Canadian Natural’s stance with NDP could backfire, analysts warn by Carrie Tait and Jeff Lewis, May 28, 2015, The Globe and Mail
Canadian Natural Resources Ltd.’s declaration that it cannot create a detailed business plan until Alberta’s new government provides more information on energy policy could backfire as the oil and gas industry tries to establish relationships with politicians and advisers in charge of rewriting regulations.
Alberta energy executives are scurrying to make friends with provincial Premier Rachel Notley and her colleagues in the New Democratic Party. But CNRL rejected the gentle approach Wednesday when it cancelled its so-called investor day, arguing it cannot allocate cash until the newly elected NDP clarifies its position on royalties, taxes, environmental policies and greenhouse gases.
The message – that CNRL is hamstrung because of the new government – could damage the industry’s chances of forming a co-operative relationship with Ms. Notley and her caucus, observers say. The Premier in May ended the Progressive Conservative Party’s 44-year streak in power, making oil and gas executives and investors nervous and cutting off their access to decision makers. Now, Alberta’s business leaders must revise their political playbook.
“It is okay to be a bit afraid of change,” said Melanee Thomas, a professor of political science at the University of Calgary. “But being afraid of democratic change, and then being derisive about it as a result, is not an effective strategy. “It doesn’t strike me as a savvy government relations,” she said. “The solution is to go out and build good, respectful contacts with government.”
Alberta is on its fifth premier since Calgary Mayor Naheed Nenshi, a popular, left-leaning politician, came to office four-and-a-half-years ago. He believes leaders in the oil patch understand that being confrontational will hinder their lobbying efforts.
“Industry in Alberta is very, very wary of the unintended consequences of taking a hard line with the new government right away,” Mr. Nenshi said in an interview a week after the provincial election. “They recognize that she’s made two promises – an increase in the corporate tax rate and a royalty review – and they are not really going to tell her: ‘Well, you’ve got to violate your promises.’ They understand those promises were made and that’s what people voted for.”
CNRL, which has revised its 2015 budget three times since November, said one of the reasons it cannot finalize spending plans is because it is waiting for clarity on greenhouse-gas policies. Right now, major emitters in Alberta pay $15 for every tonne of greenhouse gas they produce above a certain threshold. This regulation expires at the end of June, and scores of oil and gas firms have long calculated how they would fare under stiffer rules. Cenovus Energy Inc., for example, says it can “compete” if carbon levies hit $65 a tonne, spokesman Brett Harris said. [Emphasis added]
FINALLY, AN ENERGY MINISTER UNAFRAID OF THE ENERGY INDUSTRY! Alberta’s energy minister not concerned by CNRL response to royalty review by Chris Varcoe, May 28, 2015, Calgary Herald
Alberta’s new energy minister doesn’t think a decision by one of Canada’s biggest petroleum producers to hold off on future investment decisions is intended to be a warning toward the NDP government over its pending royalty review.
On Wednesday, Canadian Natural Resources Ltd. deferred an open house next month for investors, citing “uncertainty surrounding the government of Alberta’s review of royalty, taxation, environmental and greenhouse gas policies.” … Heading into cabinet meetings Thursday in Calgary, Energy Minister Marg McCuaig-Boyd said she wasn’t disturbed by the reaction of CNRL.
“It’s what it is. They’re a business, they can make their business decisions,” she said.
McCuaig-Boyd rejected the notion the announcement is intended to be a warning shot from Alberta’s most-powerful industrial sector toward the Notley government. The new minister, who took over the energy portfolio Sunday, also said she isn’t concerned the move will make the debate negative before the review even begins.
“Not really, no. There’s lots of billions of dollars being invested in Alberta. So I guess we’ll wait and see, but no I’m not worried at this point,” she added.
On Wednesday, McCuaig-Boyd said the royalty study would likely be underway within six months.
