UCP Launches Plan to Bring Oil and Gas Jobs Back to Alberta

Press Release

Royalty guarantee, support for natural gas, well remediation, faster approvals, petrochemical diversification all part of UCP plan

TURNER VALLEY, AB (April 2, 2019): Laying out the United Conservative Party’s strategy to create jobs in Alberta’s energy sector, UCP leader Jason Kenney said today that after four years of NDP mismanagement, it had become vital to restore investor confidence.

“It takes decades to earn a reputation as a good place to do business. With their ideological opposition to the development of our resources, the NDP lost Alberta’s good reputation in months, triggering a massive decline in exploration activity. By the Fraser Institute’s estimate, Alberta has nosedived on the NDP’s watch from 14^th to 43^rd most desirable destination for upstream oil and Gas Gathering (OGG) investment. A United Conservative government will proudly stand up for our 151,000 energy workers and immediately launch a comprehensive plan to get our energy sector creating jobs again.”

Kenney said a UCP government would:

• Reform the Alberta Energy Regulator (AER), to speed up well approvals;
• Guarantee in law that the royalty regime in place when a well is permitted, will remain in place for that project in perpetuity.
• Intervene at all National Energy Board hearings that affect Alberta oil and gas interests.
• Help get drilling rigs back in the field by streamlining regulations that hinder the industry;
• Work with the industry to get a fair price for Alberta natural gas, including support for LNG infrastructure to the west coast, appointing an Associate Minister for Natural gas, and implementing the Kvisle Panel recommendations;
• Encourage diversification by supporting growth of the petrochemical industry;
• Speed up the reclamation of abandoned well-sites.
• Facilitate Indigenous financial participation in resource projects and infrastructure.

“Getting investment back is critical. That means no more questions about the predictability of royalties in Alberta, and meeting or beating other jurisdictions when it comes to the speed of approvals.”

Kenney said that despite hiring more staff, the performance of the AER had eroded under the NDP: industry sources say it now takes twice as long to get a well approved in Alberta as it does in Saskatchewan, and four times longer than it does in Texas.

“It is up to the AER to ensure that energy development proceeds in an efficient and environmentally responsible manner. Our goal is to have the fastest approvals in North America, which means cutting AER timelines by at least 50 percent. And while we must preserve Alberta’s reputation as a world leader in developing resources responsibly, we must also restore our reputation with investors as a leader in predictable and efficient regulation. It is no surprise that our U.S. competitors are enjoying an oil boom while our industry languishes.”

Kenney promised that within 180 days of coming to office, a UCP government would therefore:

• Complete a review of the AER to identify efficiencies in both the budget and regulations of the AER;
• Establish clear benchmarks for approval times, and maintain a public dashboard of the AER’s key performance metrics;
• Streamline and expedite the AER’s review processes to bring greater certainty and stability to Alberta’s investment climate.

“Part of reforming the AER has to do with governance,” Kenney added. “We need to make sure that the board shares our commitment to putting Albertans back to work. That’s why we will fire Ed Whittingham who Rachel Notley appointed to the AER board after he had been involved in years of taking foreign special interest money to attack Alberta’s oil and gas industry.”

“Alberta needs to get back to honoring contracts,” Kenney continued. “Recent Alberta governments shook investor confidence with royalty reviews. A United Conservative government however, will guarantee in law that the royalty regime in place when a well is permitted, will remain in place for that project in perpetuity.”

“And to ensure that Alberta’s oil and gas interests are protected, a United Conservative government will consistently intervene in NEB hearings that affect our industry. With dozens of foreign funded special interests opposing every energy project at the NEB, we need the voice of the government of Alberta telling the truth about how we produce energy with the highest standards on Earth.”

Kenney outlined how under the NDP, there has been a massive decline in exploration activity, with capital expenditure down by 75 percent since 2014.

