choose from, assuming it’s bold enough to act on them. Among the choices offered by industry experts:

– Eliminate the carbon tax;

– Reform the Liability Management Rating policy;

– Initiate a one- or two-year royalty “holiday” on newly drilled oil and gas wells and legislate that Alberta will not  increase royalties for a clearly defined period, say 10 years;

– Reduce the municipal property tax burden on industry field facilities;

– Go back to the previous (already stringent) limitations on gas flaring;

– Persuade Ottawa to limit the new methane capture regulations;

– Restore corporate and personal income taxes to their previous, lower level;

– Move rapidly to implement so-called “play-based” regulatory policy, currently being considered by the Alberta Energy Regulator, which would replace the current well-by-well and facility-by-facility licensing approach with a single approval and licensing process for large oil and gas developments;

– Consider a fast-track approval process for companies with a demonstrably clean technical and environmental track record as well as ample financial capacity to cover future decommissioning and abandonment;

– Create a consistent, streamlined process for consultation and benefit-sharing with First Nations;

– Implement an overarching policy covering all programs and departments requiring any proposed new tax or regulation to be assessed based on whether it will hinder the economy’s efficiency or disadvantage Alberta companies versus other jurisdictions; and

– Less tangibly but perhaps most importantly, making the province’s most important industry – and the people who run it – feel welcome once more. Remind the big-city populations of its essential and positive role, fight for Alberta’s interests on the national stage, and credibly promote the industry abroad.

“The provincial Crown’s oil and natural gas royalty rights mean that Alberta’s premier is, for better or worse, effectively the CEO of one of the world’s largest energy companies,” says one Calgary-based petroleum engineer. “Even if the world does begin shifting to wind and solar and electric cars, our oil and gas resources represent a massive asset. It has immense value right now. If it is destined to become worthless, shouldn’t we be doing everything we can to extract as much value from it as we can while it’s still worth something? The next premier of Alberta needs to act that way, or they’re not working for the people.”

Even a suite of stimulative policies will require time to undo the damage of the NDP era and lure growth capital back to Alberta. International investors are likely to demand an extended “show-me” period. But it has been done before. In fact, it used to be standard operating procedure during commodity price downturns. The provincial government would craft business-friendly policies aimed at all sectors, especially energy, and then go out and tout Alberta’s attractiveness for investors. To take one example, Murray Smith, energy minister under former premier Ralph Klein in the early 2000s, travelled the world as an indefatigable promoter of the Alberta Advantage. During Smith’s tenure a staggering $100 billion in outside capital flowed into the oilsands alone. It helped make Alberta the world’s largest recipient of industrial investment capital and powered the longest boom in the province’s history – the one that ended only in late 2014.

“What I especially worry about is that we seem to be erasing our historical ‘Alberta Exceptionalism’,” says Smith, now a director of several private and publicly traded companies. “From our beginnings we had a unique approach, tackling any problem and coming up with an Alberta solution to make things work. This province made a series of brilliant technology decisions and brilliant policy decisions. I don’t see that happening these days, and if we don’t have that, we’ll fail.” In spite of everything, Smith remains an optimist. “Nothing is beyond being turned around,” he asserts. “Look at the U.S., going from the anti-fossil-fuel Obama to a new administration and from 300 rigs to 900 rigs running even with low oil and gas prices. I think the will to survive and to succeed lives on in Alberta in spite of what we’re currently doing to ourselves.”

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Diversity may be our strength. But it is now alarmingly commonplace in Canada to blame any perceived diversity in outcomes between racial groups on vaguely-defined “systemic racism” or “white supremacy”. Case in point: the Federal Housing Advocate’s allegations of rampant racism in Canada’s housing market, and the need to address it with outlandishly disruptive policies. Delving deep into Statistics Canada’s ample supply of race-based data, Peter Shawn Taylor considers the evidence for racism in Canadian housing, education, income and poverty statistics, and finds a more convincing explanation much closer to home.

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Social media is widely blamed for poisoning the public conversation on a range of topics – especially politics and contentious social questions. But there’s a possibly even more dangerous force growing on the internet: an online community of YouTubers and livestreamers spouting far-left dogma, praising political violence and denigrating their opponents as evil, far-right fascists. Using fallacious arguments, psychological manipulation and overheated rhetoric, they seek to radicalize young people and convert them to their cause. Millions are tuning in, and mainstream “progressive” politicians are jumping on their bandwagons. Noah Jarvis profiles three of these socialist crusaders and explains why they are such a threat.

The Worrisome Wave of Politicized Prosecutions

Shaping criminal charges, bail decisions or prison sentences around an accused person’s political or religious beliefs is utterly odious – a hallmark of tinpot tyrannies and totalitarian hellholes. Such practices have no place in any constitutional nation, let alone a mature democracy that presents itself as a model to the world. But that is increasingly the situation in Canada, writes Gwyn Morgan. Comparing the treatment of protesters accused of minor infractions to those of incorrigible criminals who maim and kill, Morgan finds a yawning mismatch that suggests political motivations are increasingly a factor in today’s criminal justice system.

More from this author

If You Want to Judge the Freedom Movement, Go See it for Yourself

They’re waving the Canadian flag on Parliament’s grounds – in New Zealand. Columns of trucks are mustering in France with the aim of converging on Paris. “Convoy politics” has become an international term. Canada’s Freedom movement is inspiring people around the world who want pandemic mandates to end and their freedoms restored. Here at home, the latest polls find nationwide support soaring to 46 percent. Not bad for a bunch of marginal nobodies. Still, many Canadians remain guarded or wish the truckers and their hangers-on would just fall silent, go home, get their shots and behave. George Koch checks out Canada’s Freedom movement in person.

Why It’s Wrong to Punish Politicians Who Went Away for the Holidays

Influence-peddling. Self-dealing. Nepotism. Junketeering. The ways politicians can betray the public trust are legion. But should this list include behaviour that not only abides by the law, but offers a welcome example of independent thought and self-care? Politicians from diverse parties across Canada have been excoriated and, in some instances, dramatically punished for going abroad for personal reasons during the holiday season. While this may contravene government “recommendations” to stay home, C2C Journal editor George Koch argues passionately that all Canadians – including those whom we elected – should be allowed to act as the law permits. And that includes international travel.

Choosing Your Own Adventure in a Time of Pandemic

The barriers to travelling for personal reasons certainly appear daunting. They range from shifting government restrictions to the moral pressure from risk-averse peers to the slight but real probability of contracting the virus. Plus the prospect of getting stranded overseas. Daunting they are. But insurmountable? Or merely not worth the benefits in pleasure, renewed personal connections, emotional wellbeing and horizon-broadening? C2C Editor-in Chief George Koch decided to find out for himself, venturing to Europe in mid-September for three weeks. He returns with a take that we hope helps demystify the process and encourages people to keep an open mind.

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