"Kearl Lake will create a couple of thousand short- to medium-term construction jobs - and in the current economic climate, that's a welcome thing," says Gil McGowan.
"But over the longer term, this project is deeply troubling because it's focused exclusively on the extraction and export of raw bitumen. The real money - and the real jobs - in this business are in upgrading and refining. Unfortunately Kearl will be sending all of those benefits down the pipeline to Exxon refineries in the US Midwest and Gulf Coast."
McGowan points to a study released by the AFL in March of this year - entitled Lost Down the Pipeline - which shows that energy companies are expanding U.S.-based bitumen refining capacity at a furious pace.
In the report, the AFL identifies ten refineries in eight American states that are currently being re-tooled to process bitumen from Alberta. Once completed, these refineries will have the combined capacity to handle 2.8 million barrels per day - more than double the total current output from the oil sands.
"Given what's happening south of the border, it's starting to look like Kearl is a sign of things to come for Albertans," says McGowan. "We'll get the environmental consequences and the penny-on-the-dollar royalties, while the Americans will get the long-term jobs and revenue that come with value-added production."
McGowan says the big question that Albertans should be asking now is "when will the Stelmach government start using its legislative power to stop energy companies from shipping Alberta jobs down the pipeline?"
McGowan is currently in Ottawa with other provincial and national union leaders attending a meeting of the Canadian Labour Congress executive council. Print and radio reporters interested in talking to McGowan about the Kearl project can reach him by phone. McGowan will also make himself available for television interviews for any station that has affiliates in Ottawa.
For more information, call:
Gil McGowan, AFL President (780) 218-9888 (cell)
EDMONTON – Without aggressive government intervention, Alberta will almost certainly miss out on the opportunity to create thousands of high-quality jobs in oil sands upgrading and petroleum refining.
At the same time, an historic opportunity to diversify the Alberta economy and build a more robust value-added petroleum industry will be lost – probably forever.
Those are the main conclusions of a report released today by the Alberta Federation of Labour.
The report, entitled "Lost Down the Pipeline," reveals important new information about the state of oil-sands employment and the future oil-sands development in Alberta, including the following:
- Despite the global recession, energy companies are proceeding with aggressive plans to dramatically expand both U.S.-based bitumen-refining capacity and American-bound bitumen pipeline capacity.
- Energy companies are in the process of spending about $31 billion (US) to build, re-tool or expand at least 10 refineries in the U.S. for the specific purpose of upgrading and refining raw bitumen from the Alberta oil sands. These refineries will have the combined capacity to upgrade and refine about 2.8 million barrels per day (bpd) of raw bitumen from Alberta.
- At the same time, two major bitumen pipelines – the Keystone and Alberta Clipper – are nearing completion. Together, they will have capacity to move about 1.4 million bpd of raw bitumen from Alberta to refineries in the U.S. Mid-West. In addition, six other pipelines are being planned that will have the capacity to move 2.3 million bpd of Alberta bitumen to refineries on the U.S. Gulf Coast.
- To put these numbers in context, output from the Alberta oil sands today totals about 1.3 million bpd. By 2020, Alberta's bitumen output is expected to rise by 2 million bpd to bring total production to 3.3 million bpd.
"Government and business leaders have left the impression that once the global recession ends, it will mean a return to business as usual in the oil sands," says AFL president Gil McGowan.
"But nothing could be further from the truth. What our research shows is that American refineries will have the capacity to process ALL of the expected increase in oil-sands output from Alberta. As a result, unless the Stelmach government steps in much more aggressively than it has, the raft of upgrader postponements we've seen here in Alberta will almost certainly turn into permanent cancellations. We'll be losing literally thousands of jobs down the pipeline."
The AFL report considers the two solutions put forward by the Stelmach government – new pipeline tolls and a scheme to collect bitumen in lieu of royalties – but concludes both are ineffective and doomed to failure. To make matters worse, the report shows the Stelmach government has actually been undermining the real competitive advantage that would make bitumen upgrading and refining profitable in Alberta.
"The government's own consultants have been saying for years that Alberta's real competitive advantage when it comes to refining is easy access to cheap feedstock in the form of cheap bitumen," says McGowan.
