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Stelmach romps home in election Faces mountain of energy-related issues from royalties to environmental challenges in Alberta, call for freeze on sale of oil sands leases Gary Park For Petroleum News
Albertans voted overwhelmingly for change March 3 — not a change of government, but a ringing endorsement of Premier Ed Stelmach’s campaign slogan of “Change that works for Alberta.”
In his first electoral test, the soft-spoken farmer was thought by many pundits to be in danger of ending up with a minority government, dependent on its survival for support from one of the opposition parties.
There had even been fleeting talk of defeat, especially in the major cities of Calgary and Edmonton, because of unhappiness from both sides with Stelmach’s proposed royalty framework.
Brett Wilson, chairman of investment dealer FirstEnergy Capital, showed some of the pre-vote disaffection with Stelmach, suggesting the government had “demonstrated its lack of understanding of the province’s major industry during the (2007) royalty review. Calgarians who understand the energy sector will struggle to vote for the Conservatives.”
But the 41 percent of Albertans who bothered to vote (the lowest turnout in the province’s 103-year history) showed little doubt.
They delivered a landslide victory to Stelmach, known as “Steady Eddie,” ensuring the Conservative party dynasty extended its 37-year run of 11 straight majority wins.
Conservatives increase seats Pending some recounts, the Conservatives won 73 seats in the provincial legislature (up 12 from the 2004 election), while the Liberals slumped to eight from 16 and the left-wing New Democrats to two from four.
“We’ve shown we’re not afraid to tackle the very tough issues,” Stelmach said in his victory speech, referring mostly to his willingness last year to conduct the most sweeping overhaul in history of Alberta’s royalty regime.
“We’re not afraid to lead.”
He will have ample opportunity to prove that claim as he tackles a mountain of unfinished energy business.
Sitting on the oil sands, the world’s second-largest reserves next to Saudi Arabia, is both a blessing and a burden for the Stelmach government.
Of all the items on his desk, it’s the one that will pose the earliest and heaviest challenge.
Alberta is portrayed as Canada’s environmental pariah because it is responsible for one-third of the country’s greenhouse gas emissions and has promised to let them continue rising until 2020 before targeting a 14 percent reduction from 2005 levels by 2050.
Stelmach said his climate-change plan “preserves Alberta’s jurisdictional ability to manage its own environment.”
But the federal government has yet to lay out the details of its plan, which sets the stage for possible conflict with Alberta and the potentially difficult task of harmonizing the two sets of regulations.
Unresolved energy issues Other issues to be resolved include:
• Tabling legislation and regulations to implement the proposed 20 percent across-the-board hike in royalties on Jan. 1, 2009. The “unintended consequences” of the current framework are still being negotiated, with the major industry associations seeking revisions to royalties covering shallow gas, coalbed methane, deep natural gas, deep oil, sour oil and multilateral wells. Ziff Energy Group, a Calgary-based consultant, has estimated that 80 percent of oil and gas companies operating in Alberta have already slashed their spending since the royalty changes were unveiled in October.
• A deal has yet to be reached with Syncrude Canada to amend a royalty contract that was due to expire in 2016. Suncor Energy has already settled on terms covering the 2010-16 period but the Syncrude consortium, because of its complex ownership structure, has not agreed to the changes. Stelmach has indicated he will not wait indefinitely.
• Suncor is weighing all options for upgrading future bitumen production, including an arrangement with U.S. refineries — a sore point with Stelmach, who is offering a 5 percent tax incentive to producers to keep more of the value-added upgrading and refining in Alberta.
• Stelmach must decide on a response to a number of major oil sands producers who want to freeze the sale of rights in three environmentally sensitive areas of northeastern Alberta for the next three years until the government develops strategies to protect air, water and soil and ease the demands for new infrastructure.
• Industry groups are pressing for government financial help to build pipelines from the oil sands to carry carbon dioxide to enhanced oil recovery or sequestration sites.
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