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Report on Business Oil executives see Kenney as industry champion, but key issues divide sector at home

Alberta premier-elect Jason Kenney greets supporters at his provincial election-night headquarters in Calgary on April 16, 2019.

CHRIS WATTIE/Reuters

Oil-industry executives are counting on Jason Kenney to be their champion in taking on the federal government and the industry’s critics, but Alberta’s premier-designate faces a divided industry on some key issues in his home province.

Mr. Kenney’s United Conservative Party won Tuesday’s election on a platform of unwavering support for the province’s leading industry, which has been hammered by depressed natural-gas prices, volatile crude prices and a lack of sufficient crude oil pipeline capacity to reach export markets.

The UCP Leader plans to scrap the carbon tax adopted by the New Democratic Party government, slash corporate tax rates and cut other regulations which, industry complains, are impeding investment and growth.

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Alberta election 2019: Economic worries trumped concerns about UCP. Now what?

He has also vowed to go to war with the federal Liberal government over its climate-change policies, and with environmental critics who are seen by industry supporters as unfairly targeting Alberta as a climate villain.

The UCP campaign platform was supportive of the NDP’s program to cut oil production but was opposed to the plan to purchase rail cars to move oil to markets.

Industry executives welcomed the UCP’s promise to cut corporate taxes, reduce the regulatory burden by a third, and establish a “competitive” climate-change policy. There is disagreement among them, however, over whether Mr. Kenney should lift the production cuts ordered by outgoing Premier Rachel Notley, and also disagreement over completing the government’s purchase of rail cars to expand export capacity.

“Jason Kenney is a huge supporter of our industry and business in general,” Jonathan Wright, chief executive at NuVista Energy Ltd., said Wednesday. “He’s going to be a champion for Canadian oil and gas.”

Mr. Kenney spoke in his victory speech about “unleashing the full economic potential of Alberta and wanting to invite investors back to the province,” Tim McMillan, president of the Canadian Association of Petroleum Producers, told an investors’ conference in Toronto Wednesday.

“I expect they’ll move very quickly on many of these items.”

Alberta premier-designate Jason Kenney addresses jubilant supporters in Calgary, with promises to get the province’s economy back on track and fight for pipelines. The Canadian Press

Ms. Notley has been a vocal advocate for the industry in its recent battles for pipelines and in opposition to federal legislation overhauling the environmental-review process for major resource projects, including pipelines.

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But industry executives complained that her climate policy – including a cap on future oil sands emissions – failed to win the promised pipeline to the West coast, and that the NDP government raised taxes and imposed burdensome regulations on the sector.

In December, Ms. Notley imposed an across-the-board production cut on oil companies to reduce the glut of inventories that built up in Alberta due to growing production, insufficient pipeline and rail capacity and a temporary shutdown of some key refineries in the U.S. Midwest. The growing inventories meant Alberta crude sold at a discount, with a widening differential between Western Canadian heavy oil and the benchmark West Texas Intermediate.

Companies such as Suncor Energy Inc., Imperial Oil Ltd. and Husky Energy Inc. oppose the curtailment – which started at 325,000 barrels a day in January and will be eased to 175,000 b/d in June.

Explainer: Alberta election 2019: Jason Kenney has won. What happens now? A guide

“We’re against it,” Husky’s chief operating officer, Robert Symonds, told the Bank of Nova Scotia’s investor conference on Wednesday. He said the curtailment was meant to reduce inventories but they remain elevated because prices are no longer conducive to exporting crude by rail.

“We think intervention in the free market is not a good idea,” he said.

However, many oil-company officials are urging Mr. Kenney to keep the curtailment policy in place, at least until more rail capacity can be brought online.

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“We hope that over a sensible time period, we pull out of curtailment, but we would hope it’s not quick or shock action,” said Tristan Goodman, president of the Explorers and Producers Association of Canada, which represents smaller companies.

“We don’t want to put ourselves right back where we were before with the large differential. We need to solve some degree of market access before we can see a dramatic change to curtailment.”

Companies are also split on the NDP’s plan to purchase rail cars to provide additional export capacity until three planned pipeline projects – which are delayed or on hold altogether − can be completed.

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