"But by actually promoting the construction of bitumen pipelines to the U.S., the government has been helping to build a bigger market for bitumen in the States which, in turn, has had the effect of reducing the price differential between bitumen and conventional crude oil. So, in an effort to get a few extra dollars per barrel for bitumen, they're giving away the advantage upon which we could build an entire new value-added industry."
The AFL report concludes that the real solutions lie in re-learning the lessons of the Lougheed government which used a mix of regulation and government ownership to create a multi-billion-dollar, value-added petrochemical industry based on natural gas.
In particular, the report recommends that the Alberta government follow Lougheed's example by using regulations to prohibit the export of raw bitumen and by using government resources to create a publicly owned energy company with a mandate to advance the interests of Albertans. The report also recommends that the government take the lead in building an upgrading and refining "super complex" based on a government-commissioned (but ignored) blueprint developed by the respected energy consultant, David Netzer.
"The real question we're left with after reading this report is this," says McGowan. "Will we re-learn the lessons of Lougheed and embrace a more aggressive role for government in the oil sands, or will we stand idly by while the 'market' decides to send our jobs and our economic opportunities down the pipeline?"
For more information call:
Gil McGowan, AFL President @ (780) 483-3021 (office) or (780) 218-9888 (cell)
For copies of Lost Down the Pipeline, visit the AFL website @ www.afl.org
Lost Down the Pipeline
I. U.S. refinery expansions, conversions and new refinery construction to process bitumen from Alberta oil sands
Refinery: Detroit Heavy Oil Expansion
Location: Detroit, Michigan
Investment: $1.9 billion (US)
Bitumen Capacity: 115,000 bpd
Refinery: Garyville Refinery Expansion
Location: Garyville, Louisiana
Investment: $3.2 billion (US)
Bitumen Capacity: 180,000 bpd
Refinery: Hyperion Refinery
Location: Union County, South Dakota
Investment: $4 billion (US)
Bitumen Capacity: 400,000 bpd
Refinery: Port Arthur Refinery Expansion
Company: Motiva (Shell and Saudi Aramco)
Location: Port Arthur, Texas
Investment: $7 billion (US)
Bitumen Capacity: 600,000 bpd
Refinery: Port Arthur Refinery Expansion
Location: Port Arthur, Texas
Investment: $2.4 billion (US)
Bitumen Capacity: 415,000 bpd
Refinery: Tulsa Refinery Expansion
Company: Sinclair Oil
Location: Tulsa, Oklahoma
Investment: $1 billion (US)
Bitumen Capacity: 115,000 bpd
Refinery: Whiting Refinery Conversion
Location: Whiting, Indiana
Investment: $3.8 billion (US)
Bitumen Capacity: 205,000 bpd
Refinery: Wood River Refinery Conversion and Expansion
Company: WRB Refining (ConocoPhillips and Encana)
Location: Roxana, Illinois (with refinery in Borger, Texas)
Investment: $4 billion (US)
Bitumen Capacity: 495,000 bpd
Refinery: Toledo Refinery Conversion
Location: Toledo, Ohio
Investment: $2.5 billion (US)
Bitumen Capacity: 131,000 bpd
Refinery: Lima Refinery Conversion
Location: Lima, Ohio
Investment: $1.9 billion (US)
Bitumen Capacity: 146,000 bpd
Number of U.S. oil sands related refinery projects identified by AFL: 10
Total bitumen processing capacity: 2.8 million bpd
Estimated investment: $31.7 billion (US)
Sources: Environmental Integrity Project, corporate annual reports, corporate websites, media reports
II. Bitumen Pipelines to the U.S. Mid-West
Pipeline: Alberta Clipper
Capacity: 450,000 bpd (to be expanded to 800,000 bpd in 2010)
Status: under construction
Company: TransCanada Pipelines
Capacity: 435,000 bpd (to be expanded to 590,000 bpd in 2010)
Status: under construction
Total Combined Capacity: 885,000 bpd in 2009; 1.4 million bpd by 2010
Source: National Energy Board (NEB)
III. Planned Bitumen Pipelines to U.S. Gulf Coast
Pipeline: ExxonMobil/Enbridge Texas Access
Capacity: 445,000 bpd
Pipeline: Sunoco Gulf Coast
Capacity: 300,000 bpd
Pipeline: TEPPCO/Kinder Morgan Chinook-Maple Leaf
Capacity: 440,000 bpd
Pipeline: TransCanada Keystone XL Gulf Coast
Capacity: 700,000 bpd
Pipeline: Altex Energy Gulf Coast
Capacity: 425,000 bpd
Pipeline: ExxonMobil Pegasus
Capacity: 30,000 bpd
Total Combined Capacity: 2.34 million bpd
IV. Survey: Albertans support a bigger role for government in oil sands
Results of Alberta Federation of Labour survey of 500 Albertans. Conducted by Environics Research, January 21-25, 2009
Q1. How important do you think it is that oil-sands processing and refining jobs be kept in Alberta?
