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Varcoe: OilPatch says election in Alberta must resolve the industry's "crisis"



Hours after Conservative Party leader Jason Kenney called on oil chiefs to speak more strongly about their sector, the heads of five industry groups put their election cards on the table on Wednesday.

And as leaders representing oil producers, pipeline and oil service operators began to speak in Calgary, Prime Minister Rachel Neilly announced that Alberta would increase oil levels for February and March, facilitating the province's reduction target .

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

(Kenny spoke to the Calgary Immovable Property Board, while Notely responded to data showing that Alberta's oil crash was falling faster than expected.)

What I want to say is with provincial elections around the corner – voters will enter the ballot box before the end of May – they expect to see pipelines, oil reductions, greenhouse gas emissions, carbon tax and industrial competitiveness.

The energy will not be on the ballot box.

But this is Alberta. It will not be far from the conversation, since all parties are looking for ways to start investment and employment in the province's largest and most powerful sector.

"It's really a milestone," said Chris Blumer, executive director of the Canadian Energy Pipeline Association.

"We get rid of all the parts, the pressure does not diminish and we need to hear our voices."

An unusual joint press conference by industry groups was designed to discuss the role that energy issues should have in the upcoming election campaign.

The sector is struggling with a number of concerns: difficulties in obtaining oil and gas on the market, frail prices of goods, relocation of airports in the US, reduction of capital programs, reduction of drilling activities and challenges that attract investments.

The most urgent problem is to build pipelines for the transfer of oil and natural gas from Alberta, although the government has limited ability to influence federal approval of projects crossing the provincial boundaries.

The network now facing the Transca Mountain and Kiston-XL Mountains, along with the death of the Northern Portal and the energy source, left the industry with too much production – about 3.9 million barrels per day (GDP) with a capacity in Alberta – and there are not enough ways to send it.

This is the focus of regulatory and legal barriers to the construction of the energy infrastructure in Canada.

Narrow transport led to a stronger rebate in Canadian oil prices last fall, prompting the Notley government to limit its oil production by 325,000 bp, starting this year to rebalance the market.

The province announced on Wednesday that it will increase the production of the industry by 75,000 bp. to a total of 3.63 million bpd in February and March. It is an encouraging sign, as the levels of oil inventories in Alberta declined by about 15 percent since December.

"What we found was the storage of (oil) we had was a bit faster than expected," Energy Minister Marg McCougag-Boyd said in an interview.

"But we are not out of the woods yet."

Many manufacturers have called for a reduction in cost-cutting costs, although oilfield firms have been hurt by its effect on capital programs.

Earlier this week, the Canadian Oil Service Association cut the drilling projection by 15 percent to 5,600 wells a year.

"The idea of ​​finding a rational way to get out of the limitation would be a good idea," PSAK chairman Gerry Mar said.

"This is not a hypothetical question, people are losing their jobs … For people who are workers in energy services, the limitation is not a very good program."

The debate on the province's carbon restriction and taxation – some major oil producers, such as Suncor Energy and Shell Canada, have supported, while the EPAC is opposed to the price – emphasizes the fact that the industry is not monolithic.

However, there is much in common, such as concerns over the regulatory deadlines for the transfer of major projects through government approval processes.

For example, Imperial Oil takes nearly five years from the time it first reported for its $ 2.6 billion Aspen project, until it was approved by regulators in October last year.

Tim McMillan, president of the Canadian Petroleum Manufacturers Association, believes that improved efficiency could reduce regulatory costs in Alberta for $ 2 billion. The wage is that the industry could increase the country's dual oil investment by 2020 if it meets the conditions, he said.

For the drilling sector and services, financial pressure is intense. If manufacturers do not spend money, oilfield service companies do not work.

In 2014, the industry had a fleet of about 850 drilling rigs in the country. The Canadian Oilwell Drilling Contractors Association expects it to fall to 500 by the end of the year.

"It is a function of the poor economy, the prices of products are certainly decreasing, but it also falls directly to government policy," CEEFC President Marc Scholz said.

The effect of these interrelated questions ranges from oilfields to the headquarters in the city center. Each active drilling plant directly and indirectly employs about 140 people.

ATB Financial announced on Wednesday that employment at the Calgary headquarters dropped nearly 8 percent between 2012 and 2017, while Edmonton fell by five percent.

"This is not just about energy companies; this is not just about production," said Tristan Goodman, president of Canada's Association of Researchers and Producers.

"This is where teachers receive their dollars from, this … provides good health care. It is a true economic motor that leads us forward – and right now it's in a crisis."

Often it is said that we never allow the good crisis to fall off.

Upcoming elections should test that theory, with a great opportunity to explore the future of energy development in Alberta.

Chris Varco is a columnist for the Calgary Herald.

cvarcoe@postmedia.com


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