Mel Knight looks forward in Alberta’s new energy strategy

Energy prices have been worse, especially for natural gas in the early 1970s, Knight recalls in an Alberta Oil interview.

By Gordon Jaremko

April 01, 2009

The document is a “framework” that shows all concerned, including the United States as the top destination for Alberta oil and gas, how provincial resources, regulations and intentions fit together as a recipe for clean, reliable supplies, the minister says.

Does the Tory government believe fresh action has to be taken quickly to adapt to the avowedly greener regime led by President Barack Obama and the Democrat legislative majority in Washington?
With one exception, Knight indicates he does not think special new steps are needed. The province is already ahead of the U.S. curve as the first North American jurisdiction to enact greenhouse gas control legislation and the sponsor of the world’s biggest carbon capture and storage program, he suggests.

The exception is an emerging need to prove that the province can keep its promises. “There’s going to come a time when we will have to demonstrate very clearly that transportation fuel produced from Alberta oil can match or exceed the carbon footprint standards of other refinery feed stocks,” Knight says.

That day of reckoning is not tomorrow, however. “We’re still a ways away from knowing what’s going to happen,” Knight says. “President Obama’s got a fairly solid group of people. There are certainly opportunities for us to continue to work with Washington as we have in the past.”

Knight also refuses to be rushed into further moderation of royalty increases that kick in this year, beyond previously announced deep drilling incentives and transition provisions. A review of “the competitive situation” is underway, he says, confirming industry speculation. But the minister adds that does not mean Alberta will be diverted off course by continuing royalty protests, corporate budget cuts and migrations of oil drilling into Saskatchewan and gas development into British Columbia.

His strategy makes tantalizing hints that Alberta might mimic B.C. royalty cuts for shale gas projects. There is a reference to “steps to derive greater wealth over the longer term” that include “developing our substantial unconventional gas (coalbed methane, shale gas, tight sands).”
The document pledges, “Alberta will consider royalty structures to allow the development of marginal resources and promote best use of current and new technologies.” Further review of the province’s ability to compete for investment was pledged by the February throne speech that opened the 2008 legislature session.

But Knight is not about to start a western range war for industry, with cuts to government shares of energy revenues as the weapons. Alberta remains the regional industry hub and growth all around can improve raw material supplies for the Edmonton area’s processing and upgrading network, he says.
“Our neighboring provinces of B.C. and Saskatchewan have been energy players for many years. The main reason there has been a flood of dollars into them recently has a lot to do with the fact that there are tremendous resources there. Technology has changed. That technology has opened up opportunities,” Knight says.

“It’s good for all of us,” the Alberta minister says. “It’s good for Western Canada. We don’t have to compete with B.C. and Saskatchewan.”

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