Very important 77%
Somewhat important 19%
Not very important 3%
Not at all important 1%
Q2. Which one of the following policies do you think the Alberta government should pursue with regard to keeping more oil-processing and refining jobs in the province? Should they...
Make it legally mandatory that energy companies do more of their processing and refining in Alberta. 42%
Set voluntary targets for more processing and refining in Alberta that the energy industry would be encouraged to meet. 43%
Let the energy companies decide for themselves where upgrading and refining should be done. 12%
Q3. Which one of the following statements best summarizes your view on how the Alberta oil sands should be developed?
Energy companies are the ones who know the industry best. Decisions about when and how to develop the oil sands should be left with them. 22%
The oil sands are a publicly owned resource. The Alberta government should strictly regulate the pace of oil sand development, environmental standards and job creation. 72%
Ed Stelmach's refusal to act on the key issues of exporting bitumen and slowing the pace of development in the oil sands proves Tories have no real plan for managing the engine of Alberta...
If Albertans want to see what a real plan for the oil sands look like, AFL invites them to attend Black Gold, Clear Vision forums
Whether it's because he's been paralyzed by fear or ideology, Premier Ed Stelmach has failed to articulate a clear vision or strategy for managing the new engine of the Alberta economy - the oil sands.
But just because Stelmach and the Conservatives don't have a plan doesn't mean that options for a workable strategy don't exist. With that in mind, the Alberta Federation of Labour will unveil its own oil sands policy - called the "Black Gold, Clear Vision" framework - starting tomorrow at public forums around the province.
"The Stelmach government's do-nothing approach to the oil sands is failing Albertans," says AFL president Gil McGowan. "That's why we've gone to the effort of writing our own policy framework. We want to show our political leaders that it can be done - and that, in fact, it needs to be done."
"We've listened to the public and borrowed ideas from people like former Premier Peter Lougheed," adds McGowan. "This is the kind of work the government could and should have been doing itself. Frankly, this is our challenge to Ed Stelmach and his colleagues to get off their back-sides."
The AFL oil sands forums will be held in the following locations:
Fort McMurray - Wood Buffalo
8:00 p.m. - 9:00 p.m. (first session), Wednesday, February 27th
9:30 p.m. - 10:30 p.m. (second session)
• Tamarack Room, Sawridge Inn & Conference Centre, 530 MacKenzie Boulevard, Fort McMurray
7:30 p.m., Thursday, February 28th
• Baraka Room, Holiday Inn, 393 Gregg Avenue, Hinton
7:30 p.m., Friday, February 29th
• Salon A, Crowne Plaza Chateau Lacombe, 10111 Bellamy Hill, Edmonton
7:30 p.m., Saturday, March 1st
• Grand Ball Room, Ramada Hotel Downtown, 708 - 8th Avenue SW, Calgary
The AFL forums are open to the public, the media and candidates from all parties. The "Black Gold, Clear Vision" framework document will be officially released tomorrow and copies will be available at all the forums.
"I'd love to see the Premier at one of our events," concludes McGowan. "Then he could explain why doing nothing is the right strategy for the oil sands."
The Alberta Federation of Labour is an organization of 29 public and private sector unions representing 140,000 working Albertans. The "Black Gold, Clear Vision" forums are part of the Federation's "Show Us the Plan" election campaign aimed at encouraging Albertans to demand more from their politicians.
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For more information contact:
Gil McGowan, AFL President @ 780.483-3021 (office) or 780.218-9888 (cell)
I agree and would add that the Premier should also start thinking like a negotiator.
