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Oil sector applauds Kenney s win, but pipelines remain in limbo

Oil sector applauds Kenney s win, but pipelines remain in limbo
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CALGARY -- Alberta s oilpatch is celebrating the election of a pro-business government, despite analyst observations that premier-designate Jason Kenney may not be able to do much about getting new oil export pipelines built.

"To many of our fellow oil and gas workers who are out of work, underemployed, or otherwise without hope, it feels like spring has returned to Alberta," said Mark Scholz, CEO of the Canadian Association of Oilwell Drilling Contractors.

However, he acknowledged in a statement that the United Conservative Party faces a "formidable task" to create the conditions that will allow the oil and gas sector in Western Canada to thrive again after years of difficult times.

The election results are a "positive development" for the oil and gas sector, analysts at Desjardins Energy Research said in a report, but they warned the province s difficulty in moving oil to market will remain a major thorn in the side of the new government.

"The reality is that the federal government still holds most of the key regulatory cards for future approval of interprovincial projects as well as a direct ownership stake in Trans Mountain, which highlights the greater importance of the federal ballot in October," they noted.

Ottawa is expected to wrap up court-ordered consultations with First Nations groups by next month, allowing it to make a final decision on the Trans Mountain expansion pipeline project it bought last fall.

Meanwhile, permitting issues in the U.S. have delayed Enbridge Inc. s Line 3 replacement pipeline project until the middle of 2020 and TransCanada Corp. s Keystone XL pipeline project is in limbo thanks to a U.S. court decision.

In the wake of the UCP s victory in the Alberta election over Premier Rachel Notley s NDP government, the head of the Canadian Association of Petroleum Producers called for the federal election this fall to also be fought on economic issues.

"I think that the results last night strengthen the hand of those that want a strong economy," said CAPP CEO Tim McMillan on a conference call on Wednesday.

"Clearly Albertans were calling for it, we see increasingly that Canadians are putting the economy first as we re coming into an election in the fall and that momentum across Canada for major projects -- not just energy, but all major projects -- I think, is important."

McMillan was in Toronto where his organization was hosting its annual two-day investment conference.

He said the biggest issue he s hearing about from executives, investors and lenders is the need for more pipelines to provide market access for Western Canada s growing crude oil production.

UCP leader Jason Kenney campaigned on promises to make regulatory, economic and fiscal policy reforms, including a vow to cut the corporate tax rate to eight per cent from 12 per cent, eliminate the provincial carbon tax on consumers, cancel an NDP plan to lease hundreds of railcars to move oil and complete a review of the Alberta Energy Regulator to improve efficiency.

In comments emailed from the sidelines of the CAPP conference, CEO Grant Fagerheim of Calgary-based Whitecap Resources Inc. said he supports all of Kenney s major promises, including his pledge to spend up to $30 million to combat misleading news reports about the industry, and to create a war room to examine foreign-funded anti-oil campaigns.

"These are all exceptional initiatives that will assist in bringing back a more stable investment environment in Alberta and Canadian energy and bring back foreign and Canadian investment in energy -- and job opportunities for Albertans," he said.

Gary Mar, CEO of the Petroleum Services Association of Canada, said in a statement that he welcomes Kenney s vow to restore Alberta competitiveness.

"The platform of the UCP precisely reflects the needs of the tens of thousands of service sector companies and workers that PSAC represents that have been devastated by the flight of capital from the oil and gas industry," he said.
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