The official Opposition Wildrose party blasted the NDP over the planned royalty review, which is occurring while the energy industry is shedding thousands of jobs due to low commodity prices. The Notley government should either set firm timelines to stop capital investment from fleeing the province or abandon the review entirely, said Wildrose energy critic Leela Aheer.
She noted the Conference Board of Canada released a report Thursday that predicts Alberta will slip into a recession this year, with the economy shrinking by 0.7 per cent. The Ottawa-based organization noted oil and gas drilling fell by 44 per cent during the winter drilling season from a year ago, “We don’t think the NDP government should be doing this, but if they decide to go ahead with the review, it needs to be done quickly and transparently,” Aheer said in a statement.
Interim Tory Leader Ric McIver said the energy industry is jittery over the NDP’s plans and the new government must move quickly to clarify its plans. “We heard the message from CNRL yesterday. The longer this hangs out as a threat to business interests without actually knowing how strong or weak the actual result of the threat will be, the worse it will be for Alberta,” McIver said.
Imperial Oil chief executive Rich Kruger said Thursday that the planned royalty review is an opportunity to consider other aspects of industry regulation and policy. “It’s a good time to look at all the pieces,” Kruger said during a PricewaterhouseCoopers conference in Calgary.
Imperial looks at the overall mix of taxes, regulation and royalties when it reviews investments, he said, adding there are “probably some efficiencies” that could be made to regulations. [Translation = deregulate]
Kruger said he has not yet had an opportunity to discuss the industry and regulations with Notley.
In a statement Wednesday, a CNRL spokesperson told the Herald the company’s “current investment plans have not been delayed or put on hold. We continue to prudently allocate capital in this low-price environment in the areas where we operate.”
Notley told reporters she had a lengthy telephone conversation with CNRL chairman Murray Edwards after the election, and noted the royalty review will consult widely with all sides.
The premier met Thursday with representatives from the Alberta Federation of Labour (AFL), the Calgary Chamber of Commerce and the Canadian Association of Petroleum Producers.
AFL president Gil McGowan said he would encourage Notley to hold firm in dealing with the oil and gas industry, which he said has become used to “getting its way” with past Alberta governments.
“Albertans clearly feel that they’re not getting their fair share when it comes to the sale of our collectively owned resources,” McGowan told reporters Thursday. “They elected her to get a job done, and that is to get the kind of fair deal for the development of our oil resources that successive (Progressive Conservative) governments were unable to get.” [Emphasis added]
CNRL postpones investor day over political “uncertainty” in Alberta by Stephen Ewart, May 28, 2015, Calgary Herald
After two weeks of (mostly) best wishes, any honeymoon for Alberta’s newly elected NDP government and the oilpatch is quickly coming to an end as signs of strain emerge in the forced marriage.
Canadian Natural Resources Ltd., the country’s largest oil and gas producer, has postponed an open house it planned for investors June 17 due to “uncertainty surrounding the government of Alberta’s review of royalty, taxation, environmental and greenhouse gas policies.”
Its message is clear: the NDP is already impacting the ability to conduct business. [How high does bullshit fly in Alberta’s oil patch and regulator after decades of billions in profits stripped out with many more billions in toxic devastation left behind?]
The company, which has cut more than $2.5 billion in planned spending this year due to the fall in oil prices [Which happened because of industry’s own out-of-control billions in profits and greed for more], will still hold a conference call with institutional investors but cautioned Wednesday that spending plans can’t be finalized “until greater clarity can be attained.” [Translation: we get to keep fracing the caprock however we like, groundwater, surface water, wildlife and First Nations be damned, and taking how ever many billions we want from Albertans, royalties and Notley be damned too?]
To put its concerns in context, CNRL didn’t postpone any investor events amid the uncertainty over crude oil falling more than $60 US a barrel in the past year.
