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Nervous oil sector will carry on without Redford

Alberta Premier Alison Redford arrives at a meeting of the provincial Progressive Conservative Party executive in Calgary on March 15, 2014

JEFF McINTOS/THE CANADIAN PRES

The oil patch, a crucial source of funding and votes for Alberta's Progressive Conservative party, is anxious for the government to pick a new leader after outgoing Premier Alison Redford resigned without an obvious successor.

Ms. Redford spent her 29 months as the province's top politician fiercely defending – and lobbying for – the oil and gas sector, the main driver of Alberta's economic fortunes. Her top priority was to push for new oil pipelines at home and abroad.

There is little worry in the energy sector that any successor will tinker with royalty rates or impose onerous new environmental restrictions. But with Tories preparing for their third leadership race in a decade, even supportive energy executives are voicing concerns.

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Ms. Redford's sudden departure on Wednesday, spurred in part by a string of gaffes tied to extravagant expenses, leaves the government without clear leadership and an international promoter. For an industry that demands clarity and stability, even the slightest wobbles bring on nervousness.

"She had taken steps to return [Alberta] to its position as an economic leader in Canada by delivering the first budget with an operating surplus in a number of years, and building bridges with leaders in British Columbia, Quebec and Washington – helping to open new markets for our oil production," said Murray Edwards, founder of several companies, including Canadian National Resources Ltd., and a powerful behind-the-scenes force in Alberta and Canadian politics.

"At the same time, there are still challenges before the government to streamline the regulatory process that is struggling to change to a single regulator," he said in an interview. "A concern is that with Ms. Redford not being in a leadership position, the challenges will not be dealt with for some time – until a new premier is in place."

Mr. Edwards raised concern that foreign investors could be scared off by any delays in regulatory change.

So far there is no sign of that. The province of four million people is projected to lead the country in 2014 with growth of 3.2 per cent in its gross domestic product, according to a forecast released on Thursday by the Conference Board of Canada. Also expected are 61,000 new jobs.

One risk to the forecast is further major delays to new pipeline projects, the Conference Board said. However, the energy sector has rebounded this year, partly due to a recovery in natural gas prices. The optimism has rekindled the interest of investors, allowing companies to tap capital for acquisitions. Marie-Christine Bernard, associate director of the board's provincial forecast service, said her organization's assessment remains unchanged despite political turmoil.

In its recent budget, the Alberta government said it expects a surplus for the first time in six years. However, recent polls show the Wildrose Party, led by Official Opposition Leader Danielle Smith, with a substantial lead in voter support.

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Les Stelmach, vice-president and portfolio manager at Bissett Investment Management in Calgary and former premier Ed Stelmach's son, said Alberta's economy and energy sector would carry on, especially with conditions rebounding. Indeed, oil and gas mergers and acquisitions have been on the upswing since November.

"I don't think it's had an impact yet. It's certainly something you don't want to see continue indefinitely because when people are focused on controversy they're not advancing their initiatives. You're always playing defence and you can't proceed," the younger Mr. Stelmach said in an interview.

Ms. Redford, in her resignation speech Wednesday, trumpeted her work on the energy file. "I will never apologize for aggressively selling Alberta to the world, going wherever we needed to find new customers and get fairer prices for our prices. We fought to protect Alberta's royalties from other provinces, and I was proud to unite the provinces in creating the Canadian energy strategy."

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About the Authors

Carrie Tait joined the Globe in January, 2011, mainly reporting on energy from the Calgary bureau. Previously, she spent six years working for the National Post in both Calgary and Toronto. She has a master’s degree in journalism from the University of Western Ontario and a bachelor’s degree in political studies from the University of Saskatchewan. More

Mergers and Acquisitions Reporter

Jeffrey Jones is a veteran journalist specializing in mergers, acquisitions and private equity for The Globe and Mail’s Report on Business. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general topics. More

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