5 reasons why the oilpatch could be in for another turbulent year in 2019

Canada's oilpatchwill be glad to see the back of 2018a year that saw domestic crude prices plunge, pipeline construction stall andtensions grow with Ottawa.

But the coming year doesn't promise much relief. Big questions loom over the future of the Trans Mountain pipeline, Ottawa'soverhaul of the project approval processand Alberta's decision to impose oil production cuts.

Here are the major challenges for the energy sector that willmakeheadlines in 2019.

The Trans Mountain saga

The plot twists continue for Canada's most contentiousenergyproject,the Trans Mountain pipeline expansion, which would sendoilsandscrude to the West Coast for export.

Weeks after Ottawa rescued the project by buying it from Kinder Morganfor $4.5 billion,the Federal Court of Appeal overturned the pipeline'sapproval, partly on grounds the federal governmentfailed to properly consult First Nations.

The government is redoing that work, but there are noguarantees the project will move forward.

Warren Mabee, director of theInstitute for Energy and Environmental Policy at Queen's University, sayspipelines could be an issue that splits voters innext fall's federal election.

"[Justin] Trudeau has a fine line to walk into the election," he said. "Is he going to be the prime minister who battles climate change or is he going to be the prime minister who builds pipelines? Can he be both?

"It's a big question."

Oil production cuts

With a growing oil glut triggering a steep fall in the price of Canadian oil, Alberta did something ithadn't done indecades imposed mandatory production cuts.

The policy takes effect Jan. 1, and Albertans will soon see how well it works.

Prices improved significantly following the announcement on Dec. 2, but some experts are uncertain that will continue.

Peoplewill also be watching for"unintended consequences," including harm toinvestment and trade.

There are also questions about whether the curtailmentwill actually save jobs an important matter for Premier Rachel Notley with anelection call potentially coming as earlyas February.

The battle over a carbon tax

A cornerstone of the federal government's environmental plans is its national carbon tax strategy, but it's facing mounting political pushback as implementation nears.

Ontario is taking the federal government to court on the constitutionality of the carbon taxandSaskatchewan is also mounting a legal challenge.

New Brunswick and Manitoba haven't signed oneither. And if Alberta changes governments this spring,there's little chance its carbon tax survives in its current form.

This could spell trouble for a strategy thatsupporters see as a critical step in Canada's efforts to help addressclimate change. Critics argue the policy will damage the economy and achievelittle.

"You have a federal government that is really trying to find a way to get this in place," Mabee said.

If carbon taxes"start to change behaviour," then the governmentcan invest in infrastructure such as pipelines "with a clear conscience,"he said. "But without the carbon tax, it's a problem."

Oil's rough ride

The benchmark prices for oil in North American and international markets strengthened in 2018. West Texas Intermediate (WTI) peaked at over $76 US a barrel in October, whileBrent crude nearly reached $87.

But fearthere's too much oil being produced for a slowingglobal economysent oil tumbling in December to lows not seen in more than a year, with WTI dropping below $50a barrel.

The geopolitical factors affectingoil prices can change quickly, andOPEC policy,trade disputes andU.S. shale production are all wild cards to some degree.

With so much volatility, opinions vary on where prices are headed.For one, Judith Dwarkin, chief economist at RS Energy Group, expects global crude stocks to build through next year andprices to continueto be "soft-ish."

That could be good news for consumers, as lower oil prices typically meanrelief at the pumps.

The future of Bill C-69

There's much at stake for Canadians in how the federal government proceeds with Bill C-69, which includes an overhaul of the assessment process for major energy projects across the country.

The bill sets in place new timelines and parameters for reviews, lifts limits on who can participate in the processand creates an early-phase consultation with Indigenous communities and anyone else who could be impacted by aproject.

There are fears in the oilpatchthat anew process will scare offinvestment, though executives who met Trudeau in Calgary in November said they wereconfident heheard their concerns.

The government argues reform is neededto restore trust in the system.

Indigenous leaders want to ensure they have abigger role in the decision-making process, whileenvironmental groups have long wanted to see a more transparent approval process that relies on solid science.

Crafting the final legislation will require hard work and careful politics.