Unfortunately, as our province's leading man in what is essentially a crucial set of negotiations over the price of our collectively-owned resources, Stelmach has so far failed to inspire confidence.
He doesn't seem to grasp the notion that the goal of negotiations is to get the best possible deal for his side (Alberta citizens) no matter how many feathers that might ruffle on the other side (Big Oil).
In particular, Stelmach seems to be falling into the trap that swallows up many rookie negotiators who mistakenly believe that negotiation automatically means "cutting it down the middle."
Big Oil has exploited this weakness admirably.
By inundating Albertans with an almost daily barrage of hysterical reports and dire predictions, they have successfully established their stated position (that Alberta can't afford any major royalty changes) as one pole in the debate and the recommendations of the blue-ribbon Royalty Review Panel as the other pole.
The problem with this is that the panel recommendations were already a compromise between what the panelists thought Albertans deserved and what they thought industry would be willing to pay. So any move to "cut it down the middle" would, in the memorable words of one of the panelists, be a "compromise on a compromise."
This tactic of taking extreme positions in order to "move the goalposts" at the bargaining table is the oldest trick in the book - yet the government seems to be falling for it.
The truth about negotiating is that compromise is sometimes necessary - but not always.
It depends on your goals and, even more importantly, your bargaining power.
When it comes to the royalty debate, the government's goals should be clear.
Both the royalty panel and the Auditor General have demonstrated that, when compared to the citizens of other oil-rich jurisdictions, Albertans are not getting their fair share.
In fact, both the panel and the auditor proved that Alberta has forgone literally billions of dollars in potential revenue over the past decade - revenue that could have (and many would argue, should have) been used to help our schools, hospitals and communities cope with the pressures of growth.
That leaves us with the crucial question of bargaining power. On this score, it seems Big Oil has, once again, bamboozled the Premier into thinking they have us over a barrel.
As a labour leader, I would be the first to raise the alarm if I thought thousands of jobs might actually be lost in Alberta. But, I frankly don't buy Big Oil's scare tactics - and neither should the government.
We in the labour movement have sat across the bargaining table from many of these energy corporations - and we've seen these kinds of threats and ultimatums before.
Based on that experience, we feel the questions the Premier should be asking is not: "Would job losses be bad?" Of course they would be. The real question is: "Are the threats being made by industry credible?"
Looking at the world energy market and Alberta's increasingly important role in it, I think it's clear that Big Oil would never leave the province - even if all of the royalty panel's recommendations were implemented.
They won't leave because what really matters when it comes to investment decisions is price - and the price for oil is clearly going nowhere but up.
They won't leave because other oil-producing jurisdictions have also been raising their royalty rates - often much more dramatically than what's being proposed here in Alberta.
They won't leave because, the royalty panel's recommendations aren't really that radical - for example, they keep in place the infamous penny-on-the-dollar royalty for oil sands and guarantee that more than 80 percent of gas wells will pay lower royalties at current prices.
Finally, they won't leave because about 80 per cent of the world's proven petroleum reserves are under the control of national oil companies - and thus out of reach of reach for Big Oil. Unless they want to get out of the oil business altogether and start manufacturing toothpaste, Alberta is one of the few places left for them to invest.
Taken together, all of this is called bargaining power. If anyone is over a barrel, it's Big Oil.
Alberta's bargaining position is so strong, in fact, that we should ask for more than what was proposed by the royalty panel, not less.
One obvious target would be the one-cent oil sands royalty, which is an unnecessary incentive when oil is trading at $90 per barrel.
Another target could be the panel's proposed "upgrader royalty credit."
Most Albertans agree that steps are needed to stop unrefined bitumen from being shipped to upgraders and refineries in the U.S. But is the best way to encourage domestic upgrading really to provide billions of dollars in public subsidies to developers?
Wouldn't it be cheaper and more efficient to simply impose export regulations favouring local upgraders, as former Premier Lougheed did in the 70s to promote the development of a homegrown petrochemical industry?
The bottom line is that even if the government acts aggressively on royalties, Big Oil will continue to invest in Alberta because there's still be lots of money to be made - and because there's nowhere else for them to go.
