The time has come for Alberta’s government to draw a line in the sand. They need to tell Ottawa in no uncertain terms: “This, and no farther.”
The federal Liberal government appears to be close to doing the unimaginable: killing the $20 billion Teck oilsands investment. With the stroke of a pen, they are on the edge of killing one of the biggest investments in Canadian history, 7,000 good-paying jobs, and a key component of Alberta’s sluggish economy recovery. Killing Teck will be a hammer in the coffin.
It will not have been market conditions. It will not even have been a hostile rogue province playing robber-baron with its borders. It will have been the federal government, elected to represent the interests of all Canadians.
Until this week, it was unimaginable that the Liberals would have the gumption to kill the Teck oilsands investment. However much the Liberals may ideologically oppose the continued existence or expansion of the oil and gas industry, they are politically astute enough to know that doing so would create a political Prairie fire that would burn out of their control. With his reconciliatory language after the federal election, even Trudeau appeared to recognize that the West didn’t just give up on him, but was dangerously close to giving up on federalism itself.
I was wrong. Last week, Liberal Minister Jonathan Wilkinson said on national television that the federal government may delay approval of the Teck investment unless Alberta dropped its opposition in the courts to his government’s carbon tax. For background, Alberta’s UCP left in place the NDP’s carbon tax on industry, as well as most of its anti-carbon regulations. Alberta stands a good chance of losing in court to Ottawa in any case.
It may have been dismissed as posturing until Eastern Liberal MPs came out pressuring the prime minister to kibosh the Teck mine outright. For them, it was not a matter of the West’s economy, but of saving the planet from Global Warming.
And then the bombshell: Ottawa is preparing an aid package to Alberta to cushion the blow of killing the project. This is the clearest sign yet that my most paranoid suspicions of Ottawa might become reality.
Ottawa unilaterally killing the biggest bright spot on Alberta’s dark horizon, must surely be a line too far even for the West’s federalists.
Try as the NDP might to paint Jason Kenney as a closet separatist, he is an avowed federalist. His Fair Deal Panel is either meant to take the steam out of the nascent independence movement’s engine, or a good-willed move to firewall Ottawa off from raiding Alberta’s wealth while remaining a part of Canada. Either way, Kenney has been the best friend federalists can have in Wildrose Country right now.
This is a corner that Kenney does not want to be backed into. He was elected on getting a fair deal for Alberta and fighting the kleptocrats in Ottawa. If after his election and striking his Fair Deal Panel, Ottawa still feels it has the muscle to wreak havoc on Alberta, it will be clear as day that there is no “fair deal” to be had.
It’s still to be seen if Trudeau is willing to pull this forbidding trigger, but if he does, Kenney needs to show more backbone than simply being cross with Ottawa.
He needs to be unequivocally clear that under no circumstance will Alberta accept a penny of Ottawa’s guilt money, disguised as an “economic aid package”. He should tell the prime minister Alberta does not want a penny more than any other province is entitled to. Only, that Alberta should keep more of its own money at home, and be allowed to develop its economy in peace.
This would trigger a game of chicken with Ottawa. Would Trudeau really be willing to plunge a dagger in the heart of Alberta’s economy, if Alberta was not willing to put a band-aid on the wound as it said “thank you”?
Ottawa’s “aid package” is little better than the British offering colonial Americans sugar to go in their tea.
The correct response if Ottawa does so, is to throw the tea in the harbour.
Derek Fildebrandt is Publisher of the Western Standard, and President & CEO of Wildrose Media Corp.
WITTEVRONGEL: The oil and gas industry is helping rein in Alberta’s deficit. Can it also help lower GHGs?
“If we want to have a chance of hitting this ambitious target, we need to shift the narrative from blaming the oil and gas industry to embracing it as an integral part of the solution.”
Alberta’s expected deficit will be less than half what was projected in February, largely thanks to the rebound of the oil and gas industry. Expanded oilsands production, improved oil prices, and increased oil and gas investment have resulted in higher than anticipated resource revenues. In fact, the province’s revised royalty estimates are now triple the original sums.
While the oil and gas industry steps in and once again saves Alberta, the forecasted resource revenue is being called too high to be sustainable. In addition, the serendipitous rebound occurs as we emerge from Canada’s “infernal summer,” with many calling for decisive action on climate change.
