Hard times and strange bedfellows

At a Calgary conference dedicated to addressing the existential threats facing Canada’s energy sector, you might expect to hear from oil-friendly Conservative politicians like federal and Alberta opposition leaders Andrew Scheer and Jason Kenney, and Saskatchewan Premier Scott Moe. You’d also expect industry folks like Canadian Petroleum Hall-of-Famer and former TransCanada Pipelines CEO Hal Kvisle. And podium fixture Tim McMillan, who never misses an opportunity to publicly beat the drum for the Canadian Association of Petroleum Producers.

But at last week’s Energy Relaunch gathering in the Depressed Oil Capital of Canada, the panels also included Alberta NDP Economic Development minister Deron Bilous, former federal Liberal MP and leadership contender Martha Hall Findlay, University of Alberta economist and architect of the provincial NDP government’s climate change plan Andrew Leach, and the Alberta conservative tribe’s controversial Calgary radio talk-show host, , Danielle Smith. Oh, and Mark Cameron, once policy chief in Stephen Harper’s PMO and now an oft-thrashed conservative pinata because of his dogged advocacy for carbon pricing.

This crowd was sharply divided on the finer points of carbon and climate policy and much else: Moe and Kenney reject carbon pricers like Leach and Cameron; Scheer and Hall Findlay are on opposite sides of the interminable Canadian supply management debate (he for, she against); and almost everybody there believes Bilous and his government are wrong about almost everything. But on this day, with its singular focus on the oilpatch crisis, they were all saying pretty much the same thing.

It’s Ottawa’s fault.

Scheer set the tone, calling the triple whammy of collapsing investment, blockaded market access and bone-deep price discounts on Alberta crude, “a crisis of the government’s own making.” Don’t believe anything positive Justin Trudeau says about pipelines and the oilsands, warned Scheer, because what the prime minister really wants is to “phase out your industry.” (He actually said that, although that was before he bought a pipeline.)

The litany of federal policy blunders on the energy file was recited by numerous conference panelists before a sea of nodding heads. All agreed that Ottawa has energetically discouraged growth in the Canadian energy industry by making it virtually impossible to build the new pipelines it needs to reach new markets. First it killed the fully permitted Northern Gateway pipeline, then it regulated Energy East to death. Then it so bungled the environmental assessment and aboriginal consultation processes related to the Trans Mountain pipeline expansion that it was forced to ‘save’ the project by buying it. (In an app-poll of the 300 conference attendees, nearly three-quarters had no expectation the Trudeau Pipeline Co. would get any steel in the ground next year.) Finally, adding insult to injury, the Liberal government also banned tanker traffic in northern B.C. coastal waters.

The message to domestic and international investors in the Canadian oil patch couldn’t be clearer. And investors got it: capital flows are down by more than half since 2015.

But just in case they didn’t quite get it completely, the government is doubling down on regulation of natural resource development with its proposed Impact Assessment Act. This too was a target of near-universal complaint, scorn and even fury at the Calgary gathering of the energy-aggrieved.

Better known as Bill C-69, the IAA has national scope. If passed as drafted, it would toss out the proven record of the National Energy Board and establish a new Impact Assessment Agency to review resource-development proposals not only in the energy, mining and forest industries but even port expansions – a further consideration for pipeline terminals. It has some surprising supporters, notably among Ontario’s miners, but its myriad critics say it leaves too much room for political discretion and opens the review process to frivolous objections. In particular, new resource projects would be assessed according to “the intersection of sex and gender with other identity factors,” which suggest that life for a roughneck in a trailer camp for a fly-in drill rig may never be quite the same again.

Scheer called C-69 “the worst thing to happen to the oilpatch since the NEP.” Kenney promised an Alberta referendum to quit the federal equalization program if the law goes ahead. Bilous said it “will kill the industry” unless it is drastically amended. Hall Findlay declared it beyond a parliamentary fix, saying “We should just start again.” University of Calgary economist Jack Mintz agreed: “This will be devastating to natural resource development.” And Mike Gladstone, Enbridge’s Director of External Affairs, raised the scariest prospect of all: “If this passes, we’re back to square one for court challenges.”

Scenes of the 2018 Energy Relaunch Conference hosted by New West Public Affairs in Calgary.

The Relaunch conference was held the same week that the price differential between some shipments of Canadian heavy crude (Western Canada Select) and the U.S. benchmark blend (West Texas Intermediate) set a new record of $50 a barrel. The average differential is about $30/bbl and growing. By some accounts, it is costing Canadian producers $100 million a day, while American consumers (and their protectionist president) reap the benefits of cheap northern energy.

The conference was also held the same week Prime Minister Trudeau and his cabinet rolled out a national carbon tax plan for provinces that don’t or won’t impose one of their own. Despite the government’s claim that most consumers will receive more in carbon tax credits than they’ll pay in carbon tax levies, the plan is going over like a leaded-gas balloon in provinces like Alberta, where provincial carbon tax rebates are significantly smaller than the pre-election payoffs Ottawa’s sending to Saskatchewan.

This was the perfect storm that made the Energy Relaunch conference such a success. It was organized on fairly short notice by the Calgary-based New West Public Affairs group, headed by former Conservative cabinet minister Monte Solberg.

“All this was going on,” Solberg says. “There’s the carbon tax controversy and Bill C-69. The price differential between WTI and WCS is crushing business – and of course, there’s a new government in Ontario. This all has huge impact in Alberta, but there had been no forum identified for any kind of discussion.  So we thought, ‘if nobody else will do it, we’ll do it. Then it just took off.”

Originally planned as a much smaller event, industry heavy hitters drawn by the cross-party, cross-disciplinary speaker panels rapidly pushed registrations to 300 in little more than a month. Saskatchewan premier Moe called Energy Relaunch a “critical juncture”, implying the kind of game-changing event that historians search for in their rear-view mirrors.

Certainly, the conference did portend an emerging multi-partisan consensus on one issue, at least – the need to get landlocked Alberta oil to tidewater, where it could be sold at competitive prices on the world market. There was almost equal unanimity on the notion that Liberal Ottawa has made a hash of energy and environmental policy, and is about to make things much worse with Bill C-69. “We need clarity and efficiency,” said Kvisle. “But there is a fundamental bias at the political and bureaucratic level in Ottawa, that pipeline approvals should be slowed down.”

Public opinion polling suggests, certainly in Alberta, but increasingly elsewhere in Canada, that there is growing anxiety about the country’s long-term economic prospects because of all the institutional obstacles to energy and other natural resource development. Even in B.C., a clear majority of poll respondents is buying the pipeline argument, even if their NDP-Green provincial government is not. The Alberta NDP, meanwhile, faces its own existential political crisis going into next spring’s provincial election, and it has transformed them from congenital oilsands and pipeline refuseniks into voluble industry cheerleaders. “Alberta is not landlocked,” said NDP minister Bilous, telling the crowd of conservatives and oilmen exactly what they wanted to hear. “It is part of a country that has a huge coastline, on three oceans. It is time Canada started acting a country.”

The last time Canadians saw Liberals, New Democrats and Conservatives singing from the same hymn book on a major national crisis was in the early 1990s, when Ottawa and most of the provincial governments were so deep in debt they faced an international lenders’ revolt. Politicians of all stripes, academics, and industry leaders came together to rescue the country from a self-inflicted catastrophe. Then as now, a common existential threat may be dissolving partisan divisions and compelling history to repeat.

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