Vol. 24, No.41 Week of October 13, 2019
Providing coverage of Alaska and northern Canada's oil and gas industry

Canada faces showdown

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Alberta and Saskatchewan up against a wall with election, climate-change targets

Gary Park

for Petroleum News

So deep and entrenched is the anger in Alberta and Saskatchewan with Prime Minister Justin Trudeau’s energy policies that Canada’s two largest oil and gas producing provinces could turn themselves into a political wasteland if the governing Liberal Party is reelected on Oct. 21.

Entering the election campaign, Alberta was represented by 29 Conservatives, three Liberals, one New Democrat and one Independent, while Saskatchewan had 10 Conservatives, three New Democrats and one Liberal.

While it may be inconceivable that the Liberals will emerge from the vote emptyhanded, the oddsmakers suggest that is a real possibility.

Whatever, it is unlikely that the Conservatives will lose their current dominance and, if Trudeau wins the vote across the rest of Canada, Alberta and Saskatchewan are poised to tackle head on the Trudeau government’s resolve to meet Canada’s climate change targets through a carbon tax, while shrugging off initiatives by both provinces to lower greenhouse gas emissions by imposing a carbon cap on the oil sands in Alberta and using technological advances to sequester carbon in Saskatchewan.

Bill C-69 issueSUBHED: Bill C-69 issue

Unless a second-term Trudeau government removes the club it holds over the heads of Alberta and Saskatchewan, they will press ahead with their arguments filed with the Supreme Court of Canada that a carbon tax is unconstitutional and their court challenge in Alberta to block Bill C-69 that rewrites environmental assessments for major resource projects.

Saskatchewan Justice Minister Don Morgan says scuttling Bill C-69 is an “absolutely imperative” to prevent the federal government from trampling on provincial rights to regulate development of oil and gas resources that are owned by the provinces. Alberta Premier Jason Kenney has derided Bill C-69 as the “no more pipelines law.”

But Trudeau has insisted a new regime is needed to protect the environment and the rights of indigenous communities.

Kenney’s opponents describe the Bill C-69 legal fight as mere “political theatre,” to which the Alberta premier replies “it’s about the rule of law; it’s about an economic union (in Canada); it’s about respect for the fundamental law of the land and the Constitution of Canada.”

Saskatchewan has applied for intervener status at the first round of the legal fight before the Alberta Court of Appeal, with Morgan echoing Kenney’s case that it’s “absolutely imperative for us that we stick up for the rights of (our provinces) and their ability to regulate business and regulate industry” within their jurisdiction.

“We’ve got a strong and vibrant oil and energy sector (in Saskatchewan, which is Canada’s second largest hydrocarbon producer, after Alberta) and we have to do everything we can to make sure that sector continues to be vibrant, strong and continues to grow,” he said.

Kenney’s stand is endorsed by an unlikely source - Alberta New Democratic Party leader Rachel Notley, whose government was toppled in last April’s provincial election.

She criticized Bill C-69 and acknowledged the need for a legal challenge.

Federal authority

However, Martin Olszynski, a law professor at the University of Calgary, said previous court rulings have made it clear that the Canadian government has the authority to assess the environmental impact of resource projects, even though resource development comes under provincial control.

“The constitutional principles that apply are settled and they’re very clear,” he told the Globe and Mail, adding that when Bill C-69 and the old law for regulatory reviews are put side by side, “in terms of basic architecture, these laws are almost identical.”

While that test case looms and will extend far beyond the Oct. 21 federal vote, the Kenney government is pressing on with its investigation of foreign funding of environmental groups opposed to oil sands development and pipeline construction and its creation of a so-called “war room” to counter what it views as misinformation on the oil and gas industry.

Kenney rejected criticism on social media that his request for the public to send information on foreign-funded campaigns into the inquiry amounts to a snitch line.

Former Alberta Environment Minister Shannon Phillips said the exercise was a “silly little witch hunt,” to which Kenney said that “if the political left in Alberta is opposed to investigating foreign money behind campaigning to landlock Alberta oil, that shows how out of touch they are.”

He said his government is merely “asking for public input into a formal public inquiry to a very serious issue that’s materially affecting our prosperity.”

Kenney said previous federal and provincial governments and oil industry leaders have pledged to fight anti-industry campaigns, but lost ground because they “responded defensively and reactively” while the Energy East pipeline to Atlantic Canada and the Northern Gateway pipeline to export 525,000 barrels per day of Alberta bitumen to Asia were cancelled and Keystone XL and Trans Mountain were delayed.

Amnesty International spat

Another sideline spat has found Kenney at odds with Amnesty International, which claims 7 million supporters in 150 countries.

It sent a personal letter to Kenney blasting the government funded probe as an attack on “human rights defenders - particularly indigenous people, woman and environmental human rights defenders, exposing them to intimidation and threats, including threats of violence.”

For Kenney that represented proof his opponents see no value in Alberta government plans to establish an economic development agency to underpin efforts by First Nations to invest in oil and gas support services and possibly acquire ownership stake in pipelines.

Greens the wild card?

The wild card in the federal vote could be seeing the Green Party rise from its current position of having two lawmakers among the 338 in the House of Commons to the role of powerbroker.

If neither the Liberals nor the Conservatives can obtain an outright majority on Oct. 21 they would likely need to form a coalition with the Greens, who have made strong gains in the latest polls, or the New Democratic Party.

Under the control of Elizabeth May, the Greens have the most fickle of the party leaders. Four months ago she issued a Mission Possible document calling for a ban on all imports of oil into Eastern Canada, dominated by almost 600,000 bpd for refineries in New Brunswick, Ontario and Quebec.

She said at the time that “as long as we are using fossil fuels we should be using our fossil fuels.” That would include production from the oil sands, which she views as the curse of Canada’s efforts to lower greenhouse gas emissions.

But that objective was short-lived when the Greens issued their energy plan in mid-September, targeting a lowering of GHG emissions by 60% from 2005 levels by 2030; banning hydraulic fracturing in the natural gas industry; cancelling the Trans Mountain pipeline expansion; and eliminating fossil fuel subsidies.

May said that under her party there would be no new pipelines, or coal, oil or gas development. For Alberta alone that would eliminate 270,000 direct oil and gas jobs.

Her plan said that “inevitably, jobs in fossil fuel sectors will disappear, (but) the Green Party is committed to a ‘just transition’ of workers in these sectors into new ones. This will include measures such as income protection, job guarantees, retraining and resettlement.”

But May admitted the proposal has yet to undergo an independent cost review, although she expressed confidence “in our ability to pay for what we are promising.”

If the Greens do end up holding the balance of power their impact on national policy will quickly override all other considerations, likely forcing Alberta and Saskatchewan closer to the brink of a serious debate over separation from Canada.

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