Financial uncertainty could mean good news for oil projects
As volatile oil prices are expected to affect not only Alberta’s bottom line, but all of Canada – Alberta’s Finance Minister hopes other provinces will see the need for ongoing pipeline projects to be completed.
Minister Doug Horner said he believes the current financial climate speaks to the provincial government’s call for a national energy strategy.
Volatile oil prices, coupled with the United States increasing its own oil production have translated to Alberta having to sell bitumen at a discounted rate.
Horner said it reinforces the need to open up Alberta oil to foreign markets, through pipelines such as the Northern Gateway pipeline.
“Canada needs to sit down and talk about what that Canadian energy strategy is all about,” Horner said. “We’re not talking about something that is done in the weeds; we’re talking about something that allows jurisdictions to work collaboratively together, so that all Canadians can benefit from what is one of our prime resources.”
Horner hopes attitudes towards the Northern Gateway pipeline project will change.
"We really have to work together to show that there is an economic benefit not only to Alberta but to the rest of Canada," he said.
Business expert Richard Dixon agrees.
He says the impact that low prices has on Alberta will be felt right across the country.
"You're going to see Ontario and Quebec, where their fabrication shops that would be supplying, are going to have fewer orders from Alberta," Dixon said.
The Premier says the only way to avoid the low prices and financial uncertainty is better market access.
"We are an exporting economy, so whether we're talking about Keystone to the south or pipelines east or some version of the Northern Gateway, at the end of the day, that's what's goin to make the difference," Alison Redford told CTV News.
The Northern Gateway pipeline would carry an average of 525,000 barrels of petroleum from Alberta to the B.C. coast each day - which would then be shipped to China and South America.
The Keystone XL pipeline would open up markets in the U.S. Midwest.
But Dixon warns the government needs to avoid relying on revenue from the oil industry.
"The government needs to get away from spending revenue resources of energy in the operating stream," he said. "Just take that out of the operating stream. Use a tax structure."
Currently, the Northern Gateway pipeline project is still in the consultation process, and the Keystone XL Pipeline project is waiting for approval.
As a result, financial challenges aren’t expected to improve in the near future.
With files from Amanda Anderson