Playing this kind of hard-ball with the province's dominant industry may make some people feel a little queasy. But it worked for Premier Lougheed in the 70s; it worked for Alaska's Republican governor last year; and it's working for Newfoundland's Conservative premier Danny Williams right now.
So instead of dismissing the royalty panel's proposals as unwarranted "government intervention," Albertans should look at them for what they really are: good business and the bare minimum we should accept for the sale of our assets.
Calgary Herald, Wed Oct 24 2007, Page A19
Gil McGowan, AFL President
Federation organizes royalty rally in Ft. McMurray so workers in Alberta’s oil sands heartland can speak for themselves
EDMONTON-If you want to know what rank-and-file oil industry workers really think of about energy royalties, don't go to the so-called "Grassroots Oil Workers Rally" at the Legislature tomorrow – go to the rally being held Thursday night in the heart of Alberta's oil sands country.
"Despite it's billing, tomorrow's rally isn't really a grassroots oil workers rally – it's a rally for the bosses and managers of small to medium-sized energy companies," says Gil McGowan, president of the Alberta Federation of Labour.
"These are people who have bought into the scare tactics currently being used by Big Oil. Obviously, they have a right to speak for themselves. But let's be clear: they don't speak for anything close to a majority of Albertans working in the oil patch or related industries."
In an effort to give the thousands of people working in Fort McMurray a platform of their own, the AFL – along with the International Brotherhood of Electrical Workers and the Communication, Energy Paperworkers union – will be hosting a rally and information forum at the Timberline Ballroom in the Sawridge Hotel, starting at 9 p.m.
What: The Real Oil Workers Rally and Forum
Where: The Timberline Room, Sawridge Hotel, 530 MacKenzie Boulevard, Fort McMurray
When: 9-10:30 p.m., Thursday, October 18
Speakers at the union-sponsored event will include McGowan, IBEW's Barry Salmon and others. There will also be an open mike for people to speak from the floor.
"It's always scary when the people who sign your paycheques start talking about job loss," says McGowan. "But it's clear that a strong majority of workers in this province – regardless of what industries they happen to be in – want a much better deal on the resources that we all own collectively as citizens. And they're not about to back down just because a few cranky CEOs have been rattling their sabres."
"Right now, Big Oil is behaving like a kid throwing a tantrum," concludes McGowan. "They're stamping their feet and making threats. But they're not about to leave the sandbox – because there's too much money to be made and, frankly, because there's nowhere else for them to go."
Gil McGowan, AFL President @ 780.218-9888 (cell)
Implementation of full royalty report even more pressing in light of today's NEB decision to approve
Without safeguards, Keystone pipeline will act as a spigot draining thousands of potential value-added jobs out of Alberta says McGowan
If Alberta Premier Ed Stelmach was looking for another good reason to implement all of the recommendations put forward by his government's blue-ribbon Royalty Review panel, the National Energy Board (NEB) has given it to him.
In a ruling handed down late this afternoon at its Calgary headquarters, the NEB gave the green light to a controversial mega-pipeline that will ship more than 600,000 barrels of raw bitumen each day from Alberta to upgraders and refineries in the American mid-west.
For the past year, two labour organizations - the Alberta Federation of Labour (AFL) and the Communication, Energy, Paperworkers (CEP) union - have led the fight to stop the pipeline on the grounds it will ship literally thousands of high-quality upgrader and refinery jobs down the pipeline along with the bitumen.
"The bottom line is that every barrel of raw bitumen shipped to upgraders and refineries in the U.S. is a barrel of bitumen that's not available for Alberta-based upgrading or job creation," says McGowan.
"In effect, the NEB is allowing the creation of a 'bitumen superhighway' that will take Alberta resources to refineries in the States. That may be great news for the Americans, but it's bad news for anyone who believes, as we do, that Albertans should be more than 'hewers of wood and drawers of water'."
In a letter sent to Premier Stelmach shortly after the NEB decision was announced, McGowan argued that the NEB decision makes full implementation of the royalty panel's recommendations more crucial than ever.
"Without safeguards like the proposed upgrader royalty credit, the Keystone pipeline and others like it will act as a spigot draining thousands of potential high-paying, value-added jobs from Alberta," wrote McGowan.
