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With friends like these ... Alberta premier gets lukewarm response from business executives, with petroleum industry poll pointing to growing jobs worries GARY PARK For Petroleum News
The time had come for the first socialist premier in Alberta’s 110-year history as a Canadian province to face down her one-time foes.
Rachel Notley took to the podium before a sold-out ballroom in Calgary of 1,600 business executives, offering an olive branch by cheerfully describing them as “my new best friends.”
If they were indeed friends, an outsider would have been hard-pressed to separate them from enemies.
The response they gave was cool and steadily turned icy, ending with a barely civil reception.
Notley, who was elected premier in May based on a relentlessly upbeat and candid style, put her own spin on the reaction.
She said it was mostly a case where her attempt at humor fell flat and suggested that the audience was mostly focused on what she had to say about her government’s task forces on oil and gas royalties and climate change policies and how she plans to cope with a wave of petroleum industry layoffs.
“I didn’t actually perceive that the crowd was cold in any way,” she said afterwards, before holding a private meeting with Chamber of Commerce leaders.
CAPP poll on pledge In case she was sidestepping realities, the Canadian Association of Petroleum Producers released its own poll just hours before the speech which showed that only 22 percent supported the government’s pledge to double its carbon levy from C$15 per metric ton by 2017, while Albertans who believed the province’s economy was in good shape plunged to 43 percent in September from 62 percent when CAPP’s tracking polls started in July.
CAPP President Tim McMillan said “people are increasingly worried about their jobs and the health of the Alberta economy, both today and in the future,” noting that 36,000 jobs have been lost in the oil and gas sector this year.
CAPP said the response to plans for hiking carbon prices is a sign of the “growing public concern about the competitiveness of the Alberta economy,” which 91 percent of Albertans recognize is vital to the future prosperity of the province.
But Notley was not inclined to back away from her resolve to tackle climate change.
“Albertans know well that environmental issues and, specifically, the issue of climate change is a key global problem every community and every jurisdiction must help address - especially energy-producing jurisdictions like ours,” she said.
“If we don’t get it right on this issue, a solution is going to be imposed on us, sooner or later, by others.”
Notley said an exemplary record on environmental stewardship is the oil sands is “increasingly going to be the price of admission” for Alberta to get its oil to global markets in the face of sustained opposition.
“It is my hope that by acting decisively on the issue of climate change, we will reframe the current national debate over pipelines and energy infrastructure.”
CAPP urged the Alberta government to take a balanced approach to policy reform in “order to create and protect jobs,” to which Notley said that creating jobs will be “at the heart” of her economic plans.
Expert panel named She followed her speech by pulling some pages from the playbooks of her right-leaning predecessors, starting with a 10-member expert panel replacing the Alberta Economic Development Authority to explore ways of diversifying the Alberta economy.
The objective, she said, is to have “the best information in front of me to make the best decisions I can to grow the economy, diversify our economy and create more jobs.”
The committee, chaired by the dean of the University of Alberta’s business school, Joseph Doucet, will advise Notley on initiatives that identify, promote and develop economic activity, innovation and job creation.
Others on the panel include Steve Williams, chief executive officer of Suncor Energy, and Nancy Southern, chair of the ATCO Group, which owns coal-fired power plants in Alberta and has a large oilfield services division.
Doucet said “there’s no jurisdiction around the globe that has been as successful as they’ve wanted to be in terms of diversification, because it’s very, very hard to do.”
“I certainly believe that Alberta’s economy can become more diversified. We are more diverse than we were two decades ago. We see that in professional services and in technology.”
Public money off the list What already seems to be off any list of possible ideas is the use of public money to support expansions of oil sands upgraders and refineries, reflecting the early warnings that an upcoming 2015-16 provincial budget is likely to contain a deficit greater than the previously forecast C$5 billion.
Energy Minister Marg McCuaig-Boyd told the Globe and Mail that her government will continue a commitment made by the previous administration for the first phase of the C$8.5 billion Sturgeon Refinery, a 50-50 partnership of North West Upgrading and Canadian Natural Resources.
The facility, scheduled for completion within two years, is planned to process 150,000 barrels per day of diluted bitumen, in three stages of 50,000 bpd each, based on an earlier understanding that25 percent of the feedstock would come from Canadian Natural and 75 percent from the government’s bitumen royalty-in-kind program along with a processing fee.
But McCuaig-Boyd said that whether the government participates in the second and third phases will depend on results from the startup phase.
Solid results required North West Upgrading Chief Executive Officer Ian MacGregor said that, based on a meeting he had with McCuaig-Boyd, he assumes the project will have to show solid results in a tough industry.
He said government officials have not expressed concerns to him about taxpayer exposure, adding that the previous government’s role has played a vital part in accessing debt markets at favorable rates, which ensure superior margins and savings for the province.
MacGregor said the upgrader has a “very high credit rating and the debt is very low cost, which reduces the (processing) fee that we have to charge.”
“Obviously we wouldn’t get an A-minus rating without having a toll payer like the province there,” he said.
MacGregor took issue with a recent assessment by former Alberta finance minister Ted Morton, that the processing fee for the province will be C$63 a barrel, contending it’s about half that.
But, for now, the Notley government may be holding back pending a recovery in oil prices and the results of its royalty review panel which is studying ways within the fiscal regime to promote refining and upgrading.
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