Oilpatch rejoices, but Jason Kenney has few levers to fast-track pipelines
Pressed for details on how Kenney’s UCP would help their industry solve its most acute problem — getting new pipelines built to export markets – some oil and gas CEOs pointed specifically to Kenney’s “fight-back strategy” to confront environmental groups opposed to new pipelines.
“Having the owner of the resources — the people of Alberta, through their government – defending their resources will be very helpful,” said Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers, speaking on the sidelines of an investor conference his group organized in Toronto on Wednesday.
“The number of foreign-funded activists that have been targeting Canada and targeting infrastructure is inappropriate and damaging, so if we could get that foreign special interest out of our policy debates, that would be very helpful,” McMillan said.
Unlike the party’s more concrete policy proposals — such as a corporate tax cut from 12 per cent to eight per cent, or a one-third reduction in regulations — the UCP’s fight-back strategy is among its most loosely defined. It is also unclear whether it will reduce the effectiveness of those opposed to development of Alberta’s oil and gas reserves.
The new government plans to establish a legal fund to sue environmental groups that oppose new pipeline projects and establish a “war room” to combat misinformation about the energy industry.
While Kenney and his party was combative during the campaign, directing its scorn at Ottawa for knee-caping the Alberta economy, analysts now expect the former federal minister in Stephen Harper’s cabinet to strike a more conciliatory tone in dealing with other provincial governments that have opposed energy pipelines in the past such as British Columbia and Quebec, Canoe Financial director and senior portfolio manager Rafi Tahmazian said.
“I do not believe that he thinks he can do this by being contentious,” said Tahmazian, adding that Kenney has been talking directly to investors and energy companies to determine the best approach to the problem.
Noting that Kenney spoke directly to Quebecers in French during his acceptance speech, Tahmazian said the premier-designate was committed to reaching out to Quebec “with sincerity.”
“We need pipelines for the prosperity of all Canadians, including Quebecers,” Kenney said in his speech.
However, Quebec Premier Francois Legault declined Kenney’s overtures on Wednesday and reiterated his stance that there was no social acceptance for pipelines in the province.
More important than overtures to Quebec, however, Tahmazian said that Kenney would help establish a powerful coalition between the premiers of Alberta, Saskatchewan, Manitoba and Ontario to force more business-friendly policies from the federal government.
“You can’t deny the pseudo coalition,” he said of the four provinces in the centre of the country.
Still, there are limits to Kenney’s power to get new pipeline projects moving.
“Can that accelerate time tables (for pipelines)? I don’t know,” said Ian Dundas, president and CEO of Enerplus Corp. “This is all about public opinion influencing energy policy. We need clearer policy federally, so can the provinces play a stronger role in that? Clearly they can.”
The TSX Capped Energy Index, comprised of Canada’s largest oil and gas companies and oilfield services companies, traded up just 1.4 per cent on Wednesday as the markets digested the UCP winning a sizeable majority in the Alberta Legislature, where the party took 63 of 87 seats.
“The tools available to the new provincial government are limited — at least at this point — though we can say that future provincial increases in the carbon tax are likely off the table,” Raymond James analysts said in a research note Wednesday.
The analysts also said the UCP’s win would likely have “little effect at all” on oil and gas equities because of the market’s “asymmetric handling” of news related to the energy sector, where negative events have punishing effects on stock prices where positive events have none.
Still, the analysts said the corporate tax cuts and regulatory rollbacks would provide the sector a boost in the long run, and executives agreed.
“I see it as a positive development. Reducing the regulatory burden or speeding the approval process up will allow Alberta projects that we have in our portfolio to rank a little higher,” Tourmaline Oil Corp. president and CEO Mike Rose said.
“More than anything else, we look forward to a renewed investment climate for our industry,” Canadian Association of Oilwell Drilling Contractors president and CEO Mark Scholz said in a release, which also praised the new party for its willingness to “go to bat for Alberta” on pipelines.
Published at Wed, 17 Apr 2019 20:55:44 +0000