Of course, Canadian producers have no control over the price of oil. [Is that true? Producers’ greed around the world caused the collapse of prices and is their own undoing. Watch for more rape of Canadians and their drinking water as “Alberta Model” deregulated, out of control Fox Creek play-based blanket approval spreads country-wide]
In contrast, they’ve had plenty of input on policy in 44 years of business-friendly Conservative governments in the province that produces three-quarters of Canada’s oil and gas. At a minimum, the industry’s influence has greatly diminished since May 4. [Who knows if individual MLAs will be able to stand up to oil and gas industry bullying and threats, attacks and lies by media, or the bribes and fracbacks (aka kickbacks)?]
Energy Minister Marg McCuaig-Boyd provided some certainty — if no comfort — to the industry on her way into Premier Rachel Notley’s first cabinet meeting Wednesday in Calgary when she noted the royalty review is a priority for the NDP.
“As the premier’s promised, it’s going to be an open and transparent process,” McCuaig-Boyd said, indicating the plan for a review within six months — and report back in a year — is on track.
It’s what Notley has “promised” that concerns industry.
During the election campaign, she pledged to “stop the fire sale” royalties for oil and gas, raise corporate taxes, refine more crude oil in Alberta and toughen standards for GHGs in the province that accounts for 36 per cent of Canada’s emissions.
[What about the many families, communities and workers being poisoned by fracing?
Who is going to stop the fracing of Alberta’s caprock and water?]
Notwithstanding the politically correct niceties about the need for industry and government to work together on shared goals — see the statements from any industry association since election — and the two sides are on a collision course on several fronts.
In relationship terms, they’re “frienemies.”
Notley won a clear electoral majority but must still work with oil and gas companies for the vibrant economy needed to generate government revenues to implement her social policies. [Why? If the oil and gas industry can’t shelve its greed and is wiped out, resilient, innovative and creative Albertans will quickly find another way.] The industry has already warned 120,000 jobs could be lost in Alberta this year with depressed oil and gas prices and cautioned governments not to add to the uncertainty. [Will those workers eventually be grateful for the loss of their toxic jobs when they find out they were spared from cancer, dementia, etc and/or losing their sperm?]
Notley has repeatedly said the energy industry is critical to Alberta’s economic prosperity but she also has any number of public opinion polls that suggest Albertans support a royalty review and higher corporate taxes to address a record $5-billion provincial budget deficit.
Notley promised a “thoughtful, considered, intelligent” approach Wednesday.
“As a government we have an obligation to the people of this province to periodically test that we are doing the best that we can for them in terms of our royalty regime,” she said. “To suggest we never change anything ever, ever, ever going forward, I don’t think is responsible.”
While not the war of words between industry and the Tories over plans to increase royalties in 2007, the tone is getting edgier. [Is it high time? How many billions are Albertans to stand by and let industry steal from under and above them?]
It’s a far cry from CNRL’s annual meeting just days after the election when chairman Murray Edwards joked it was a good sign the Calgary Flames — he’s the principal owner of the NHL team — were undefeated under the NDP. The Flames lost their next game and were eliminated from the playoffs.
The relationship between CNRL and the province is more complex than other oil and gas companies. They are partners through multibillion dollar agreements signed with the Tory government on the controversial North West Redwater upgrader under construction near Edmonton.
The company warned in March of what chief executive Steve Laut called an “oilsands death spiral” [Indeed, how many worker cancers has the oil and gas industry caused?] unless costs are dramatically reduced in the region where a dozen proposed plants have been mothballed and thousands of workers laid off.
Since the election, the new premier has had no shortage of advice from industry. [Bullying and threats is advice?]
Last week, Suncor Energy Inc. CEO Steve Williams encouraged Notley to consider a broad-based carbon tax that targets businesses and consumers when she updates Alberta’s current carbon levy that applies to large industrial emitters.
Notley said she spoke with Edwards — a regular financial contributor to the provincial Conservatives — and the announcement to defer CNRL’s investor day over “uncertainty” came after that conversation.
“Everyone has their interests,” Notley said, “and this is a political debate as well as an economic debate.”
