EDMONTON — Alberta Premier Jason Kenney says the investment climate in Canada has become so unsettling for private capital that it’s necessary for his government to start backing oil and gas projects, just as the federal Liberal government was forced to do in order to save the Trans Mountain pipeline project.
“The circumstance today is that politics are spooking capital markets and we are prepared to step up and ensure there’s a future,” Kenney told the Post on Wednesday. “I’m not talking about nationalizing the energy industry here.”
In 2018, the federal Liberal government had to step in and purchase the Trans Mountain pipeline project for $4.5 billion after its owner, Kinder Morgan, signalled that it was giving up the project in the face of continual activist opposition, regulatory changes and legal delays.
The premier had made the announcement Monday evening that his government would play a larger role in investing in Alberta’s energy sector in a pre-throne speech address to caucus and staff. It caught many observers unawares, but for Kenney, he says he’s “guided by core principles” and there’s a need to “deal with reality” at a time when, he says, economic problems are being caused by political decisions.
The plan was outlined in the throne speech at Alberta’s legislature on Tuesday by Lieutenant Governor Lois Mitchell. “When regulatory uncertainty, hostility by the federal government, or pressure from special interest groups inhibits investment in Alberta resource development, my government will act,” she read. “Like the government of the late Premier Lougheed, Alberta is prepared to invest directly and support companies and Indigenous groups, when necessary, to assure the future of responsible resource development.”
Former premier Lougheed, among his other government investments, created the Alberta Energy Corporation, which invested public money that helped lead to the development of the oilsands.
After 10 challenging months in power, Kenney said he thinks his government has hit a “fiscal sweet spot,” balancing the need to get the province’s finances under control while being mindful of a fragile market and chilled climate for investment.
It’s a Canadian problem
On Sunday, Teck Resources Ltd. withdrew its application for a $20-billion Frontier oilsands mine in northern Alberta, a major project that was expected to create 7,000 construction jobs and produce 260,000 barrels of oil per day. The bombshell decision was announced as the federal Liberal government sent mixed signals about whether it would allow the project, despite it having been endorsed by multiple reviews and supported unanimously by the affected First Nations. At the same time, protests across the country in solidarity with the minority of Wet’suwet’en hereditary chiefs who oppose a natural gas pipeline have been blocking critical transport infrastructure. And there are fears that the same sort of serious unrest could erupt over the Trans Mountain project.
“It’s a Canadian problem,” Kenney said. “There’s a lot of fault to go around…The general context of social disorder, of infrastructure blockages, was the efficient cause of the Teck withdrawal.”
He said the last little while has been “the two toughest weeks since I’ve been in office,” given negotiations with First Nations on Teck, the rail blockages across the country, all while trying to put together a throne speech and budget.
“It’s been pretty intense,” Kenney said. But he said he is buoyed by the fact that his fiscal plan, to be updated in Thursday’s provincial budget, is going according to plan. “Getting to balance at a time of economic adversity is not easy.” He dismisses the idea that his government should be spending more to help the economy as Alberta struggles through its ongoing downturn, since that hasn’t worked in the past. However, neither does he think it is a good idea during a time of economic fragility to “pull a Klein” and massively slash spending. In its last budget, Kenney’s government said it planned to reduce overall government spending by 2.8 per cent over four years while freezing funding for health and education.
Kenney says he believes that plan is reasonable. “I think a lot of Albertans have heard a great deal of noise which massively exaggerates the impact of our modest restraint,” he said. However, he said the province still faces unknown risks to its economy, namely the possibility of coronavirus causing a substantial recession, and the continued campaign by anti-oil activists to landlock Alberta energy.
“We will have to respond to events as they unfold,” Kenney said.
Email: tdawson@postmedia.com | Twitter: tylerrdawson