Given the federal government’s pledge to achieve net-zero emissions by 2050, we must consider how and where the oil and gas industry fits into that. While some are more than happy to see the entire sector go up in flames, others have a more nuanced vision of the future. With its technology, resources, and infrastructure, the industry is actually uniquely situated to not only play its part in a low-emission future, but to lead.
While the Canadian oil and gas sector contributes only about 0.3% of overall global GHG emissions, and work is well underway to develop more renewable energy sources for consumption, there are other high-emitting industries like steel and cement that lack viable options for reducing emissions. Therefore, without some form of carbon capture, utilization, and storage (CCUS), net-zero seems unrealistic.
CCUS involves capturing carbon dioxide and, if not used on site, often transporting it (by pipeline) to be used elsewhere or injected into geological formations for permanent storage so it does not re-enter the atmosphere. The oil and gas industry, with its expertise, pipelines, and other infrastructure, is best positioned to lead in this area. In fact, the same formations we extract oil and gas out of can store CO2, deep in the ground.
In recent years, some of the world’s largest and most advanced carbon capture projects have been developed in Alberta. With a promised federal investment tax credit for CCUS slotted to take effect in 2022, this is an opportune time to expand and grow CCUS potential.
In addition, the much-vilified Alberta oilsands are in close proximity to Canada’s Western Canadian Sedimentary Basin, offering a world-class opportunity for permanent carbon storage.
CCUS fits into the broader circular economy model for mitigating emissions. The four Rs of the circular carbon economy—reduce, reuse, recycle, and remove—were endorsed at the G20 Energy Ministers meeting in 2020 as being “a holistic, integrated, inclusive, and pragmatic approach to managing emissions.” As such, CCUS has a part to play in a resilient, sustainable system.
Reducing net GHG emissions to zero by 2050 is going to be a challenge. If we want to have a chance of hitting this ambitious target, we need to shift the narrative from blaming the oil and gas industry to embracing it as an integral part of the solution.
Guest Column by Krystle Wittevrongel, Public Policy Analyst at the Montreal Economic Institute www.iedm.org
Deal sees Alberta becoming half owner of the Sturgeon Refinery
North West Refining will be paid $425 million to forego future tolling revenue and for its 50% equity stake. Canadian Natural Resources Ltd., which owns the other 50% of the refinery, will also be paid $400 million.
The Alberta government now owns 50% of the troubled Sturgeon Refinery.
Energy Minister Sonya Savage said yesterday the move should free up $2 billion for provincial coffers.
“We are taking action to get a better deal for taxpayers and reducing long-term costs. This agreement provides more economic certainty which will benefit Albertans today and into the future. We look forward to our renewed arrangement with the refinery’s operator, the North West Redwater Partnership, in the years to come,” Savage said in a release.
Under the deal, the government is transferred a 50% ownership interest in the refinery previously held by North West Refining.
The government made the switch after reviewing contracts the Sturgeon Refinery signed with former premier Ed Stelmach’s government in 2011.
The Alberta director of the Canadian Taxpayers Federation, Kevin Lacey, wasn’t happy with the deal.
“The government is just trying to dig themselves out of bad contracts they signed in the past. We expect our government to run schools, hospitals and keep our taxes low, they should not be involved in the energy business,” Lacey told the Western Standard.
“Alberta needs our government to support our energy sector, yes, but it should not be directly involved in the industry. Let the politicians run the government and business people run businesses.”
With the deal, North West Refining will be paid $425 million to forego future tolling revenue and for its 50% equity stake. Canadian Natural Resources Ltd., which owns the other 50% of the refinery, will also be paid $400 million.
“This process will not cost taxpayers any additional funds than the government would otherwise be obligated to pay as a toll payer,” said a government release.
“Through the agreement, the government is able to capture the value of processing bitumen as both a toll payer and facility owner.
“This plan improves the government’s net present value for the refinery by approximately $2 billion over the life of the project. Net present value is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.”
The government said the agreement also frees up $1 billion in cash flow over the next five years because additional cash flow is a result of the restructuring.
The agreement includes a 10-year extension of the processing agreement to 2058.
“With this optimization, the government has an equal vote in the control of the refinery to which it is the majority toll payer. Canadian Natural will provide operational leadership to North West Redwater Partnership,” said the government.