It looks to be a rocky marriage. [Emphasis added]
Royalty review likely to commence within six months, says NDP energy minister by James Wood, May 27, 2015, Calgary Herald
Premier Rachel Notley says she’s not surprised by a new poll showing strong support from Albertans for a review of oil and gas royalties as her energy minister signalled the study promised by the NDP in the spring election will likely get underway in the next half year.
As the NDP cabinet met Wednesday morning at McDougall Centre — the seat of the provincial government in Calgary — for the first time since being sworn in on Sunday in Edmonton, a major energy company threw down the gauntlet to the government by saying investment was on hold because of the uncertainty over the royalty review and other policies.
But Energy Minister Marg McCuaig-Boyd told reporters the royalty review is a top priority for the new NDP government, which was elected May 5 by defeating the Progressive Conservative party that had held power in Alberta for the last four decades. “I think in six months we’ll have a pretty good map of where we’re going,” said McCuaig-Boyd, the Dunvegan-Central-Peace-Notley MLA whose appointment to the energy post took the oilpatch by surprise. “But right now I’m just in the listening and learning mode.”
The prospect of a royalty review — along with the NDP’s tougher stance on greenhouse gas emissions — has rattled some in the energy industry, particularly because of the current low-price environment for oil and natural gas.
Royalties have been a hot-button issue in Alberta politics since former Tory premier Ed Stelmach’s revamped royalty regime in 2007 prompted a huge backlash from the industry and helped fuel the growth of the Wildrose Party. [Do we need to know anything more about the Wildrose Party?]
Notley has said her government will gather a panel of experts and hold a transparent review with input from the public to determine if Albertans — who own the resource — are getting the best rate of return and whether the system can give incentives for more processing of oilsands crude in the province. [What about reviewing the massive frac incentives, health harms and expected future costs to the health system and secret chemicals injected?]
A Mainstreet Technologies poll released this week shows that 65 per cent of Albertans support the NDP call for a royalty review while 46 per cent believe royalties should be hiked. “I’m not surprised,” said Notley, as she entered McDougall Centre for the first time ever. “This is what voters were telling us all through the campaign so I’m very excited we’ve got that base of support.”
But a major energy company appeared to raise a red flag over the NDP government’s plan on Wednesday.
Canadian Natural Resources Limited cancelled its institutional open house planned for June 17, saying that “due to the current uncertainty surrounding the Government of Alberta’s review of royalty, taxation, environmental and greenhouse gas policies, detailed future capital allocation plans for each of the company’s assets cannot be finalized at this time.” [Wouldn’t it be more appropriate for CNRL to put a lid on its greed and fix the caprock and aquifers the company frac’d and toxic pollution from its ongoing leaks?]
CNRL Fracing the Caprock to Hell
“We should probably stop fracking there right now”
McCuaig-Boyd, who will start meeting with industry leaders this week, moved to reassure the oilpatch over royalty review concerns. “They’re going to have a lot of input in the process and we’ve said that all along, we’re going to work with industry,” she said.
Members of the new 12-member cabinet streamed into McDougall Centre through the front entrance. Some would not talk to reporters, citing lateness, while others such as Finance Minister Joe Ceci and Infrastructure Minister Brian Mason stopped to be interviewed.
“I’m quite excited,” said Mason, who Notley succeeded as NDP Leader. “I am looking forward to working with my colleagues. I think the premier has made excellent choices in her selection and what we will want to do is give this province better government than it has had in the last number of years. I am confident we will be able to do that.” Mason is one of only four MLAs in the government caucus who served prior to the election.
Ceci, the former Calgary alderman who is now the top minister for the city, said Wednesday’s meeting is a “get to know each other day” while Thursday will see the new cabinet “down to business.”
He said planning for the provincial budget will start next week. Ceci told the Herald on Tuesday that the NDP promises of a corporate tax hike and new tax brackets for those earning over $125,000 will be contained in the budget, which will be released this fall. Ceci said Wednesday the changes will simply bring Alberta in line with other provinces.