McGowan says that "more aggressive action" - like regulation or even government ownership of projects - may be necessary to promote a "more vigourous Alberta-based downstream petroleum industry." But he said an upgrader royalty credit is the bare minimum of what should be done to keep jobs and value-added production in the province.
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For more information call:
Gil McGowan, AFL President @ 780.218-9888 (cell)
Many Albertans get prickly at the prospect of oilsands bitumen flowing to the U.S. for refining. And rightly so -- for how can the province make most of its finite resource if low-priced bitumen and high priced refinery jobs go south? Last fall, Ed Stelmach raised exactly that concern when two major exporters, BP and Encana, announced plans for two large-scale export projects. Stelmach likened bitumen exports to selling off topsoil, clearly a bad idea.
As it turns out, more than a dozen U.S. refineries want to gear up to accept bitumen.
Some forecasts say 1.5 million barrels a day will be going south by 2020 -- more than today's entire oilsands production of 1.25 million barrels a day. About one-third of the bitumen produced today is exported.
The crucial first steps to implement in this export strategy are already being taken. This month, the National Energy Board started hearings into the $2.1-billion Keystone pipeline proposed by TransCanada Pipelines to carry around 435,000 barrels of bitumen a day to Illinois and Oklahoma.
Enbridge is also putting together a pipeline proposal, the Alberta Clipper, for U.S.-bound bitumen.
Approval of a new export pipeline is an irrevocable decision about the use of Alberta's oil reserves, and there's been no opportunity for a public discussion about what's at stake for the province.
The proposed bitumen exports, for instance, are already creating thousands of jobs in Texas to renovate aging refineries, for instance. What other opportunities will flow south? A group of Alberta labour unions is trying to raise that red flag at the NEB hearings. The Alberta Federation of Labour says 18,000 upgrading and refining jobs will be lost if the pipeline is approved, as well as the opportunity to build a more diversified economy.
AFL president Gil McGowan asked the NEB to delay its approval until Albertans and policy makers have a chance to address those issues in a public forum. Because once the pipes are in the ground and the billions invested in re-tooling U.S. refineries, there's no turning back. Alberta and Canada will be tied into the "limited role of miner and extractor." "We're at a crossroads and decisions we make now will affect Alberta and Canada for generations to come. We can't afford to get it wrong," said McGowan in an interview.
"I was asked at the hearing what is the right proportion for export and I said that's what the public should be discussing. These are the resources they own collectively." "The public should be setting the course, not just narrow interests of the big industrial players." The NEB sent a message earlier this year that it does not want to consider the labour federation's concerns: "these are matters of broad public policy that are properly under the purview of federal and provincial government," it said in a February report.
Albertans have heard the NEB refrain before. The Alberta Energy and Utilities Board last fall declined to consider Ft. McMurray's request to delay approval of the three giant projects on the same grounds.
Municipal problems coping with boom are not an EUB responsibility.
That's correct, strictly speaking. But in this deregulated environment, Alberta has no public forum for raising these issues around energy projects. There's no discussion of what's an appropriate target for domestic upgrading nor a policy to promote refining in Western Canada, for instance.
Alberta Energy Minister Mel Knight, like his boss, has backed off earlier concerns about selling off the topsoil. Large-scale exports have the advantage of creating a bigger demand for bitumen, says the department. That will help raise the price (about one-third to half of the price of oil) and that in turn means higher royalties.
The Alberta government is content to delegate these difficult decisions to regulatory agencies, or the market. If a proposal for a nuclear power project came forward, would that too be delegated to the EUB? Or how about the issue of water exports? But elected representatives should remind themselves that delegating these tough decisions doesn't make the MLAs less accountable for the impact of these decisions and the direction they take this province.
Edmonton Journal, Tues June 12 2007, Page A16
If this isn't a political slap up the side of the head I don't know what is.
But will Ed Stelmach and the Alberta Tories get the message?
Calgary pollster Bruce Cameron released his latest survey this week. Complete with a headline that screamed "Stelmach stumbles in big cities."
He talked about how the premier's disapproval rating in Edmonton and Calgary has jumped from 15% to 29% since the Steady Eddy days in January when Stelmach was still enjoying his political honeymoon.
After the Cowtown figures are broken out, the picture goes from bad to worse. Cameron noted a "significant and growing discontent" in Alberta's second city where the premier's disapproval rating now stands at 39%.
