‘Black cloud’: Alberta’s latest fight with Ottawa could drive oilpatch investment away

The ongoing constitutional battle between the province of Alberta and the federal government in Ottawa has left the oil and gas sector in a state of uncertainty. The latest move by Alberta Premier Danielle Smith to table a motion invoking the Alberta Sovereignty within a United Canada Act has raised concerns among industry watchers about the impact on the sector caught in the middle.

The motion aims to push back against federal draft regulations that would require oil and gas producers in Canada to limit greenhouse gas emissions by 35 per cent below 2019 levels. Under the Alberta Sovereignty Act, the province would have the authority to declare federal laws unconstitutional or harmful and issue orders to provincial entities not to comply with federal rules.

One of the key provisions of the motion is to designate emissions data as proprietary information owned exclusively by the Alberta government, with reporting of that data to be directed by the province. It would also prohibit site visits by federal employees or contractors without authorization from Alberta.

Federal Environment Minister Steven Guilbeault has criticized the proposed motion, calling the restrictions on emissions reporting a violation of federal laws. In response, Alberta Environment Minister Rebecca Schulz accused Guilbeault of lying and insisted that the federal emissions cap would be found unconstitutional when challenged in court.

The ongoing battle between the provincial and federal governments over jurisdictional authority has created uncertainty in the oil and gas sector. Richard Masson, an executive fellow with the University of Calgary’s School of Public Policy, expressed concerns about the federal emissions cap, but believes that the provincial motion will only add to the confusion. He emphasized that oil and gas companies are unlikely to ignore federal rules for emissions reporting in favor of untested provincial legislation.

Sander Duncanson, a partner at the law firm Osler, Hoskin and Harcourt, shared Masson’s concerns and highlighted the complexity of overlapping federal and provincial regulations on emissions reductions. He warned that regulatory uncertainty could drive investment away from the industry.

Schulz defended the reporting conditions in the motion, citing concerns about Ottawa requiring emissions data from all companies regardless of their size. She also expressed a lack of trust in Guilbeault and criticized Bill C-59 for imposing a gag order on industry from discussing their environmental records.

The prohibition of site visits by federal government employees was also questioned by Masson, who raised doubts about the province’s jurisdiction to enforce such a restriction. Schulz assured that industry consultation would take place to address any concerns raised by the motion.

Overall, the ongoing conflict between the provincial and federal governments has cast a shadow over the oil and gas industry, leading to uncertainty and concerns about investments. The industry is calling for clarity and stability in regulations to foster growth and sustainability in the sector.