The reaction to an Alberta NDP government was predictable.
What’s harder to determine is whether it is realistic.
No sooner had the jokes died down about refugee camps on the Alberta-Saskatchewan border, then came stories from the oil sector of threats to pull out their business from Alberta and move east.
Calgary-based Bonterra Energy said it had initially decided to spend all its money in Alberta, but is now assessing whether some of its exploration dollars should be moved to Saskatchewan or British Columbia.
“If it gets too difficult and it’s more economic and there’s a better rate of return for your shareholders in Saskatchewan, (or) B.C. than it might be in Alberta, if they make some drastic changes, then obviously, as stewards of the company, we should be looking at where we can get a better return,” George Fink, Bonterra CEO, told the Regina Leader-Post’s Bruce Johnstone.
Much will depend on whether premier-designate Rachel Notley’s government decides to go ahead with her plan to increase royalty rates and raise the corporation income tax rate from 10 to 12 per cent, said Fink, who is originally from Vibank, Sask. “We don’t really know what this (NDP) government is going to do. We’re hoping we can sit down and have open and frank discussions and make it work for everyone.”
Crescent Point Energy CEO Scott Saxberg – Saskatchewan’s biggest oil producer – predicted a fire sale on assets in Alberta if Notley makes good on that royalty-rate hike.
“If the NDP create further uncertainty on royalties, and change royalties to impact valuations, it will provide an opportunity for companies, such as ourselves, to step in and buy Alberta-based companies for a discount value,’’ Saxberg said.
Such noise is making the Saskatchewan Party government almost giddy.
“There is uncertainty in Alberta right now with respect to the royalty review that the new (Alberta NDP) government has promised,” said Economy Minister Jeremy Harrison, minister responsible for jobs and skills training.
Harrison was quick to note that former Alberta Progressive Conservative premier Ed Stelmach produced the same effect when he also threatened a royalty review.
“We’ve seen this before,” Harrison said. “It happened in Alberta in 2009 and there was significant increase in investment into Saskatchewan because of it.”
Certainly, more oil companies moving into Alberta would be good news for many parts of rural Saskatchewan now seeing oilfield workers laid off. And it might even mean a little more good news for the Saskatchewan budget that is starting to see money from oil land lease sales peter out.
But whether it’s all that great _ or whether it will even happen _ is a little early to say.
According to the Canadian Association of Petroleum Producers (CAPP), such talk is definitely premature.
“We want the NDP to have a little bit of run time and understand the industry,” said CAPP spokeswoman Chelsie Klassen. “And they seem open to understanding what the industry is about. So, we’re not going into panic mode.’’
Klassen noted CAPP has “worked with NDP governments before,” including Saskatchewan’s last NDP government that set our current royalty rates.
And the man blamed for starting the demise of the Alberta PC dynasty reminds us that it’s also a problem when governments gets too cozy with the business right.
“Our popularity was always in the centre and someone gave the advice to move to the right,” Stelmach told the Edmonton Journal after his party was reduced to 10 seats.
There is little doubt that the Alberta PCs got into trouble in its last budget that refused to tax business when it was taxing everyone else.
Moreover, Stelmach believes there is “certainly no need for business to panic over an NDP government before any decisions are made.”
An Alberta NDP government could bring some good news for rural Saskatchewan, but how much and for how long is really the question.