In Redmonton - where Stelmach's Ukrainian roots were supposed to win back the PC's popularity - the thumbs-down factor doubled from 13% to 29%.
And when Albertans were asked if the Stelmach government was "leading Alberta in the wrong direction," 30% agreed. The same question was put to them in January and only 10% answered "wrong."
In Calgary, 41% said Ed is leading us down the garden path.
This is troubling for the Tories for sure - especially now that the byelection in Ralph Klein's old Calgary Elbow riding appears to be turning into an Ed-a-rendum.
This is not the end of the Tories as we know them. When Cameron asked the crucial "if an election were held tomorrow" question, the PCs still got 47% support province-wide, but were down nine points in Edmonton and a disturbing 19 points in Calgary.
Sadly, Cameron doesn't put a finger on what's bugging Albertans.
But you can bet the Stelmach PCs' growth management blunders rank right up there.
And there was more where that came from yesterday after Enbridge CEO Pat Daniel filed his provocative plan to build the Alberta Clipper big inch oil pipeline from Hardisty to the U.S. Midwest.
This project could hit 800,000 barrels a day if proposed future expansions are built.
Daniel called the application "timely," mainly because of the "growing supplies of crude oil from Alberta's oilsands."
Which sounds like more bitumen and jobs down the pipeline to the States.
It's the thing Ed Stelmach compared to stripping the "topsoil" from a farm when he was on his game during the PC leadership race. But since winning the job, he's done diddly squat about it.
On Monday, crucial hearings begin before the National Energy Board on another job-stealing raw bitumen line to the U.S.
The Alberta Federation of Labour has already branded TransCanada's Keystone pipeline a "devil's bargain."
"Why, we ask," AFL president Gil McGowan blasted in his submission, "should Canadians settle for 17 jobs when they could have 18,000?
"Labour's interest is in keeping industry and good jobs in Canada," McGowan boomed.
Shouldn't that be the government's job, too?
And what applies to Keystone clearly applies to the Alberta Clipper, too.
Meanwhile, the Alberta Tories plan on sending one lowly market analyst to monitor the Keystone hearings.
Another Stelmach government boondoggle blew up right on schedule yesterday when the Fraser Institute released its "business case" for the carbon dioxide "backbone" pipeline from the tarsands to a bunch of old Alberta oilfields like Pembina and Swan Hills/Judy Creek.
This is the magic wand technology first dreamed up by Ottawa Liberal Leader Stephane Dion - but later endorsed by the Stelmach government - to pump oil-sands plant emissions down oilwells to hopefully enhance recovery, and solve global warming, all at the same time.
The price tag going in is $1.5 billion with none of the engineering actually done. So you can bet your mortgage that it will be at least triple that amount.
The right-wing think-tank determined that "current demand is very small."
And no wonder, considering these target oilfields are up to 50 years old, and there will be more than enough COC generated from Edmonton-area upgraders to satisfy that market.
Which led study authors Gerry Angevine and Dara Hrytzak-Lieffers to conclude that building the pipeline "does not make sense from a business perspective," and "cannot be justified on the basis of the economics." But more to the point: "public support for a backbone project does not appear to be justified."
Except that's clearly the direction the Stelmach government appears to be headed and in all likelihood the Backbone Pipeline will end up joining the wrecks from the bad old Peter Lougheed/Don Getty days like NovAtel and the Canadian Commercial Bank.
Which is what the Cameron Strategy poll seems to be already signalling.
Edmonton Sun, Fri June 1 2007, Page 54
Byline: Neil Waugh
Changes to royalty regime could threaten viability of natural gas; Industry appeals for status quo as it struggles with exploding costs
CALGARY - Wholesale changes to Alberta's royalty regime could threaten the viability of natural gas production in the province and raise rates for consumers, industry insiders told the Alberta government's Royalty Review Panel meeting in Calgary Wednesday.
Rising costs, falling prices and an uncertain regulatory environment are already leading to reduced rig counts, lower production and ultimately, lower government revenues, said Tailisman Energy Inc. CEO Jim Buckee.
"You have a zero-per-cent royalty you get zero; with a 100-per-cent royalty you also get zero," Buckee told the province's travelling review panel. "The current regime has worked and is best left alone."
