'Core problem remains': Critics pan federal plan to help Alberta's oil and gas sector
Published Tuesday, December 18, 2018 11:48AM EST
Last Updated Tuesday, December 18, 2018 3:01PM EST
Critics say the federal government’s plan to help Alberta deal with a crisis in the energy sector largely by providing up to $1.6 billion in loans and export development assistance won’t address the root causes of the problem.
Natural Resources Minister Amarjeet Sohi and International Trade Diversification Minister Jim Carr were in Edmonton Tuesday morning to announce the funding: $1 billion in commercial loans available through Export Development Canada and $500 million in commercial loans through the Business Development Bank of Canada.
“Our focus is to make sure that Alberta’s oil and gas sector remains a source of well-paying jobs for middle-class Canadians,” Sohi said. “When Alberta hurts, so does Canada.”
The larger fund will be available to all exporting companies in the oil and gas sector, the ministers said, while the smaller fund will be focused on helping smaller players in the industry.
The remainder of the funding is divided up among economic diversification and technological programs.
Sohi stressed that the measures announced Tuesday are meant to provide the province with short-term help and that pipelines are nonetheless the only long-term solution that makes sense for Alberta. He pointed to his government’s purchase of Trans Mountain and commitment to building the Keystone XL pipeline as vital to the provincial and national interests.
“For the long-term success and growth of the oil sector, nothing is more important than building the pipeline capacity to expand to other, non-U.S., global markets,” he said.
Alberta’s energy sector has been struggling in recent months, with a backlog of oil sitting in warehouses. Alberta oil is being sold to the U.S., its only market, at significantly lower prices than oil from other jurisdictions.
The province has estimated that it is losing $80 million per day due to the backlog. Alberta Premier Rachel Notley’s government has announced a mandatory production cut to take effect Jan. 1, 2019, as well as plans to purchase 7,000 rail cars to transport oil.
Some politicians have urged the federal government to resurrect plans for the Energy East pipeline, which would move Alberta oil through Quebec and into New Brunswick. Quebec Premier Francois Legault opposes the proposal, and Prime Minister Justin Trudeau told CTV’s Question Period Sunday that he had no plans to revive Energy East.
‘An attempt to trick western Canadians’: Scheer
Conservative Leader Andrew Scheer called on the government to overturn a tanker ban the Liberals put in place when they quashed Northern Gateway, a pipeline through northern B.C. that was conditionally approved by the National Energy Board.
Scheer issued a statement Tuesday saying that Trudeau “has wanted to phase out Canada’s energy industry since day one” and called Tuesday’s announcement a “handout” and an “election-year attempt to trick western Canadians into thinking he cares.”
“If the Prime Minister truly cared about energy workers – if he wanted a future with oil and gas in Canada – he would immediately drop the No-More-Pipelines Bill C-69,” Scheer said, referring to the Liberals’ proposed impact assessment law, which many observers believe will make future pipeline approvals less likely.
‘Take the handcuffs off’: Notley
Notley responded to the announcement Tuesday afternoon, saying the increased access to capital “will probably help a few small producers,” but that the plan doesn’t go far enough.
“Folks here in Calgary and across Alberta can make a profit out of oil and gas … but they need Ottawa to take the handcuffs off so that can happen,” she told reporters.
Specifically, Notley said she wanted to see the federal government push forward with pipeline-building efforts and help fund the province’s purchase of rail cars and locomotives.
“This is only the very first step of what we anticipate had better be many steps,” she said.
“There must be more to come, because quite frankly that’s what this industry and this province and this city deserve,” she added.
Notley later told CTV’s Power Play that Albertans didn’t ask for a program that will allow them “to go further into debt.”
“It’s a cut and paste of the support that was offered to steel, that was offered to aluminum, that was offered to forestry,” she added.
‘Core problem remains’: Mar
Gary Mar, the former Alberta Progressive Conservative cabinet minister who now runs the Petroleum Services Association of Canada, told CTV’s Power Play that the plan is partially a “re-hash” of things the federal government already does to support exporters.
“I agree with the premier that there may be some small benefit to some of the smaller producers that might take advantage of the loans but, really, the core problem remains,” Mar said. “That is that we don’t have the infrastructure, we don’t have the kinds of transparent legislation that allow us to get things done.”
“We develop about 3.3 million barrels of oil per day for export out of Canada but we still import nearly 900,000. So because of the lack of infrastructure, we’re selling low and we’re buying high,” Mar added.
Duane Bratt, a political scientist at Mount Royal University in Calgary, said the measures announced Tuesday were designed to help the oil and gas industry manage its cash flow until the price of oil rebounds.
“It will make a difference, but it won’t make a huge difference,” he told CTV News Channel.
Canadian Taxpayers Federation federal director Aaron Wudrick told CTV News Channel the biggest thing the government could do to help Alberta’s economy would be to speed up the process of building Trans Mountain.
“I don’t deny that there are people in Alberta that could use the money, but this doesn’t solve the problem,” he said.