First Oil
Last month, Calgary again hosted the annual Global Petroleum Show, attended by more than 47,000 oil and gas professionals from Canada and another 110 countries, including the U.S. An intriguing aspect of this year’s GPS is that the show’s organizers managed to juxtapose on back-to-back days—whether intended or not—the energy policy views of Alberta Premier (equivalent to governor of a U.S. state) Rachel Notley, whose left-leaning New Democratic Party gained power in the last provincial election in 2015, with those of Brian Jean, the leader of the “official opposition,” the conservative Wildrose Party.
On June 13, Jean gave a speech about Alberta’s energy shortcomings on a special wooden stage, right on the GPS exhibition floor. Notley, on June 14, presented a rebuttal of Jean’s attack in a more comfortable setting, the ballroom of the Hyatt Regency Calgary, before several hundred industry professionals attending the morning-long Energy Leaders Forum of GPS.
The opposition view. Brian Jean came out swinging, rattling off a detailed list of Notley’s failings. This includes increased taxes on businesses and income; mandated wage increases on businesses during a downturn; implementation of royalty reviews; instituting a punitive cap on oil sands; adding further delays to pipeline approvals; and introducing and mandating a carbon tax in Alberta.
Jean complained that “since last month (May), Alberta has lost 7,800 jobs in professional, scientific and technical services. Downtown vacancy rates, here in Calgary, remain between 25% and 30%.” He also pointed out that back in 2007, Alberta had 94 companies producing between 500 boed and 10,000 boed. Yet, today, that number of companies has dwindled to 25, with 17 lost in just the last two years.
Nevertheless, Jean has a vision for Alberta. “Our people are strong, innovative and resourceful….We sit on the third-largest oil reserve in the world. Let me be clear on one thing—regardless of a noisy minority of anti-jobs and anti-energy activists, the world will need oil and gas for decades to come.” Jean pointed out that oil and gas royalties contributed C$15 billion/year to Canadian provincial governments, for funding hospitals, schools, teachers and nurses. He also said that the industry should continue implementing new technologies that reduce the impact from emissions.
The premier’s rebuttal. Notley reminded attendees that since the early days of her government, “we promised Alberta’s energy industry, workers and investors that we would work with them closely, as honest, thoughtful partners.” Despite a 7.9% unemployment rate, Notley said that her regime is “tapping into the best, most innovative minds in Alberta….to make sure our future is prosperous and sustainable.” She also said that her climate leadership plan “puts a price on carbon, phases out coal, reduces methane, and invests billions of dollars back into our economy.” Her detractors would say that these are job-killing measures.
Notley mentioned her “modernizing” of Alberta’s oil and gas royalty framework, which took effect on Jan. 1, 2017. Yet, it was only accepted grudgingly by the industry, because it was less “radical” than her original proposal. Trying to win over skeptics, the premier touted how the new framework creates two strategic incentive programs targeting EOR methods and emerging resources areas. She also credited this same framework, along with higher oil prices, for pushing the number of new wells drilled in Alberta 131% higher, during first-quarter 2017.
Notley did not mention her intention to force mandatory reductions in methane emissions from E&P operations this fall. Yet, a long-time local analyst told this editor that the premier’s methane emissions rule “will be a nasty mistake, an unmitigated disaster.” Notley told the Forum crowd that her government “will be looking closely at the themes and suggestions of the discussions at the Forum, and GPS in general.” 
