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Alberta grasps economic nettle
GARY PARK For Petroleum News
The Alberta government is confident it can succeed where its predecessors have stumbled and failed over more than 40 years by engineering a radical shift in the province’s economic oil and natural underpinning.
In opening a new session of the legislature, the New Democratic Party administration of Premier Rachel Notley pledged it would not sit back and “do nothing” as Alberta plunges ever-deeper into financial trouble.
“We have a very, very difficult economic situation here in Alberta as a result of a do-nothing approach in the past,” Notley, who was elected last May, told reporters. “We are here to act as a shock absorber.”
She said the government will create an Energy Diversification Advisory Committee to “look at a wide range of initiatives that could enhance value-added efforts in Alberta.”
Through the EDAC, the government will seek advice on creating more incentives for upgrading oil sands bitumen into synthetic crude, for an expanded petrochemical sector and for other “value added” industries, indicating it is ready to “enhance the economics” of related projects.
Notley said the province’s recent allocation of C$500 million in royalty tax credits for companies building petrochemical plants is one example of the of government incentives, including for the 50,000 barrels per day, C$8.4 billion first stage of the North West Redwater Partnership’s refinery under construction near Edmonton that the NDP heavily criticized while it was in opposition.
Value-for-dollar analysis She said the EDAC will analyze the value-for-dollar the plant will generate for taxpayers and may consider “tweaking it to come up with better.”
Notley declined to speculate on how the government would react if the EDAC recommends direct investment in private industry, but she did concede that the oil price shock battering Alberta does not allow her administration to sit back and wait.
“I would reject the notion that we simply cover our ears, cover our eyes, cross our fingers and sit in the corner hoping the economy recovers,” she said.
Provincial assistance in the 1960s and 1970s helped the establishment of a commercial oil sands industry, but Alberta also has a long list of failed ventures in telecommunications, banking, resource processing and agriculture that ran up losses of about C$2.2 billion.
More details are expected in the 2016-17 budget due for release on April 14.
“If economic diversification happened completely on its own, Alberta would not be in the position it currently is today,” said Economic Development Minister Deron Bilous. “Government has a role in setting the right conditions that will help attract investment.”
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