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Vol. 20, No. 34 Week of August 23, 2015
Providing coverage of Alaska and northern Canada's oil and gas industry

Energizing an election

Future of crude lines out of Alberta tricky high-wire act for parties


For Petroleum News

No matter who wins the Canadian election on Oct. 19, the outcome could be crucial to the future of the country’s petroleum industry.

And, at this stage of the campaign, the four major parties - governing Conservatives who are seeking a fourth consecutive term in office, the poll-leading New Democratic Party, Liberals and Greens - are all staking out contrasting positions.

The question is which one makes the most compelling argument.

At this stage of the campaign only two have clear-cut positions - the governing Conservatives, whose leader Prime Minister Stephen Harper unreservedly backs pipelines to get oil sands production to market and the Green Party, which is just as strongly opposed to pipelines but has no hope of winning the election, although it could influence the outcome by siphoning votes from the other three.

The leaves the New Democratic Party and the Liberals, whose positions are at best vague as they try to appease voters at both ends of the spectrum.

The issues confronting all four leaders are two-fold - to what extent should climate-change policies determine the future of oil sands development and what stance should the Canadian government take on proposed new export pipelines.

Last election in 2011

That all represents a dramatic turnaround from the last election in 2011 when the price of oil was sitting around US$100 a barrel and seen as likely to climb even higher, while pipeline projects seemed to be destined for approval in the United States and Canada.

Now the pipelines are bogged down in disputes with First Nations, landowners and environmentalists and Alberta has elected a new government which has yet to disclose its final plans for royalties and climate-change policies.

Those topics are also inextricably tied to Canada’s economic outlook.

Dan Ouimet, Western Canadian vice president for Environics Research, told the Calgary Herald it is of “critical importance for the political leaders to be speaking about these issues in a credible manner and have a cohesive plan. The research we have done bears out that Canadians care about it as well.”

Positions not clear cut

But even getting a clear-cut position from the parties trying to topple Prime Minister Stephen Harper is far from easy.

NDP leader Tom Mulcair, whose party continues to make a strong showing in the polls, discovered just how difficult it is to “herd cats” when one of his star candidates, Linda McQuaig, a prominent author and indentified by Mulcair as a certain cabinet appointee if he wins, turned a brush fire into a full-scale blaze during a Canadian Broadcasting Corp. panel discussion.

She said that if Canada is to have any chance of meeting climate change targets “a lot of the oil sands oil may have to stay in the ground.”

McQuaig even found herself at odds with her own p[arty, whose deputy natural resources spokesman Malcolm Allen said the NDP supports continued oil sands extraction, coupled with more rigorous oversight aimed at reducing the sector’s environmental impact.

Allen said his party sets no limits on the quantity of fossil fuel extractions.

Two days later, Mulcair echoed those thoughts, while arguing that the “problem we have in Canada with regards to the development of our natural resources and getting new markets for them is called ‘Stephen Harper’” who he blamed for failing to establish new climate-change policies and for mishandling pipeline negotiations.

Taking another two days to mull things over, he further clarified the NDP position by arguing that Canada needs credible, sustainable development laws before it can decided whether or not to endorse significant production increases at the oil sands.

Mulcair said legislation must include pricing carbon output into oil products and making polluters pay for what they create.

In the first leaders’ TV debate, before McQuaig went public with her thoughts, Mulcair accused Harper of not doing anything about “our environmental laws, thinking somehow he could get our energy resources to market better.”

Mulcair then fired a barb at the prime minister, by asking “How’s that working out, Mr. Harper? None of those projects have gotten off the drawing board.”

During one campaign stop, some anti-oil sands activists challenged Mulcair to reveal whether an NDP government would reject Energy East - TransCanada’s proposed 1.1 million barrels per day system from Western Canada to refineries in Ontario and Quebec and an export terminal in New Brunswick - if it was “found to be incompatible with national action on climate change.”

“Of course we will,” he replied. “That’s what the whole purpose of coming in with a new system is to make sure we take into account climate change whenever we analyze a project.”

On the matter of new bitumen pipelines, Mulcair, taking a similar line to Obama, said those projects should be judged based on whether they significantly increase Canada’s greenhouse gas emissions.

NDP promises cap-and-trade

The NDP under Mulcair is promising a national cap-and-trade program aimed at meeting Canada’s commitments on reducing GHGs by toughening environmental reviews for pipelines to ensure they are in line with those obligations.

But the party has been vague on whether those goals will leave room for rising oil sands production.

Both Mulcair and Liberal leader Justin Trudeau (the oldest son of former Prime Minister Pierre Trudeau) have voiced their opposition to the existing federal pipeline review process, pledging that they would introduce stricter more thorough analyses of proposed energy projects.

However, Harper said McQuaig’s comments disclosed “the NDP’s not-hidden agendas on (oil sands) development. The NDP is consistently against the development of our resources and our economy.”

Alberta’s opposition Wildrose Party leader Brian Jean said McQuaig’s remarks were “deeply concerning” as he called on Notley to stand up to the federal NDP, which operates separately from NDP organizations in the provinces.

Trudeau, brushing off the Harper government’s commitment to reduce greenhouse gas emissions by 30 percent from 2005 levels by 2030 - only slightly behind President Barack Obama’s target of a 32 percent reduction over the same period of carbon emissions from U.S. power plants - accused Harper of bungling negotiations with the U.S. government on Keystone XL.

He said Harper had “turned the oil sands into a scapegoat around the world for climate change and he’s put a big target on our oil sands, which are going to be an important part of our economy for a number of years to come, although we have to get beyond them.”

But whether the three leaders engage in a broader, more vigorous debate over the remaining two months of the campaign on the oil and gas industry - given that the oil sands account for only 2 percent of Canada’s Gross Domestic Product - is not yet clear.

What has puzzled most observers so far is Harper’s reluctance to take a hard-line stance on the bread-and-butter issues that matter most to his home province of Alberta.

He even remarked that contraction of the Canadian economy which has put the country on the brink of recession “is almost exclusively in the energy sector. The rest of the economy is growing and it is projected to grow next year and into future years.”

Trudeau seized the chance to paint himself as the leader who is most concerned about Alberta’s interests.

“You cannot make a choice between what’s good for the environment and what’s good for the economy,” he said. “In the 21st Century, they go together.”

But Trudeau’s efforts to scratch together constituency victories in pockets across Canada is also a strategic gamble, given that strongly pro-Harper Alberta elects only 34 members of Parliament, compared with 121 in Ontario, of which 58 are in Greater Toronto.

He does not want to be seen in Ontario, Quebec and British Columbia as cozying up to Alberta if that puts him at odds with the demand for climate-change action in Canada’s three largest provinces.

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