“Some of this is red tape. To help get rigs back in the field, a UCP government would review regulations and licensing requirements, especially as they affect the movement of heavy equipment. We shall for example reclassify service rigs as off-road vehicles, similar to farm equipment and replace rural road permits with an annual provincial permit.”

Canada is the fourth largest natural gas producer in the world, and more than half of our production comes from Alberta. But lack of pipeline access is forcing natural gas producers to sell their product at discounts of as much as 70 percent.

“Alberta is practically giving away this valuable resource that belongs to all Albertans,” said Kenney. “A United Conservative government will implement a robust natural gas strategy so that our producers can create jobs for Albertans. Among other important measures, we shall appoint an Associate Minister and an Associate Deputy Minister for Natural Gas, and work with the natural gas industry to facilitate infrastructure for shipping Alberta gas to Asian markets through Liquified Natural Gas projects to the coast.”

Alberta also has an opportunity to attract major private sector capital investment to leverage our inexpensive feedstock into petrochemical diversification and upgrading.

“We will respect agreements made by the current government under the Petrochemical Diversification Program (PDP),” said Kenney. “As an incentive to develop future projects, we are open to extending the PDP royalty tax credit model. We will also amend the Municipal Government Act to allow municipalities to offer targeted property tax breaks as incentives for petrochemical and other major capital investments. With the same objectives, we will work with municipalities to create pre-approved industrial zones. This will speed up approvals and allow companies to ‘plug and play’.”

Finally, there are a large number of suspended or inactive oil and gas wells and associated facilities in Alberta that have reached the end of their economic lives. Under the current climate of reduced oil and natural gas prices, this inventory of suspended wells and facilities has grown substantially.

UCP Leader Kenney announced that to reduce costs and speed up the rate at which wells that will not be used again are officially “abandoned”, a UCP government would streamline the process for well and facility abandonment and environmental reclamation.

A UCP government would:

• Work jointly with the AER and industry to overhaul the liability management framework in Alberta, ensuring liabilities are covered without unduly discouraging new investment.
• Propose that the federal government provide tax incentives and financial support such as “green” flow-through shares for the abandonment and environmental reclamation of oil and gas wells and associated surface facilities.
• Urge the federal government to establish alternative financial vehicles that focus on environmental reclamation in the oil and gas industry, such as adapting Qualifying Environmental Trusts (QET) to include well decommissioning costs.

Kenney concluded, “Alberta is in a jobs crisis after four years of economic stagnation and decline. The number one reason is the success of the foreign funded campaign to landlock our energy, and the consequences of the Trudeau-Notley alliance.”

These include, said Kenney:

• Surrendering to President Obama’s veto of Keystone XL
• Scrapping Northern Gateway, a pipeline to the Pacific which Premier Notley opposed
• Regulating the Energy East pipeline out of existence
• Giving the B.C. NDP a blank cheque to delay and block the Trans Mountain pipeline, while still receiving hundreds of millions of dollars in discretionary federal transfers
• Giving Quebec a veto over New Brunswick’s effort to revive the Energy East project while providing Quebec a $1.3 billion increase in equalization
• Pushing the “tanker ban,” Bill C-48, and the “No More Pipelines Act,” Bill C-69, through the House of Commons
• Extending the unfair equalization program by five years without discussion

Kenney said that many other changes proposed by the UCP would also help kickstart the industry, especially the Job Creation Tax Cut, carbon tax elimination, the Red Tape Reduction Action Plan, and the Open for Business Act.

“However,” he concluded, “to get Alberta back to work, and to create jobs in our energy sector, it is necessary for Alberta to move from a defensive, passive, and apologetic approach to a strong, assertive, and strategic defence of our economy, our workers, and our way of life. And with a United Conservative Party government in office, that is what we will do – get pipelines built, fight back against foreign-funded special interests and stand up for a fair deal in Canada.”

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For more information, contact:

media@unitedconservative.ca

Creating Oil and Gas Jobs

BACKGROUNDER

Alberta’s energy sector is truly a remarkable success story. It is a global leader in environmental standards, labour standards, and technological innovation.