“We’re not doing anything too drastic, too out of this world,” he said. [Emphasis added]
Rachel Notley says fiscal challenges bigger than expected, Alberta’s new cabinet ministers hold first 2-day meeting in Calgary by CBC News, May 27, 2015 Alberta’s budgetary predicament is more dire than expected, Premier Rachel Notley told media in Calgary as the NDP’s first cabinet meeting got underway today. “There’s no question that as we get briefed we’re starting to find the challenges are bigger than may have been featured in the [PC leader Jim ] Prentice campaign,” said Notley.
“Our plan is built off of their plan; now we’re looking at the fact their plan was not as fulsome as Albertans may have expected.”
… Notley promised several announcements, including plans for a royalty review, health-care restructuring and a new cancer centre in Calgary in the coming days — but not before she and her cabinet are thoroughly briefed, she said. “Rushed decisions can be bad decisions,” she said.
Notley promised her government will approach the issue of a royalty review with transparency in “a careful considered approach that takes into account the fulsome contribution of our industry partners.”
“We have an obligation to the people of this province to test periodically that we’re doing the best we can for them in the royalty regime,” she said. [Emphasis added]
Notley to review agencies, boards and commissions by Karen Kleiss, May 22, 2015, Edmonton Journal
Premier-designate Rachel Notley has pledged to continue her predecessor’s review of Alberta’s 320 agencies, boards and commissions, which control more than half of the province’s roughly $40-billion budget.
Notley said she intends to review pay scales, make salaries public under the provincial sunshine list and assess the “content as well as the quantity” of the organizations, known as ABCs.
“We’ve indicated all along that agencies, boards and commissions should have been subject to the sunshine list … and we’ll be moving forward to make that a reality as quickly as we can,” Notley said Wednesday.
Progressive Conservative Premier Jim Prentice started a review of ABCs in September and later promised to cut the number of ABCs by 25 per cent. He asked three business leaders to begin the review, and they were expected to produce a report by the end of 2014. Nothing has been made public. The current status of the Prentice review is unclear.
“They’re a major black hole of accountability in the province,” Wildrose MLA Derek Fildebrandt said of the ABCs. “We want to see the ABCs made fully subject to the sunshine list and to the blue book. Alberta taxpayers deserve to know who is on their payroll, and what contracts are being doled out.”
The sunshine list shows the salaries of civil servants. The blue book shows the names of companies that get government contracts and the amount of those contracts. Currently, ABCs are not required to submit information to either.
Alberta Party leader Greg Clark said “with a new government, we have an opportunity to fundamentally transform the way ABCs operate, to the point where we may end up consolidating some or eliminating them entirely. “We also get a chance to rein in what appear to be some pretty outrageous salaries.” [Will Gerard Protti and his two-steak dinners be removed as Chair of the AER? Jim Ellis as CEO with his >500,000 salary? ]
… 2007 Edmonton Journal investigation found half the boards were stacked with card-carrying PC party members. Asked if she planned to address this in her review, Notley did not answer. [Emphasis added]
[Refer also to:
Economic ‘rights’ don’t need their own charter, Proposed document would lock in bias toward deregulation and conservative economic policies by Adam Harmes, Associate Professor in the Department of Political Science at the University of Western Ontario, August 4, 2010, Toronto Star
The Western premiers at their annual conference in June. Three of them, Alberta’s Ed Stelmach, left, B.C.’s Gordon Campbell, centre and Saskatchewan’s Brad Wall, right, are linked in an interprovincial trade agreement.
As premiers gather for their annual conference in Winnipeg this week, the issue of reducing interprovincial trade barriers will no doubt be a topic of discussion.
However, for one conservative think-tank, interprovincial trade is an issue best left to the federal government.
