What's Happening to Alberta's Oil?
Jan 02 2019
It's no secret that the state of Alberta's oil economy is turbulent, with a recent price collapse triggering fears of economic contagion. In the face of a downturn the Liberals aren’t holding back on scaling down operations, launching a series of strategic moves designed to curb production. This includes the introduction of new regulations and energy-hostile bills, as well as the withdrawal of tax incentives and abandonment of pipeline options.
Liberals scale back Canadian heavy crude
The new regulations build on controversial comments made by Canadian Prime Minister Justin Trudeau early last year, which sparked concerns that the government is intentionally downsizing Alberta’s oil sands operations, and consequently Canada's entire fossil fuel industry.
“We can’t shut down the oilsands tomorrow. We need to phase them out. We need to manage the transition off of our dependence on fossil fuels," he said. “That is going to take time. And, in the meantime, we have to manage that transition.”
While the changes appear to be slow, critics have accused the Liberals of implementing a multi-decade strategy that will eventually shut down Alberta’s main industry. At the frontline are industry-crippling bills like C-48 and C-69, as well as fiscal incentives that allow companies to write-off capital equipment.
Downturn costing Canada billions
Now, investors are worried that the gradual price slip could turn into an abrupt plunge, with federal hostility towards the Northern Gateway and the Energy East pipelines being blamed for the recent oil price crash. As a result, the average barrel of Alberta oil now sells for significantly less than international competitors, with some producers even toying with the idea of curbing output in a bid to drive up prices.
The negative trends are set to cost the Alberta treasury a huge C$5 billion per year, while experts predict that the Alberta government’s annual deficit could hit C$40 billion by 2040.
There's also plenty of controversy surrounding the Trans Mountain pipeline project, which the Liberals were forced to purchase for C$4.5 billion. It has since encountered multiple hurdles, with Alberta Premier Rachel Notley asserting the Canadian economy is bleeding around C$80 million every day for every 24 hours the pipeline expansion remains immobilised.
While pipeline construction comes with plenty of challenges, experts like Canadian video analytics specialist IntelliView are working hard to develop pioneering solutions. For a closer look at the latest innovations don't miss 'Thermal Imaging Provides Early Leak Detection in Oil and Gas Pipelines.'
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