May 2019

First oil

Alberta looks forward to better days
Kurt Abraham / World Oil

With references to Stephen Spielberg and Edmonton-born Michael J. Fox not intended, Alberta’s provincial election last month was truly a “Back to the Future” moment. In trying to right the shaky ship of provincial government and secure their economic future, Alberta’s citizens reached back beyond four years for fresh inspiration by electing the United Conservative Party (UCP) to power. Led by incoming provincial Premier Jason Kenney, UCP picked up 63 of 87 seats in Alberta’s Legislative Assembly, to 24 for the incumbent New Democratic Party (NDP), led by outgoing Premier Rachel Notley.

For 44 years, until the spring of 2015, the center-right Progressive Conservative Association of Alberta (PCA) had governed the province, winning every election going back to 1971. Yet, by 2014, differences among conservatives had them choosing up sides between PCA and the Wildrose Party. These differences were exacerbated by the oil price collapse.

By the spring of 2015, the seeds of the “accidental experiment” (as one industry friend in Calgary labels it), an NDP majority, were sown. Rather than choose between one conservative party or the other, some voters instead chose NDP as a protest. Another industry friend in Calgary told me recently that what these individual voters didn’t know was that so many of them had the same idea. Thus, NDP got into power with just a 40.62% plurality. 

Well, wake up everyone did, to the NDP reality that ensued over the last four years. Notley’s regime could do little to help the struggling Alberta oil and gas industry while making the situation worse by doing federal Premier Justin Trudeau’s bidding and passing a carbon tax. Most frustrating of all was Notley’s failure to get any kind of new pipeline project approved. Meanwhile, the PCA and Wildrose formed a united party, UCP, in 2017 and put together a solid agenda. Notley’s defeat was ensured when Trudeau failed to fulfill her claim that he was going to re-start the Trans-Mountain Pipeline Project by Alberta’s election day.

Kenney’s considerable task. The new Premier has promised an ambitious agenda, including a cut in the corporate tax rate to 8% from 12%, development of a natural gas strategy, a reduction in project approval red tape, a complete review of the Alberta Energy Regulator, scrapping Notley’s cherished $22/ton carbon tax, and getting new pipelines built.

But it won’t all be easy, particularly the pipelines. Kenney has pledged to take a more aggressive approach to pipeline approvals, even threatening to cut off oil and gas exports to neighboring provinces (as in BC) that don’t cooperate. One cannot envision this happening.

Nevertheless, Kenney received hearty congratulatory statements from Canada’s three major associations, CAPP, PSAC and CAODC. And the Global Petroleum Show (to be held June 11-13) went so far as to declare, "We're open for business!"

Colorado’s regulatory mess. As detailed by our contributing editor in Washington, Roger Bezdek, on page 19, the new Democrat majority in Colorado’s legislature appears to believe in the “Will of the People” only when it suits their purposes. Not happy that voters rejected Proposition 112 by a 57%-42% majority, the majority party rammed a bill through the legislature that accomplishes what the referendum couldn’t, making life much tougher for operators. And as Technical Editor Craig Fleming examines the situation further in his column on page 86, he notes that this flawed thinking has infected a federal judge in neighboring Wyoming.

Chevron vs. Oxy on Anadarko. As this issue went to the printer, the battle to acquire Anadarko Petroleum remained unresolved. Despite an April 12 agreement, whereby Anadarko would be acquired by Chevron, Occidental Petroleum on April 24, helped by Warren Buffett, made its third and most public offer to acquire the large independent. No matter which way the acquisition finally goes, the U.S. E&P sector will be markedly changed. WO

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Kurt Abraham
World Oil
Kurt Abraham
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