The Liberal Majority-- What it Could Mean for the Oil and Gas Industry

The Liberal Majority-- What it Could Mean for the Oil and Gas Industry

What the Liberal majority could mean for the oil and gas industry
October 23, 2015

Canada’s oil producers are facing new risks with the stunning election victory of Justin Trudeau, who campaigned on promises of tougher environmental rules and greater ambition in the fight against climate change.

With the Alberta New Democratic Party government already pursuing policies that could drive up industry costs, the Liberals’ win on Monday raises the prospect of delays in regulatory hearings for proposed oil-sands pipelines; greater pressure on the industry to reduce its greenhouse-gas emissions; and a government that is less inclined to defend the oil sands in the global marketplace.

The industry remains focused on enhancing market access through new pipeline capacity to the U.S. and offshore markets, and maintaining the regulatory changes imposed by the previous Conservative government, Tim McMillan, president of the Canadian Association of Petroleum Producers, said in a post-election statement.

CAPP worries that new governments in Edmonton and Ottawa will ratchet up carbon regulations and impose new costs on the industry, which is already struggling with low prices.

Prior to and during the campaign, Mr. Trudeau proclaimed his support for the oil industry during visits to Alberta. While he opposed Enbridge Inc.’s proposed Northern Gateway pipeline, he has supported TransCanada Corp.’s Keystone XL to the U.S. Gulf Coast, and offered a qualified endorsement of TransCanada’s Energy East project and Kinder Morgan Inc.’s Trans Mountain expansion.

However, he slammed Conservative changes to environmental-assessment procedures for pipeline projects, saying they resulted in a loss of confidence among Canadians. Both Energy East and Trans Mountain have applied for approval to the National Energy Board, and those reviews are governed by the Conservatives’ controversial changes to process.

Environmentalists and opposition critics on Tuesday urged the Liberals to reverse the Harper government’s conditional approval of Northern Gateway and to suspend the reviews of Trans Mountain and Energy East until they can strengthen the review process.

On Northern Gateway, it’s not clear what power the new government would have to overturn a certificate issued by its predecessor, particularly since Enbridge has signed up a number of aboriginal communities as partners and those First Nations would have to be fully consulted before such a decision was taken.

“If there is an existing approval, it becomes challenging [for the new government] to unwind that approval,” said lawyer Alan Ross, a Calgary-based partner in Border Ladner Gervais LLP and former Alberta government representative in Ottawa. “It will raise some legal concerns.”

However, the Liberals pledge to impose a ban on oil-tanker traffic in environmentally sensitive waters off the British Columbia coast, including the Dixon Entrance and Hecate Strait that leads to the planned Gateway terminus at Kitimat. Such a move would amount to a de facto rejection of the Gateway project, but it too could face a court challenge by the proponents.

TransCanada and Kinder Morgan also face the possibility that their project will be sidelined as the Liberals consider changes to environmental regulations.

In his now-famous memo to TransCanada, former Liberal campaign co-chair Daniel Gagnier warned that Energy East was likely to face such a delay, and encouraged the company to establish relations early with a new government and promote the prospect of investment and jobs. Mr. Gagnier’s memo was leaked last week, causing a brief controversy in what was otherwise a virtually flawless campaign.

Typically, projects already submitted for approval would be grandfathered when a government changes regulatory rules. But Mr. Ross said a Liberal cabinet will find it politically difficult to approve controversial pipeline projects that were reviewed under a process that Mr. Trudeau had publicly condemned as lacking in credibility.

The industry insists the regulatory process for major projects remains rigorous, but was merely streamlined to avoid duplication between agencies and levels of government. The changes “in no way undermined the rigour with which a breadth of issues are being reviewed,” Brenda Kenny, president of the Canadian Energy Pipeline Association, said Tuesday.

 

 

 

 

Source: McCarthy, Shawn. "What the Liberal Majority Could Mean for the Oil and Gas Industry." The Globe and Mail. Phillip Crawley, 20 Oct. 2015. Web. 22 Oct. 2015. www.theglobeandmail.com/report-on-business/what-the-liberal-majority-could-mean-for-the-oil-and-gas-industry/article26898667/.

MORE 2017 NEWS
Jan 7, 2021
The Federal Government of Canada has approved Ontario’s proposal to substitute the Federal Output Based Pricing System for the Ontario Emissions Performance Standards program. The Output Based Pricing System, or OBPS, has been the Federal backstop for provinces that did not have their own carbon pricing plans in place.
Apr 28, 2020
For years, the prices of oil and natural gas have been heavily correlated, as the production of natural gas in Canada comes as a by-product of oil extraction.
Mar 25, 2020
Ontario releases new Electricity Relief program for residential and small business
Oct 8, 2019
One of the largest factors playing into the voting decision of many professionals in the energy management industry, whether that be natural gas, electricity producers, or facility managers, is of course: ENERGY.
Aug 12, 2019
New research has emerged in the field of Absorbed Natural Gas (ANG). ANG is an alternative to Compressed or Liquified Natural Gas (CNG and LNG), which may include a process that is both more financially feasible and safer to handle than the two current options.
Jul 8, 2019
Over the past month, large moves have been made on the fate of the Federal carbon pricing backstop in Ontario. Companies will be seeing a new line item on their Enbridge bills beginning next month, with a $0.0391/m3 charge being added and back-billed to include all gas consumed from April 1st onward.
Jun 19, 2019
Government Approves Trans Mountain and how that affects the Canadian Oil Industry.
Mar 5, 2019
Natural gas is nearly universally accepted as the bridge resource between emissions-heavy fossil fuels and the green-tech movement. It is the ideal commodity to do the job, especially in North America, where the introduction of new drilling techniques in the mid 2000’s allowed access to enough natural gas to power the continent for decades to come.
Jan 2, 2019
As expected, the 2018/2019 winter season has been full of volatility in the natural gas markets, both in North America and globally. Prices rose dramatically in November with cold weather forecasts. In much the same way, prices dropped significantly near the end of December among mild weather forecasts for the beginning of January.
Nov 20, 2018
Since the start of November, the natural gas futures index on the NYMEX has shown incredible volatility. Now up 60% YTD, the natural gas futures are having a rocky relationship with weather forecasts across North America.
RECENT ENTRIES
Jan 7, 2021
The Federal Government of Canada has approved Ontario’s proposal to substitute the Federal Output Based Pricing System for the Ontario Emissions Performance Standards program. The Output Based Pricing System, or OBPS, has been the Federal backstop for provinces that did not have their own carbon pricing plans in place.