Alberta Premier Notley fires back at opposition during GPS, touts accomplishments

By KURT ABRAHAM, Editor on 6/16/2017

HOUSTON -- In an appearance just three weeks after the two-year anniversary of her New Democratic Party gaining a majority in the Province’s Legislative Assembly, Alberta Premier Rachel Notley spoke on Wednesday about her administration’s accomplishments and seemed to be issuing a rebuttal to her official opposition. Notley’s comments were delivered to an audience at the Energy Leaders Forum, an event hosted in the Hyatt Regency Hotel that was part of this year’s Global Petroleum Show (GPS) agenda.

That audience included a cast of high-ranking attendees that had participated it two panels that morning, including governmental officials from Canada, Texas, Argentina and Cuba, as well as oil and gas industry executives from companies in Canada, Kenya and Ukraine. Given that her official opposition leader, Brian Jean, a Legislative Assembly member and head of the Wild Rose Party, had delivered a fiery speech on the GPS exhibition floor just a day earlier, one could surmise that Notley’s address was an attempt to rebut Jean’s criticisms. Unfortunately, if that was the intention, then the premier’s effort came up somewhat short—more on that in a minute.

Notley began her comments by reminding 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. It’s a commitment that has guided everything we’ve done, working to better position Alberta as a global energy leader, one that is competitive, reliable and that takes its climate change obligations seriously.” She pointed out that her regime is “tapping into the best, most innovative minds here in Alberta—from industry, investors, the scientific community and more—to make sure our future is prosperous and sustainable. Some attendees might have taken issue with use of the word, prosperous, given that Alberta’s unemployment is 7.9%.

Nevertheless, Notley touted how her government has partnered with industry and “done some incredible work.” Explaining that she has travelled to Washington, DC, Bejing, Toyko, Toronto, New York and elsewhere, Notley said her message to them is always the same: “Alberta is a competitive, responsible and reliable place to invest. Our overall taxes are the lowest in Canada, our business environment is wide open to investment, our reserves are amongst the largest in the world, our workforce is the most skilled in Canada, our regulators are efficient and effective, and our industry expertise is second to none.” However, she left out an important detail—her regime is one of the most expensive provincial governments to operate in Canada.

Royalty restructuring. Shifting to specific policy items, the premier spoke glowingly about her successful “modernizing” of Alberta’s oil and gas royalty framework. The reforms were unveiled during mid-2016, and the amended framework took effect on Jan. 1, 2017. But what she didn’t mention in her comments was that while they Canadian oil and gas industry grudgingly went along with the royalty reforms, they did so because the final package was perceived to be not nearly as “radical” as what she originally intimated on the campaign trail during 2015.

Notley said that her government established a panel of trusted experts “to take a look at how our royalty framework operates, and to see if there were ways to improve it, making it better for industry, investors and the owners of the resource—the people of Alberta.” She said that the new framework is designed to encourage investment and innovation, and to create good

jobs. Again, analysts might take issue with creation of good jobs, when unemployement is stuck at 7.9%.  But the framework does remove a number of investment uncertainties, especially related to harmonization of royalty treatments associated with different types of hydrocarbons. This provides greater certainty, making certain plays in Alberta more attractive.

The new framework also creates two strategic incentive programs that target enhanced recovery methods and emerging resource areas.  Notley credited that framework, along with somewhat-improved oil prices, for pushing the number of wells drilled in Alberta up 131% during first-quarter 2017. And economic forecasts show Alberta, again, will lead economic growth among all Canadian provinces in 2017. “This is exactly what we want to see, exclaimed Notley. “More drilling, more jobs, and a growing economy.”

Climate change policy. Another success claimed by Notley is her regime’s work with the industry to design a made-in-Alberta response to climate change. “Under no circumstance were we going to allow Ottawa to impose a plan on us,” declared the premier. “Albertans know this industry best.”

