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Vol. 23, No.37 Week of September 16, 2018
Providing coverage of Alaska and northern Canada's oil and gas industry

Trudeau treads carefully

Administration examining options to salvage Trans Mountain, including an appeal

Gary Park

for Petroleum News

The future of large-scale resource projects in Canada depends heavily on how his government responds to a federal court ruling that has stalled progress on the Trans Mountain pipeline expansion, said Prime Minister Justin Trudeau.

“What we need is not just this pipeline. We need to be able to build resource projects of all different types with appropriate social license,” he told reporters.

He said the objective is to ensure that Trans Mountain and other projects do not get “bogged” down in endless court battles.

Trudeau, firing back at his critics, noted that TransCanada’s Keystone XL project was long ago approved in Canada, but has become entangled in the United States over a failure to engage in detailed consultations with communities along the pipeline right of way.

“This is the way that the world is going and if we can demonstrate clarity and certainty for businesses through the process to the investors we will be able to get more built,” he said.

Decision impacts communities

Trudeau called the court decision on Trans Mountain “frustrating and devastating” for communities that were counting on the employment that would come with the C$9.3 billion Trans Mountain expansion.

The prime minister said his administration is examining a wide range of legislative and other options to salvage Trans Mountain, including an appeal to the Supreme Court of Canada.

However, he would not go as far as using a “legislative trick,” such as an emergency measure in the guise of the “national interest” to bypass the federal court ruling.

Trudeau said that might “be satisfying in the short term,” but it would set up fights and uncertainty for investors over the coming years on any other project because you can’t have a government that keeps invoking those sorts of things.

“We would like to see shovels in the ground as quickly as possible. This is a priority for Alberta and Canada. We must make sure it’s done right,” he said.

Patience thin in Calgary

While Trudeau mulls his next move, patience is wearing thin in Calgary, the heads office city of Canada’s petroleum industry, where unemployment rose to 8.2 percent in August from 7.9 percent in July in a metropolitan population of 1.4 million, compared with 6.7 percent for all of Alberta, 6.4 percent in the provincial capital of Edmonton and 6 percent across Canada.

As hundreds of laid off residents with no hope of finding a new job start packing their bags and heading for the exit door, the real estate market is swamped with more than 5,000 listings.

“Oil companies are still very reluctant to hire heads office workers (where Calgary’s economic strength lies),” said Court Ellingson, vice president of Calgary Economic Development.

Even so, he is confident that a recovery will occur based on signs of a return to upstream exploration and development.

In the meantime, patience in the industry is fast approaching breaking point as Alberta Premier Rachel Notley discovered during a “tense” late-August meeting with industry executives.

Those from the larger companies unburdened themselves, speaking about the chilling impact of the Trans Mountain court ruling on their investment climate and Canada’s inability to get major infrastructure built that has prompted oil sands giant Suncor Energy to shelve all plans to grow production until pipeline capacity out of Alberta is increased.

Chris Bloomer, chief executive officer of the Canadian Energy Pipeline Association, told the Calgary Herald his sector is moving towards a “pretty desperate” situation.

Tamarack Valley Energy Chief Executive Officer Brian Schmidt, who also attended the Notley session, said he is “just watching people leave” the Western Canada Sedimentary Basin. “No one is able to raise money here right now,” he said.

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