Under the NDP however, which has shown their underlying opposition to the development of our resources, Alberta’s energy sector has suffered huge setbacks.

The Trudeau-Notley alliance

The number one reason is the success of the foreign funded campaign to landlock our energy, and the consequences of the Trudeau-Notley alliance.

Together, the Trudeau-Notley alliance has taken numerous steps to harm Alberta’s long-term interests, including:

• Surrendering to President Obama’s veto of Keystone XL.
• Scrapping Northern Gateway, a pipeline to the Pacific which Premier Notley opposed.
• Regulating the Energy East pipeline out of existence.
• Giving the B.C. NDP a blank cheque to delay and block the Trans Mountain pipeline, while still receiving hundreds of millions of dollars in discretionary federal transfers.
• Giving Quebec a veto over New Brunswick’s effort to revive the Energy East project while providing Quebec a $1.3 billion increase in equalization.
• Pushing the “tanker ban,” Bill C-48, and the “No More Pipelines Act,” Bill C-69, through the House of Commons.
• Extending the unfair equalization program by 5 years without discussion.

Shortly after becoming Premier, Rachel Notley said that Alberta is “the embarrassing cousin that no one wants to talk about.”

That apologetic attitude emboldened those seeking to damage our vital economic interests.

It is time for Alberta to move from a defensive, passive, and apologetic approach to a strong, assertive, and strategic defence of our economy, our workers, and our way of life.

A clear, comprehensive plan to create jobs in the energy sector

Unlike the NDP, a United Conservative government will proudly stand up for our 151,000 energy workers.

Many of the UCP’s other proposed changes such as the Job Creation Tax Cut, carbon tax elimination, the Red Tape Reduction Action Plan, and the Open for Business Act will also help to kickstart investment in the industry.

However, the UCP a clear industry-specific plan to restore investor confidence and get our energy sector creating jobs again, by giving a royalty guarantee, improving the regulation of the energy sector, standing up for Alberta’s energy interests at the NEB, revitalizing our natural gas sector, encouraging the further development of Alberta’s petrochemical industry, rationalising regulations for the movement of heavy oilfield equipment and speeding up the reclamation of abandoned wells.

Royalty Guarantee

Recent Alberta governments shook investor confidence with royalty reviews. In fact, according to the Fraser Institute, during the NDP’s time on power, Alberta has nosedived from being in the “top 15 most desirable destinations¹ for upstream oil and gas gathering investment, to 43^rd, behind (for example) Thailand, Namibia and Morocco.²

A United Conservative government will guarantee in law that the royalty regime in place when a well is permitted will remain in place for that project in perpetuity.

The Alberta Energy Regulator (AER)

The AER should ensure that energy development occurs in an efficient and environmentally responsible manner. We must preserve Alberta’s reputation as a world leader in developing resources responsibly – but we must also restore our reputation with investors as a leader in predictable and efficient regulation.

Under the NDP, the performance of the AER has declined despite hiring more staff. The Canadian Association of Petroleum Producers now estimates that getting wells approved in Alberta can take up to twice as long as in Saskatchewan and four times longer than in Texas. It is no surprise that our U.S. competitors are enjoying an oil boom while our industry languishes.

View Table

A United Conservative government will:

• Within 180 days complete a review of the AER to identify efficiencies in both the budget and regulations of the AER.
• Establish legislated benchmarks for approval times, and maintain a public dashboard of the AER’s key performance metrics.
• Aim to have the fastest approvals in North America, reducing AER timelines by at least 50 percent.
• Streamline and expedite the AER’s review processes to bring greater certainty and stability to our investment climate.
• Fire Ed Whittingham from the AER.

Intervene in NEB Hearings

A United Conservative government will ensure that Alberta intervenes at all National Energy Board hearings that affect Alberta oil and gas interests.

