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Varcoe: Oilpatch says that the Albert elections have to deal with an industry crisis



A few hours after Jason Kenney, the leader of the United Conservative Party, urged oil product directors to speak more strongly than their industry, the leaders of five industry groups spoke on their election cards on Wednesday.

And as the leaders representing oil producers, pipeline operators and the oilfield industry began to talk to Calgary, Premier Rachel Notley announced that Alberta would increase oil production in February and March, easing the provincial limit.

I am not saying that there is a direct link between these events.

(Kenney spoke to the Calgary Real Estate Board, but Notley replied to the data showing that Albert's oil stocks are falling sharply than expected.)

What I say with provincial elections around the corner – voters will go to the polls before the end of May – expect to see pipelines, oil cuts, greenhouse gas emissions, carbon taxes and industry competitiveness become the main themes of the campaign.

Energy will not be in the ballot box.

But this is Alberta. It will not be far from negotiating, as all sides are looking for ways to start investing and employment in the largest and strongest sector in the province.

"It's really a water reservoir," said Chris Bloomer, head of the Canadian Energy Pipeline Association, in an interview.

"We get pounded from all sections, the pushback is not reduced and we have to make our voices heard."

An unusual joint news conference organized by industry groups was designed to discuss the role of energy issues in the upcoming election campaign.

The industry is struggling with many problems: difficulties in obtaining oil and gas on the market, insufficient commodity prices, relocation of platforms to the United States, reduced capital programs, reduced drilling activity and investment attracting problems.

The fastest problem is the construction of pipelines to relocate oil and natural gas from Alberta, although the government has limited possibilities to influence the approval of federal projects crossing the provincial borders.

Currently, Trans Mountain and Keystone XL pipeline projects related to the North Gate and East Energy Death have left the industry too much in production – about 3.9 million barrels per day (bpd) in Alberta – and there are not enough ways to send it.

It focuses on regulatory and legal barriers to building energy infrastructure in Canada.

The bottleneck of transport led to a sharp drop in Canadian crude oil prices last autumn, prompting the Notley government to cut oil production by 325,000 bpd from this year to balance the market.

The province announced Wednesday that in February and March the industry's output will increase by 75,000 bpd to 3.63 million bpd. This is a promising sign, as oil stocks have fallen by around 15 percent since December in Alberta.

"What we have discovered is (oil) storage, which we had a bit faster than expected," said Energy Minister Marg McCuaig-Boyds in an interview.

"But we are not yet in the forest."

Many manufacturers have called for price cuts to reduce prices, although oilfield companies have suffered from its impact on capital programs.

This week, the Canadian Oil Services Association lowered the drilling forecast by 15 percent to 5600 wells a year.

"The idea of ​​finding a rational way to get out of the constraints would be a good idea," said PSAC President Gary Mar.

“It's not a hypothetical question, it's people who lose their jobs. . . For people who are energy service workers, curbing has not been a very good program. ”

The debate on restrictions and the province's carbon tax – some large oil producers, such as Suncor Energy and Shell Canada, have supported it, while the Canadian Association of Researchers and Producers (EPAC) opposes the levy – emphasizes that the industry is not monolithic.

However, it has many common problems, such as concerns about regulatory deadlines, to move large projects through government approval processes.

For example, Imperial Oil lasted almost five years from the time it first claimed its $ 2.6 billion Aspen oilands project, until the regulators approved it last October.

Tim McMillan, president of the Canadian Oil Manufacturers Association, believes that improved efficiency could reduce regulatory costs in Alberta by $ 2 billion. The cost is calculated if the industry could double its oil product investment in the province by 2020 if it gets the conditions, he said.

In the drilling and service sector, financial pressure is intense. If producers do not spend money, oilfield companies do not work.

In 2014, there were about 850 drilling rigs in this sector. The Canadian Association of Oil Drilling Contractors expects it to drop to 500 by the end of the year.

"It is a bad economic function, commodity prices have certainly fallen, but it also applies to government policy," said CAODC president Mark Scholz.

The impact of these interconnected issues is emerging from oilfields to the central office. Each active drilling machine directly and indirectly employs about 140 people.

On Wednesday, ATB Financial announced that headquarters employment in Calgary fell by almost eight percent between 2012 and 2017, and in Edmonton by five percent.

"It's not just about energy companies, it's not just a manufacturing process," said Tristan Goodman, president of the Canadian Association of Researchers and Manufacturers.

“This is where teachers get dollars from it. . . provides good health care. It is the actual economic engine that will drive us forward – and now it is in crisis. ”

It is often said that it is never a good crisis.

The upcoming elections will test this theory with a great opportunity to explore the future of Albert's energy development.

Chris Varcoe is a colleague of Calgary Herald.

cvarcoe@postmedia.com


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