Notley said that Alberta’s climate leadership plan is the most aggressive of any energy-heavy jurisdiction in North America. “It puts a price on carbon, phases out coal, reduces methane, and invests billions of dollars back into our economy. It also limits emissions from the oil sands without limiting production. Industry in Alberta has done a terrific job of reducing the carbon intensity of every barrel produced here, and we are working with them to bring that intensity per barrel down even further.”

Oil sands policy. Regarding another key industry sector, Notley pointed out the work now being done by the Oil Sands Advisory Group. “The group is composed of leaders from the oil sands industry, environmental groups, and local communities,” said the premier. “They are working with us to consider how we best implement the emissions limit. How we can develop durable, effective ways to address local and regional environmental issues? And how we can best invest carbon price revenue into new technology that will reduce future emissions intensity?”

Industry competitiveness. For this same reason, Notley continued, Alberta is building specific protections into its plan to keep industry competitive. “I’m sure many of you here today have taken part in our consultations around output-based emission allocations. And I want to thank you for your advice. Under the output-based allocation system, facilities will be allowed to emit a certain amount of greenhouse gases, free of charge from the carbon levy.  It will reward our most efficient producers and help to drive meaningful emissions reductions. This approach is designed to protect industries, protect jobs, and keep Alberta competitive.”

Attempting to show that she may be more pro-industry than some people think, Notley said, “I have zero time for any conversation that seeks to shut down our oil sands.  Zero.  The oil sands are massive job and wealth creators, here in Alberta and across Canada, and we need to protect the good jobs they create. Above all, this is one of the reasons I’m most proud of the work we’ve accomplished with industry in designing our Climate Leadership Plan.”

Notley then showed her true motivation by saying, “A strong, wealth-producing economy gives us the financial capacity to invest in renewables, support energy efficiency and fund green research and development.” Yet this philosophical flip-flop was seemingly reversed again, when she said, “Alberta is combining aggressive climate action with economic growth and goodjobs in a number of important ways.

“Two stand out.  First, we are working to diversify and add more value to our energy products.

For example, the Petrochemical Diversification Program we established aims to create thousands of new jobs, turning raw energy resources into plastic products used throughout the world. Second, we are working to diversify our energy markets.  Right now, our lack of market access means Alberta takes a financial hit on every barrel, because we are forced to sell our product to the United States at one discounted price.”

She said that the twinning of the Trans Mountain pipeline “gets our economy out of the economic shackles that have held us back. It is not surprising to Albertans that the twinning of this pipeline has triggered a passionate debate. We agree that Canada’s coast lines must be protected. And we understand why our B.C. neighbors have concerns [which] we have worked to address through the most rigorous environmental review in Canadian history, and protections that improve safety for every ship that travels our west coast waters.”

Notley said it is also important to note that because Alberta capped emissions from the oil sands, the twinned pipeline will not add to CO2 emissions beyond the cap. “Rather, it will add to the economic security of Albertans and all Canadians, a fundamental pre-condition for effective and lasting action on climate.”

Coal elimination, methane reductions conveniently ignored. Nowhere in her remarks, save for a very brief mention in her comments on Alberta’s climate leadership plan, did the premier talk about the substantial negative side-effects of her intentions to eliminate coal mining and usage in Alberta, as well as force mandatory reductions in methane emissions. There was no acknowledgment of how the elimination of coal mining will nearly wipe out some smaller communities and destroy many relatively high-paying jobs. Nor was there any recognition that the proposed methane regulations, which will require small- and medium-sized oil and gas producers to acquire costly equipment and adopt more expensive practices—and if they can’t afford these items, they will go out of business.

Time and again, Notley mentioned that her regime is working to create jobs and achieve economic growth, but these efforts will likely be offset, at a minimum, by the loss of coal mining and reduction in smaller oil and gas producers.

Early in her comments, the premier said that her government “will be looking closely at the themes and suggestions of the discussions at the Forum, and GPS in general. One can only hope that this happens, as the good Ms. Notley and her minions seem to be in need of a refresher course on common-sense energy policy.

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