Where previous sessions have focused on the government's share of oilsands revenues, Wednesday's discussions revolved around conventional royalties and how they relate to natural gas.
Buckee argued higher royalties would discourage activity at a time when high costs and falling prices are putting the bite on an already margin-squeezed segment of the oil and gas business.
According to the Canadian Association of Oilwell Drilling Contractors (CAODC), 107 of 885 rigs were working this week, down from 342 active rigs at this time last year.
Likewise, the number of new well licences issued by the province are off a third from last year.
According to Buckee, declining field activity is a leading indicator of the overall economic viability of natural gas.
Talisman, along with Canadian Natural Resources Ltd. and EnCana Corp. earlier this year reigned in gas spending in response to higher costs and lower prices. An additional financial load in the form of higher royalties will inevitably lead to lower drilling, lower production and in turn, lower government royalty payments.
If major oil companies balk at paying higher royalty rates on oilsands projects, then the Alberta government should consider developing the resource itself by working in equity partnerships with more co-operative companies, says Gil McGowan, president of the Alberta Federation of Labour.
"I think we should learn a lesson from other oil-rich jurisdictions, especially Norway. And that lesson is that if private sector firms aren't willing to develop our resources in the public interest we shouldn't be afraid to do it ourselves. Royalties are one way to guarantee returns for the public, but ownership is another."
McGowan's remarks were made as part of his presentation to the Alberta government's the government panel.
The hearings continue through today.
The head of the Alberta Federation of Labour says TransCanada Corp.'s proposed Keystone pipeline to the United States is a job killer that needs to be stopped.
In a submission to the National Energy Board, labour federation president Gil McGowan said the proposed 3,000-kilometre pipeline to the U.S. Midwest is not in the public interest because it would export refining and upgrading jobs from Canada, where the oil is produced.
"Canadians should be getting the greatest value for their resources," he said.
"The Keystone project falls well short of providing maximum value in the areas of jobs, economic opportunity and long-term economic and energy security."
According to a study by the economic consulting firm Infometrica, the labour federation insists 18,000 jobs would be created in Canada if bitumen was refined in Alberta instead of being shipped to the U.S. on the proposed pipeline.
"If Keystone goes ahead, we will miss a once-in-a-lifetime opportunity to create a broad, healthy, value-added, and research industry centred around a rejuvenated refining industry, McGowan warned.
Instead, "billions of dollars will be spent to retool and renovate current refineries in places such as Illinois and the American Gulf Coast."
If approved, Keystone would transport some 435,000 barrels a day from Hardisty, near Edmonton, to refineries in Illinois.
In February, TransCanada received National Energy Board approval to transfer assets from its main natural gas line to a subsidiary that would operate Keystone.
In December it filed a formal application to build the line and National Energy Board hearings seeking approval to construct and operate the Canadian facilities are scheduled to begin on June 4.
TransCanada spokeswoman Shela Shapiro said the company doesn't comment on intervenor submissions or the regulatory system.
"We're aware they have filed and it's part of the process," she said.
But David MacInnis, head of the Canadian Energy Pipeline Association, said at least 450,000 barrels a day of new pipeline capacity is needed by 2009 to avert slowdowns and job losses in the burgeoning oilsands sector.
TransCanada, along with Enbridge Inc. and Kinder Morgan have put forth proposals to increase oilsands export capacity to the United States.
Although MacInnis wouldn't comment on the merits of any specific proposal, he said CEPA supports "market-backed solutions" to add new pipeline infrastructure and alleviate what he said is a looming capacity shortage.
He further suggested that upgraders planned for the Edmonton area over the next several years are threatened by a lack of skilled labour.
"With all that construction, I don't get the sense anybody is worried about losing jobs. In fact the opposite is true."
He said the labour federation's call for a moratorium on future pipeline construction would threaten oilsands growth and actually cost jobs in the long run.
"The AFL need to look in the mirror," he said.
"The short story is that these oilsands pipes create jobs. If they get their way, they will absolutely devastate the economy.
"There will definitely be shut-ins in production at oilsands plants . . . that's what's going to kill jobs."
Calgary Herald, Tues Apr 17 2007
Byline: Shaun Polczer