Oilpatch hopes investment flows back to Alberta after big Kenney win

After four years of declining investment in Alberta's oil and gas sector, the industry is hopeful a swift change in government will bring an equally quick return of fortunes for the oilpatch.

Voters showed Rachel Notley's NDPthe door on Tuesday;Jason Kenney's United Conservative Partywill now have a majority government.

It's exactly what many oil and gas companies wanted to see, despite how much credit they give Notleyfor her performance during her single term in power.

In the last couple of years, Tamarack Valley Energy CEO Brian Schmidt has struggled to attract investors when he holds meeting in places like New York. A new provincial government could be enough for pent-up investment dollars, and the accompanying jobs,to start flowing into Alberta.

"Finally we have something they will look at as positive," said Schmidt. "For investment, this gives a big boost to our jurisdiction."

Notleyconsistently tried her best to support the industry amid low oil prices, said Schmidt, but he has more trust in Kenneyto streamline regulations and to fight off federal government policies that could hurt the sector.

Kenney's promise to set up a "war room" to defend the sector against misinformation and attacks on social media and elsewhere isimportant, as is a fresh approach to getting pipelines built, said Tristan Goodman, president of theExplorers and Producers Association of Canada.

Notleytried to work with all stakeholders to build support for more pipelines, while Kenneyhas signalled he'll be muchmore combative in dealingwith opponents.

"Notley did a lot of work to try to underpin why we should move forward with pipelines and, unfortunately, that wasn't supported, I don't think, by the federal government," said Goodman.

During the campaign, the UCP pledged to get rid of the carbon tax and all other policies that arepart of the NDP's climate plan, including the accelerated phase-out of coal-fired power plants and a cap on total oilsandsemissions.

The party also vowed to replace the entire board of the Alberta Energy Regulator, and to streamlinethe agency to reduce the amount of red tape for oil and gas companies wanting to drill new wells or build new oilsands projects.

"There's no question that I think there are opportunities to look a little deeper [at] some of the streamlining, and just reducing some of the duplication that has occurred over the last several years," said Goodman.

In addition, Kenney vowed to stop Notley's plan to lease thousands of oil-tank railcars, and has threatened to turn off the supply of oil to B.C. if the province continues to obstruct construction of the Trans Mountain pipeline expansion.

After stubbornly low commodity prices since late 2014, the value of Alberta oil has stabilizedrecently. Since the beginning of January, when the Alberta government's mandated cuts to oil production began, heavy oil in the province has sold for more than $40 US per barrel and even climbed above $50 this month.

There is, however, some skepticism about what a Kenney victory will mean for the oilpatch.

U.S.-based political risk analysis and consulting firm Eurasia Group said in a report last week that investors in the Canadian energy sector should brace for "significant risks" following a Kenney victory, especially if Prime Minister Justin Trudeau's Liberal government is re-elected this fall.

As much as Kenneyvowed to fight for the oilpatch as he toured the province during the campaign, he also routinely criticizedlarge oil companies in the country, mainly because of their support of a carbon tax.

In Alberta, the larger oil and gas companies are more likely to support a carbon tax or climate policy than small or medium-sized companies. Kenney'scritiques were an unusual strategy, said experts, considering premiers of the province have usually gone out of their way to court support fromenergy-industry leaders.

While business has picked up in recent months at Performance Energy Services, CEO Scott Darling expects Kenney's victory will inject further optimism into the oilpatch. Admittedly, he said, he's pretty happy with the election result.

All of Kenney's advocacy for getting more pipelines built to improve the province's sluggish economy appeals to him. Darling is also counting on investors around North Americato take notice.

Schmidt, with Tamarack Valley Energy, expects Kenney'swin to translate into more meetings with investors and better luck with them buying back into the sector.

"How fast and how hard they come in that's what remains to be seen."

WATCH | Jason Kenney talked about his priorities including jobs and pipelines in his victory speech

Jason Kenney's victory speech

5 years ago

Duration 30:15

The UCP leader is projected to form a majority government, capping his three-year goal of uniting Alberta's political right.