In fact, rather than waiting for the premiers to reduce trade barriers on their own, a recent report by the Macdonald-Laurier Institute argues that Ottawa should impose a solution by creating an “economic charter of rights.” While Canadians should say Yes to promoting interprovincial trade, they should voice a resounding No to an economic charter.
The problem with an economic charter of rights is that it’s less about promoting trade within Canada and more about locking in a bias toward deregulation and other conservative economic policies. It’s part of a broader conservative strategy known as “constitutional economics” developed by free market luminary James Buchanan and long-promoted by business lobby groups and free market think-tanks in Canada and the United States.
The idea is to create a business version of the Canadian Charter of Rights and Freedoms [How fast would it override the existing Charter?] by making government economic policy subject to “judicial review.” Under our existing Charter, the courts can strike down a law as unconstitutional if it’s deemed to violate our fundamental rights, such as freedom of religion or freedom of the press. An economic charter, reinforced by a proposed “economic freedom commission,” would give the courts a similar ability to strike down government regulations on business, including everything from environmental policies to health and safety standards.
Proponents of an economic charter argue that it would not affect these types of legitimate and necessary regulations. Instead, it would only target the purely protectionist and “silly” regulatory differences between provinces that create red tape for business and provide no real benefits for Canadians. An oft-cited example is the way that different provinces mandate different sizes for the small cream containers we get with our coffee. [Enormous differences between cream, fracing and tarsands companies]
While such regulations should clearly be removed, history shows us that there’s no real way to legally distinguish the silly and protectionist regulations from those that genuinely protect Canadians. The closest thing we have to a precedent for an economic charter is Chapter 11 of the North American Free Trade Agreement, which was designed to prevent governments from the outright expropriation of businesses, without compensation, as was done by Fidel Castro in Cuba and Hugo Chavez in Venezuela.
However, clever lawyers were able expand the application of Chapter 11 and use it to force governments to abandon legitimate environmental regulations. Because Canada still has many clever lawyers [How many work for oil and gas companies?], there is every reason to believe that the application of an economic charter would be similarly expanded and create similar problems.
This is why proposals for an economic charter and equivalent measures are only promoted by business lobby groups and free market think-tanks and are consistently opposed by environmentalists and consumer advocates.
Back in 1982, when Pierre Trudeau repatriated the Constitution and brought in the Charter of Rights and Freedoms, the Fraser Institute think-tank proposed that governments be constitutionally prohibited from running deficits. A decade later, during the Charlottetown accord negotiations, the Fraser Institute and the Business Council on National Issues supported a proposal to include protection for property rights in the Canadian Charter. Similar proposals to subject economic policy to forms of judicial review were promoted in relation to Canada’s 1994 Agreement on Internal Trade (AIT).
While these efforts to lock in a deregulatory bias largely failed, the same cannot be said for the B.C.-Alberta Trade, Investment and Labour Mobility Agreement (TILMA), which came into effect in April of 2007. Under the TILMA, companies can now challenge a wide range of legitimate provincial and municipal regulations, with governments paying penalties of up to $5 million per claim, simply because they are an impediment to investment.
Following this victory, and the later inclusion of Saskatchewan, efforts to expand the TILMA to other provinces and to reform the AIT along more free market lines have stalled. This is why the Macdonald-Laurier Institute, whose directors are almost exclusively CEOs, is repackaging some old conservative wine in the new bottle of an economic charter of rights. This is also why the institute wants an economic charter to be imposed by the federal government rather than implemented through negotiations with the provinces.
….if we’ve learned anything from the recent financial crisis and the BP oil spill, it’s to be wary of an excessively deregulatory approach couched in the language of “economic freedom.” [Or more recently, as communities educate themselves and say no to fracing, AER’s Play-based, Blanket Approval, Frac Frenzy Enabling, Pilot Projects such as at Fox Creek]
Canadians should support all sensible and democratic measures to reduce interprovincial trade barriers. But a charter of economic rights, designed to impose a deregulatory bias from above, is simply not one of them. [Emphasis added]