Revitalizing Alberta’s Natural Gas Industry

Canada is the fourth largest natural gas producer in the world, and more than half of our production comes from Alberta. Tens of thousands of Albertans work in natural gas and many more work in related industries like our petrochemical sector. Western Canada now has a large resource base in the Deep Basin and Montney areas of western Alberta and northeastern B.C.

The lack of pipeline access is forcing natural gas producers to sell their product at a massive discount. In 2018 American producers sold for roughly $3.00/GJ, while Alberta’s spot price averaged just under $1.00/GJ (US) – nearly 70 percent less. We are practically giving away this valuable resource that belongs to all Albertans.

A United Conservative government will implement a robust natural gas strategy so that our producers can create jobs for Albertans.

A United Conservative government will:

• Appoint an Associate Minister for Natural Gas.
• Appoint an Associate Deputy Minister for Natural Gas in the Department of Energy.
• Review and implement key recommendations of the 2018 Roadmap to Recovery, (a.k.a the Kvisle Panel.)
• Increase regulatory efficiency and streamline project approvals to increase the pace of activity.
• Work with producers, the National Energy Board, and TransCanada to evaluate changes to regulations and policies pertaining to the NGTL system, including tolls and tariffs, and interconnection to the TransCanada Pipeline System through to the export points in Saskatchewan and Manitoba.
• Work with producers, TransCanada, and regulators to increase throughput, reduce price volatility, and lower shipper tolls on major natural gas pipeline systems.
• Work with the natural gas industry to facilitate infrastructure for shipping Alberta gas to Asian markets through Liquified Natural Gas projects.

Energy Diversification into the Petrochemical industry

Alberta has an opportunity to attract major private sector capital investment to leverage our inexpensive feedstock into petrochemical diversification and upgrading. We will respect agreements made by the current government under the Petrochemical Diversification Program (PDP) and will be open to extending the PDP royalty tax credit model to incentivize future projects.

We will also amend the Municipal Government Act to allow municipalities to offer targeted property tax breaks as incentives for petrochemical and other major capital investments, and work with municipalities to create pre-approved industrial zones for the same reason, to speed up approvals and allow companies to “plug and play.

Drilling and Exploration

Under the NDP, there has been a massive decline in exploration activity, with capital expenditure down by 75 percent since 2014.

A United Conservative government would help to get rigs back in the field; we will:

• Reclassify service rigs as off-road vehicles, such as farm equipment.
• Replace rural road permits with an annual provincial permit.
• Reclassify service rigs as provincial carriers even when crossing provincial boundaries.
• Extend BOP Level IV certification from three to five years.
• Extend mast and overhead equipment level IV certification from 1,000 to 2,000 operating days.

Oil and Gas Well and Facility Environmental Reclamation

There are a large number of suspended or inactive oil and gas wells and associated facilities in Alberta that have reached the end of their economic lives. Under the current climate of reduced oil and natural gas prices, this inventory of suspended wells and facilities has grown substantially.

A United Conservative government will:

• Streamline the process for well and facility abandonment and environmental reclamation to reduce costs and increase the rate at which wells that will not be used again are officially “abandoned.”
• Work jointly with the AER and industry to overhaul the liability management framework in Alberta, ensuring liabilities are covered without unduly discouraging new investment.
• Propose that the federal government provide tax incentives and financial support such as “green” flow-through shares for the abandonment and environmental reclamation of oil and gas wells and associated surface facilities.
• Urge the federal government to establish alternative financial vehicles that focus on environmental reclamation in the oil and gas industry, such as adapting Qualifying Environmental Trusts (QET) to include well decommissioning costs.

Indigenous participation

A United Conservative government will facilitate Aboriginal financial participation in resource projects and infrastructure.

A United Conservative government will Stand Up for Alberta with a plan to:

• Get pipelines built
• Fight back against foreign funded special interests, and
• Stand up for a fair deal in Canada

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