The Syncrude oil sands site, outside of on April 28th, 2015 in Fort McMurray, Alberta.Ian Willms/Getty Images
Simon Doyle is a reporter based in Ottawa who specializes in lobbying and public affairs. Follow him on Twitter @sdoyle333.
The oil industry is laying the groundwork to lobby hard on Rachel Notley's energy royalty review, preparing arguments from the composition of the review panel to international comparisons on royalty rates.
As the premier-designate starts to plan for a review of the province's energy royalties, oil and gas companies will frame the debate in the context of depressed crude oil prices, sector cutbacks in capital spending and the need to compete globally for investment capital, lobbyists said.
Speaking on a background basis because it's too early to discuss the issue publicly, energy companies and associations are starting to craft positions on the royalty review, including the need for a lengthy, thorough process, having a senior energy official on the panel and gradually phasing-in any changes to the royalty fees.
What's the issue?
The NDP campaigned on reviewing whether Albertans are receiving an appropriate share of royalties from oil and natural gas. Lobbyists are now requesting introductory meetings with Ms. Notley and her transition team.
Much of the industry is lobbying through the Canadian Association of Petroleum Producers, which has reached out to the incoming NDP government for a potential meeting "in the days ahead," spokeswoman Chelsie Klassen said via e-mail. She said the industry is seeking "competitiveness for investment, including a stable and predictable fiscal regime," and access to new markets through pipelines, among other principles.
The Alberta lobbyist registry shows that Global Public Affairs is currently registered to lobby for BP and the Williams Companies while Hill+Knowlton Strategies is registered for Statoil ASA. Both firms' registrations list royalties as a subject matter for lobbying, among other issues.
Several companies also list royalties as an issue in their in-house lobbying registrations, including CNOOC Ltd.-owned Nexen Energy ULC, Imperial Oil Ltd., Chevron, Shell, Syncrude Canada Ltd., and Husky Energy Inc.
Ms. Notley, now focused on appointing a cabinet, told reporters this week no dates have been set for the royalty review or the government's first budget. She said the royalty review will happen at some point during her first term, before the next election.
"I'm not going to make any specific determinations around timing except to say it was in our platform, it will happen within this term and it will be preceded by good, thorough discussions with all stakeholders, including industry," Ms. Notley said. "No one will be surprised by the way it unfolds."
Who's affected?
CAPP's members include the Canadian subsidiaries of energy giants Royal Dutch Shell PLC, BP PLC, Chevron Corp., as well as influential Canadian operators such as Canadian Natural Resources Ltd.
The Canadian Energy Pipeline Association, whose members include gas companies and pipeline builders TransCanada Corp. and Enbridge Inc., will also be active.
Ms. Notley's team has started contacting industry to assuage their concerns after the NDP's majority-government victory in Alberta this month. The party campaigned on a platform that included raising corporate taxes from 10 per cent to 12 per cent, toughening environmental standards, phasing out coal faster than a federal plan, reallocating funding from carbon capture and storage to transit, and promoting more renewable energy.
The premier-designate has personally made phone calls to TransCanada chief executive Russ Girling, Encana Corp. chief executive Doug Suttles, CAPP president Tim McMillan, and others. Ms. Notley and her team have told senior company officials that they will have a chance to provide their input through consultations before any moves are made on major issues such as establishing the royalty-review panel.
The biggest challenge?
Lobbyists said the energy industry's position now is that the sector needs competitive royalty rates to encourage investment and that oil-price declines and sector volatility do not warrant a hike in rates.
Industry officials are researching possible members for the review panel, including a senior energy official and others depending on whether it will include labour, economic and environmental representatives.
If there is any change to the royalty rates, industry will argue for a phased-in approach. The sector will argue for international comparisons on royalty rates, such as those in Texas or North Dakota for conventional oil and gas and countries such as Venezuela for unconventional megaprojects comparable to the oil sands.
What's next?
In other lobbying, groups on all sides are parsing Ms. Notley's past statements for any clues about other new policy directions. The province's price on carbon is one area that could see changes and on which the energy sector will also be active.
"On election night, she talked about wanting to erase Alberta's black eye. In the platform, she talked about wanting Alberta to be a leader on climate," said Ed Whittingham, executive director of environmental group the Pembina Institute. "To do both, we need an effective price on carbon pollution."
Ms. Notley said after the election that climate change would be one of the first things to be discussed with the Alberta public service.
Energy and environment lobbyists will also be meeting with Ms. Notley's team and her new caucus members to get to know one another and discuss the issues.