Cenovus CEO pans NDP idea of royalty review
Higher royalties during Stelmach era led to significant loss of investment.
CALGARY — The CEO of Calgary-based Cenovus Energy says it would be a bad idea to review Alberta’s royalty structure at a time when crude prices are down by half. Brian Ferguson says if Alberta is not fiscally competitive, then jobs and investment will go elsewhere.
Royalties have become a hot topic ahead of the May 5 election, with NDP Leader Rachel Notley saying it makes sense to examine whether Albertans are getting their fair share of the province’s resource riches.
Notley has also said she would take a more hands-off approach to promoting the Keystone XL and Northern Gateway pipeline projects.
Ferguson says he’d like to see the next premier be “actively engaged” in seeking out new markets for Alberta crude.
The governing Progressive Conservatives have been pressing the New Democrats, who have never held more than 16 seats in Alberta, on their energy approach as polls show the Tories in a tight race.
“I think it’s not appropriate for me to comment on a specific outcome of the election next week, but I would say that in this kind of a business environment … having fiscal stability in the province is critically important,” said Ferguson.
“Alberta must be competitive. If Alberta is not competitive fiscally, then capital will flow to other jurisdictions and investment and jobs will flow to other jurisdictions.”
Oil companies and their executives were big donors to Premier Jim Prentice’s successful Tory leadership campaign last year. Disclosures filed with Elections Alberta show Cenovus donated $20,000 and Ferguson gave $15,000.
Prentice continued the Tory attack on the NDP on April 29.
“We have experience in this province with royalty reviews,” he said at an event in Calgary. “We know that the last time we did this, it was incredibly destructive.”
The government of former premier Ed Stelmach increased royalty rates in 2007, but rolled them back after major criticism from the oil and natural gas industry and a serious loss of investment in the province. Producers suggested royalty increases compounded the effects of falling demand and low prices during the 2008 economic downturn.
Sen. Doug Black from Alberta also weighed in with a blog post that said the election of an NDP government would be an economic disaster for Alberta and its energy industry.
“If there is one sure way to get rid of the Alberta advantage, it’s to elect an NDP government,” said Black, who serves on the Committee on Energy, the Environment and Natural Resources.
“Their position on pipelines, royalties and our energy industry would turn back the clock on decades of progress we’ve made in Alberta.”
Notley has called the Tory position fearmongering.
“I don’t know how talking to Albertans, with Albertans, in an independent, transparent accountable forum about a resource that belongs to Albertans is going to kill the industry,” she said earlier this week.
Notley suggested Prentice’s continued focus on the NDP shows the Tories are nervous.
“Jim Prentice, it appears, is talking about me,” she said Wednesday. “That’s the kind of thing you do when you’re desperate, when you’ve given up trying to persuade people that they should vote for your budget and your plan.”
© 2015 The Canadian Press