New coronavirus stifling oil and gas economy: Kenny
Industry sideswiped as it works on efficiencies and reducing emissions, while the government focuses on job creation.
EDMONTON — Alberta Premier Jason Kenney says it’s difficult to watch global oil prices fall due to reduced demand tied to the novel coronavirus outbreak at the same time his government refocuses its efforts on job creation.
“I won’t hide it: it frustrates me that I think we’re doing everything that we reasonably can to get this economy moving again. And yet we’re being sideswiped by global events that are beyond our control,” Kenney said.
Alberta must keep leveraging the benefits of its well-educated and young workforce, along with its low-tax environment, while it waits for new pipeline projects to come online, he said.
The province is in a better position to weather low prices, because oil companies in the province have used lean times to find ways to reduce operating costs over the last five years, Kenney added.
“They’ve made lemonade out of the lemons of the 2015 downturn by compressing their costs by on average 30%. Producers operate much more efficiently, they emit less carbon … and we’re getting more and more market access,” he said.
“We may be in for a bumpy ride as a result of the coronavirus, but that is a global situation. It’s not specific to Alberta, and we still have all of these amazing advantages.”
Spread of the novel coronavirus, also known as COVID-19, has resulted in a downturn in the global economy, including oil prices. Alberta’s budget, introduced last week, is banking on the West Texas Intermediate benchmark for oil at $US58 a barrel, but it has been hovering around $50.
Kenney promised voters in last spring’s election that his United Conservative government would bring back jobs. But since last June, 50,000 full-time jobs have been lost and unemployment is about seven per cent.
Kenney’s government has promised a recommitment to job creation, and on Monday, Kenney and Energy Minister Sonya Savage announced a $100-million loan to the Orphan Well Association to clean up more abandoned sites. They say it will create a projected 500 direct and spin-off jobs.
“Our government recognizes the pressing need to turn the tide on growing oil and gas liabilities,” said Savage.
“That’s why in the coming weeks, I’ll be announcing a suite of policies which will address the entire life cycle of wells, from licensing to operations to production to abandonment (and) reclamations to closure and legacy sites.”
The premier has promised to eradicate Alberta’s $6.8-billion deficit by 2023, in part by keeping spending costs in line. The Opposition NDP says the province is compromising front-line services by cutting staff in health, education and elsewhere.
Also March 2, the Northern Alberta Institute of Technology announced it is offering voluntary buyout deals for up to 240 staff, or about 9% of its workforce. Last week, the Southern Alberta Institute of Technology announced 230 positions will be eliminated, some by not filling existing vacancies.
NDP Advanced Education critic David Eggen said the cuts put the lie to Kenney’s promise to grow the economy through an educated workforce.
“I fear what shape our institutions will be left in once Jason Kenney is through,” Eggen said in a news release.