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Calgary & Alberta Economy

JonnyCanuck

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You may have seen or heard about the full page advertorial that is running today in newspapers across the country. CNRL, Cenovus & Meg Energy are reaching out to Canadians to rally behind the oil & gas sector. Despite what the public perception is of the oil sands, Canada is a leader in lowering carbon emissions. As a country, we just don' talk about it enough.
Obviously the intent is to make energy a campaign issue in the federal election. It is a pity that an industry so vital to the Canadian economy has to take it upon themselves to deliver this message to Canadians and the world. Another example of the failed leadership of our federal government.🙁
 

darwink

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The federal government acting as an advocate instead of as a regulator and trustee of the land is one of the reasons we ended up where we are.

I bet the milk farmers of Canada at $80 million for marketing a year (at the national level) spends more both in absolute terms, and relative terms advocating for its industry than the oil and gas industry.

Oil and gas was and largely continues to act like it supplies a strategic product which requires no marketing or advocacy, instead of a choice product which requires a full throat-ed defence and promotion.
 
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JonnyCanuck

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The dairy farmers have benefited from federal regulation (i.e supply management) that has protected that industry from foreign competition. No such regulation exists for oil & gas. If Quebec wants to import oil from Saudi Arabia or Venezuela they can. That consumption is at the expense of Canadian sources. Yeah ... we can get into the whole debate about the fact that we don't have the pipeline infrastructure to service Eastern Canada but that is not the fault of the oil & gas companies. The only industry, that I am aware of, that the federal government is going out of it's way to discourage growth in is the energy industry. (see bills C69 & C48)
 

darwink

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The good ol National Oil Policy guaranteed a Canadian market for Canadian oil from 1961 until it was dismantled at the request of the oil industry as part of the dismantling of the National Energy Program in the 80s so they could access better mid-western crude prices instead of prices set relative to Brent. Then supply to the USA market was guaranteed in CUSFTA, to guarantee Canada a market, and guarantee assured supply to the USA. Until NAFTA, which contains the provisions from CUSFTA, is replaced, policy decisions from decades ago constrain Canada's ability to shift rapidly to using Canadian oil for Canadian needs (without substantial simultaneous supply growth). All of these changes were supported by a large caucus of Alberta government MPs.

The USA broke this bargain when Keystone KL became bogged down.

Fact is we were in this mess before the current federal government was even elected. The court cases were lost based on laws Alberta's 'friends' passed, and on work (or rather, lack there of) our 'friends' did to try to expedite things.
 

JonnyCanuck

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Some positive news for a change. However, until the first barrel of oil enters the expanded pipeline and reaches Burnaby, I will continue to be skeptical. The earliest that will be is 2022, at best. That will be almost 9 years after the expansion plan was first announced.
Since 2008 when Keystone XL and Northern Gateway were announced, there were 4 major pipeline projects on the books (5 if you include Line 3). Today none of them have come to completion. If we are lucky one, and maybe two (Line 3), will be operational by 2022 ... that is 14 years later!!!! Hundreds of billions of dollars of lost corporate and tax revenues; billions of dollars of lost foreign investment in Alberta lost; thousands of jobs lost as oil sand expansion plans put on hold and probably thousands more jobs not created without the 'trickle down' economic benefit. And any extra pipeline capacity will be for nothing unless we find more than one customer for our products. 🤨
 

Chowda7

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darwink

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Chowda7

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Chowda7

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Also buried in the news this week AB gov't has negotiated with TC Energy to allow storage of natural gas during maintenance periods which will reverse TC Energy's policy change in 2017 that restricted storage during maintenance resulting in massive price swings. Pretty impressive turnaround time seeing that the Associate Minister for Natural Gas only started work on this in June.


 

JonnyCanuck

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It will take a series of little known accomplishments like this for the UCP to make a difference. Most Albertans won't see or hear about them. Unfortunately, they can't do very much on their own about the two major issues the energy industry is faced with.
1. Pipeline capacity outside of Alberta
2. Foreign investment in the oil sands

The oil sands have become a bit of a pariah to the outside world. It is going to take a concerted effort between Alberta, oil companies and the federal government to change that perception. I am not sure they can all get on the same page as long as there is a federal Liberal government.
 
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darwink

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^ You just need the pipelines, I don't really care about the pariah status. We aren't going to return to a path of oil sands 8 million, and we have to accept that. Prices just won't justify it, even without a triple discount.

I was happy to hear the minister of environment last week talking about continuing the program that gives royalty credits to petrochemical producers making new capital investments. The UCP opposition to a program that costs no money was always a puzzler to me.
 

JonnyCanuck

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^ You just need the pipelines, I don't really care about the pariah status. We aren't going to return to a path of oil sands 8 million, and we have to accept that. Prices just won't justify it, even without a triple discount.
I disagree. Countries are/will be making decisions on who they will be investing in or who they are buying oil from, based on a false perception of the oil sands. An improved sales story in the future, should increase demand for our product. Sure, we need pipelines first to get it to outside markets. However the two can go hand in hand
 

darwink

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You can disagree all you want, but it still isn't going to bring oil sands investment back the way it was. There is no reason for majors to invest in the oil sands unless they have an edge to play. Back before shale reserves were provable maintaining reserve ratios was a big reason to invest, in oil sands, in deepwater. As the pipelines coming on stream, you'll have some stalled projects revived to ake advantage of the capacity, but anyone without committed capacity has to worry about fighting shale players which will be to market years earlier.

And yeah, the oil market globally is a blood bath right now. The shale players in the US are getting hammered. We are outside of it right now, but they are stuck in a feedback loop that makes it impossible for them to make money over the lifecycle of their projects.
 

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