CDN NEWS | 
US NEWS 
by Maureen McCall
What a difference five days makes.
When Prime Minister Justin Trudeau spoke last week in Calgary, he framed the Oil and Gas sector crisis and the unprecedented price differential for WCS oil as an Alberta problem.
“There is no question that folks in Alberta, folks here in Calgary, are living through extremely difficult times. This is very much a crisis…When you have a price differential that’s up around $42, $50 even, that’s a massive challenge to local industry, to the livelihood of a lot of Albertans. I hear that very, very clearly.”
Less than a week later, much has changed.
News of GMs decision to cease production at their Oshawa, Ontario plant rocked the Auto sector with many references to “enormous job loss” and references to equally enormous government response.
Prime Minister Trudeau’s swift response to the news and his meeting with Jerome Dias, the head of the Auto Union and his promises that he “would be working with Premier Doug Ford to do “everything we can” to help workers.” stood in stark contrast to the Federal government’s indifference to years of oil patch layoffs of much greater magnitude that the impending Oshawa layoffs.
Estimates are that upwards of 100,000 jobs have been lost in the oil patch- some estimate the figure is higher when the ripple effects on related sectors are considered.
In last week’s address to the Calgary Chamber of Commerce, the Prime Minister identified the crisis in the Oil and Gas sector as a regional “Alberta” problem rather than as a crisis profoundly affecting Canada’s economy.
While speaking to a sold-out crowd Tuesday at the Calgary Chamber of Commerce, Finance Minister Bill Morneau was quick to reframe the conversation, perhaps in the light of commentary that Federal Government action for the auto sector vs oil and gas sector was unbalanced.
‘This is not a Calgary Challenge – the enormous differential – the issue around the discount that we have for some of our resources is a Canada problem. It’s a problem for all Canadians…I think we need to recognize that this is something that is important for the entire country.”
It’s encouraging that Mr. Morneau is hearing concerns expressed by the industry and hears our calls for action to address Oil and Gas sector concerns in the short and medium term. He reiterated “We are as vocally supportive of the industry as we should be. The decision to purchase the Trans mountain expansion pipeline was intended to substitute action for words.”
He expressed the Federal Government’s goal to support the industry and ensure the Canadian economy stays strong and even indicated that he is focused on Bill C-69 issues. “I heard concerns around Bill C-69 and I know that is a continuing area of concern and we are trying to see ways to address the legitimate concerns. The process is ongoing.”
Unfortunately, there are indicators that the Federal Government’s approach is all about process and not about progress.
Mr. Morneau stated the Federal government intends to have a “process that ensures the future of regulatory addresses not only health and safety issues but also the necessity of getting things done in our country”.
However, there were very little specifics about that process.
In addition, Mr. Morneau stops short of a necessary conclusion that will lead to true regulatory reform.
Until we hear a Federal minster concede that the Canadian regulatory process has become so dysfunctional that taking on the risk of the regulatory process has become unreasonable for private capital to accept, we will not have meaningful change to that dysfunctional process.
For companies proposing pipelines that give us access to international markets, the cost of regulatory process failure versus expected return of infrastructure investment is just too high.
And the Federal Government can’t continue buying projects when private companies abandon the dysfunctional regulatory process.
At some point, the Federal Government’s “process” must transition to the execution phase and this is where the current administration stalls.
The result is endless regulatory loops when they reverse Federal Government pipeline approvals or fail to appeal a Supreme Court ruling to quash pipeline approvals. Seemingly endless regulatory layers further regulatory hurdles, time delays and increased costs on projects as they did with the Northern Gateway Pipeline project and with the Trans Mountain Expansion.
The costs of regulatory approval processes for these projects are significant even without the cost of added regulatory requirements.
Reportedly, Enbridge spent approximately $500 million in seeking the federal government approval it obtained in June 2014 only to have the Prime Minister stop the Northern Gateway pipeline.
Kinder Morgan Canada documents say expanding the Trans Mountain pipeline will cost the Federal government another $1.9 billion beyond the company’s original construction estimate. No doubt a sizeable share of those costs will be going to satisfying additional regulatory requirements. So, while Albertans want to be grateful for Mr. Morneau’s more thoughtful comments yesterday to the Calgary Chamber of Commerce, we are faced with the Federal Government’s failure to address the fundamental problem that has exacerbated the lack of access to international markets for Canadian oil and gas.
A dysfunctional regulatory process….
We need swift action on regulatory reform – both in the short term and the mid-term.
Maureen McCall is a freelance writer, EnergyNow.ca contributor and has over 14 years’ experience in the oil and gas industry from operations to land and joint ventures
Share This:
COMMENTARY: BC Energy Faces a Complicated Puzzle – Margareta Dovgal, Resource Works