The Sturgeon Refinery is designed to process approximately 79,000 barrels per day of diluted bitumen from Alberta’s oil sands into higher-value products like low-carbon, low-sulphur diesel, vacuum gas oil, diluent and natural gas liquids.
It was set to originally cost $5.4 billion but was completed last year at a cost of close to $11 billion.
WAGNER: The partnership rooted in faith that built the oil sands
“Ernest Manning’s enthusiasm for the development of the oil sands helped to attract Pew’s investment, and their shared Christian commitment cemented a partnership that proved beneficial for the entire province.”
The two men most responsible for the commercial development of Alberta’s oil sands were Ernest Manning and J. Howard Pew. Ernest Manning, of course, was Alberta’s premier for 25 years, and Pew was a long-time president of Sun Oil (later known as Sunoco), a company co-founded by his father Joseph Newton Pew in 1886. These two men had a common spiritual bond that contributed to their successful relationship, facilitating their cooperation on the development of the oil sands.
The opening of Alberta’s oil sands is one of the events covered in Darren Dochuk’s 2019 book, Anointed with Oil: How Christianity and Crude Made Modern America. Dochuk is a history professor at the University of Notre Dame in Indiana, but he was born and raised in Edmonton. He is no stranger to Alberta and its history.
Beginning in the 1920s, attempts were made to commercially extract usable products from the oil sands, but they were mostly unsuccessful. Nevertheless, Manning saw the potential they held and continued to search for an investor. Pew was interested and saw the oil sands as a resource that could help provide North American energy security. Sun Oil Vice-President Clarence Thayer shared Pew’s perspective.
As Dochuk writes, “Impelled by Thayer and his own obsession with the oil sands, in 1962 Pew committed a quarter of a billion dollars to the creation of Great Canadian Oil Sands.”
Dochuk adds, “Pew and Manning would manage this investment together over the coming years, as business partners and fellow believers.”
That “fellow believers” bit is important. Manning was known across much of Canada as the radio evangelist for Back to the Bible Hour, and he was also recognized in American evangelical circles. For instance, Manning spoke on behalf of evangelist Billy Graham and wrote for Graham’s periodical. Pew was also heavily involved in conservative evangelical causes, and was even known for a time as “God’s bankroller” due to his financial support of those causes. Pew was as conservative in politics as he was in religion, and prominently supported Arizona Senator Barry Goldwater’s 1964 presidential campaign, which was a watershed moment for the conservative movement to take decisive control over the Republican Party.
Construction of the Great Canadian Oil Sands (GCOS) processing plant began in 1964. A ceremony was held on July 2 of that year to inaugurate the construction. At the climax of this event, Dochuk writes, Ernest Manning “praised the project as the finest example of free enterprise from which Alberta and the entire Dominion would profit.”
Even as construction got underway, negotiations over the project continued between the Alberta government and Sun Oil. They didn’t always see eye-to-eye. Manning, of course, wanted to ensure Albertans would receive maximum benefit for the development of their resources. Pew, on the other hand, wanted to maximize the profitability for Sun Oil.
Dochuk writes, “While Manning and Pew had become good friends by this point, conflicting interests still required ironing out. Enter Billy Graham. With their mutual ally serving as mediator, Pew and Manning began exchanging letters at a fairer clip. Soon the correspondence assumed a comity strengthened by talk about the Bible.”
Manning and Pew’s relationship deepened further, and their wives became good friends as well. The GCOS plant officially opened in 1967, with both Manning and Pew presiding over the ceremony.
The following year Manning retired as premier and was replaced by Harry Strom, a devoted evangelical just like his two Social Credit predecessors. As Dochuk notes, “One of Strom’s first trips after becoming premier was to Washington, DC, to hear Manning keynote Richard Nixon’s Presidential Prayer Breakfast, an event assisted by Billy Graham and J. Howard Pew.”
Since the discovery of oil at Leduc in 1947, Americans have played a key role in in the development of Alberta’s oil resources. It was J. Howard Pew – and not a Canadian investor – who decided to risk millions on opening up the oil sands. All Albertans have benefited from his risky venture through the economic prosperity that resulted, as well as the royalties paid to the provincial government. Those royalties pay for health care, education and other services.
Ernest Manning’s enthusiasm for the development of the oil sands helped to attract Pew’s investment, and their shared Christian commitment cemented a partnership that proved beneficial for the entire province.
Michael Wagner is a Senior Columnist for the Western Standard
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