AB Today – Daily Report December 3, 2018
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AB Today – Daily Report December 3, 2018 Quotation of the day “I can’t promise the coming weeks and months will be easy, but I can promise we will never back down in our fight to protect jobs and the resources owned by all Albertans.” Premier Rachel Notley announces a mandated, short-term reduction in oil production on Sunday night. Today in AB On the schedule House business is scheduled to resume at 1:30 p.m. on Monday for the final week of the fall legislative session. An evening session is planned, unless MLAs vote to adjourn at 6 p.m. The Monday afternoon session is set aside for private member’s bills, written questions and motions for returns. There are three private member’s bills on the order paper: ● UCP MLA Wayne Anderson’s Bill 201, Employment Standards (Firefighter Leave) Amendment Act, which would prevent professional firefighters from being fired from paid work for also serving as volunteer firefighters; ● NDP MLA Debbie Jabbour’s Bill 205, Supporting Accessible Mental Health Services Act, which would create a mental health patient bill of rights; and ● NDP MLA Craig Coolahan’s Bill 206, Societies (Preventing the Promotion of Hate) Amendment Act, which would prevent organized hate groups from getting official recognition from the province. The following government bills could also be debated, per the order paper: ● Bill 27, Joint Governance of Public Sector Pension Plans Act; ● Bill 30, Mental Health Services Protection Act, which would create a professional college for mental health and addictions workers; ● Bill 31, Miscellaneous Statutes Amendment Act; and ● Bill 32, City Charters Fiscal Framework Act, which would provide predictable, permanent funding for Calgary and Edmonton. Province to curtail oil production by 8.7 per cent starting in January Premier Rachel Notley announced plans Sunday evening to curtail oil production in the province by 8.7 per cent beginning January 1, 2019 in response to a “punishing” oil price differential. The deep discount is caused in part by an inability to move product. The industry currently produces 190,000 more raw crude oil and bitumen barrels than it can ship by pipelines, rail or other means. Normally there are 16 million barrels in storage, but the glut has maxed out storage capacity to nearly 35 million barrels. Starting in January, daily oil production will be reduced by 8.7 per cent, or 375,000 barrels per day. The Alberta Energy Regulator will carry out the implementation. The cap will be applied on an operator basis, not by well or by project, meaning companies can choose to shut off their highest-cost, lowest-return projects. Operators that produce under the 10,000 barrels per day will be excluded from the cap. Energy Minister Marg McCuaig-Boyd will set monthly curtailment limits by order-in-council, which will expire December 31, 2019. As the glut is reduced, the curtailment percentage will be reduced accordingly. The province expects the glut to be cleared by spring 2019. With Western Canadian Select hovering around $10 per barrel, Alberta’s oil now sells its product for about $45 per barrel less than West Texas Intermediate. The government expects the curtailment to add at least $4 USD per barrel to the value of Western Canadian Select. “We must act immediately, and we must do it together. I can’t promise the coming weeks and months will be easy, but I can promise we will never back down in our fight to protect jobs and the resources owned by all Albertans,” Notley said in a statement Sunday. The decision comes after consultations between the government, energy experts, and oil and gas industry executives through three “special envoys” — Brian Topp, Robert Skinner, and Coleen Volk — who were appointed on November 19 to come up with short- and mid-term solutions to the crisis. Notley said the discount on Alberta oil is the results of shipping Alberta’s petroleum products to only one customer — the United States. Opposition parties onside with curtailment The call for a government-mandated curtailment first came from Cenovus Energy last month and has since received backing from the Alberta Party and the United Conservative Party. UCP Leader Jason Kenney had previously stated the industry should voluntarily come to an agreement around curtailment. However, after his meetings with industry officials, Kenney said it was clear not all executives were on board and that government intervention was required. Kenney pitched a 10 per cent curtailment, while Scotiabank released a report suggesting a four per cent curtailment would suffice to reign in the current price differential. On Sunday evening, Kenney said he would not quibble with the number selected by the NDP. The UCP leader says he hopes to see the differential back to its normal $20 per barrel by the end of the year. "This is the kind of issue Albertans expect us to find a solution together on,” Kenney said. In a statement, Conservative Party of Canada leader Andrew Scheer called Notley’s announcement “drastic” and “extraordinary.” While seeming to approve of the curtailment, Scheer said it is “in no way a permanent solutions.” He blamed the current crisis on Prime Minister Justin Trudeau delaying the Trans Mountain pipeline and said it will be up to the federal government to fix the problem. Other steps taken The curtailment is the latest in a series of steps to tackle the price differential as the province remains hopeful the Trans Mountain pipeline will get approval to take products to tidewater. Notley has been on a tour of speaking engagements selling the urgency of pipeline approval to politicians and business leaders in British Columbia and Ontario. Last week, Notley announced the province would move ahead with the purchase of rail cars to add 120,000 barrels per day to the province’s shipping capacity, but the plan — which could cost billions — would not make a dent in the differential for about nine months. The plan involves the province buying upwards of 80 additions locomotives, and the cost has yet to be released. The province expects additional capacity once Line 3 comes back online in late 2019. The hit to oil prices created a dire fiscal situation, which the province says is costing Canada $80 million a day in lost revenues. The province also launched a second phase of its “Keep Canada Working” campaign, buying up ad space in Ottawa with a live counter of how much the differential is costing the Canadian economy. Q2 fiscal update paints picture of calm before the economic storm Treasury Board President and Finance Minister Joe Ceci says Alberta’s fiscal picture has improved slightly compared to spring budget projections — but that economic recovery continues to be under threat by the oil price differential. Ceci made the announcement while releasing the province’s second quarter fiscal update Friday. The deficit for 2018-19 is now forecast at $7.5 billion, $1.3 billion lower than forecast at the beginning of the year. The province will bring in $49.6 billion in revenues this year — up $1.7 billion from the budget forecast due to additional income taxes. This was partially offset by higher-than-forecasted expenses related to the Lubicon Lake Band settlement, pipeline advocacy, and wildfire and disaster relief costs. “We’re fighting for the Albertans who are struggling because of the punishing differential,” Ceci said. “We’re going to keep pressing the federal government. And if they won’t act, we will.” Ceci said 42,000 more jobs have been added compared to the same time last year and that the province is still on track to balance its budget by 2023. Opposition parties call update ‘out-of-touch’ Both the Alberta Party and United Conservative Party charged the fiscal update is “out of touch.” UCP finance critic Drew Barnes said the forecast failed to mention the province could lose out on $7 billion annually if the oil differential continues, and failed to pay lip service to the 180,000 Albertans who are out of work. “The numbers released today rely on overly optimistic forecasts that completely disregard the emergency situation facing our energy sector,” Barnes said. Alberta Party Leader Stephen Mandel criticized the government for spending half a billion more than it projected in the spring. "I’m deeply concerned about the government’s inability to stick to their own budget. They’ve spent half a billion dollars more than their own projections in the spring, and it seems the more they make, the more they spend,” Mandel said. Liberal MLA David Swann said the province’s deficit is artificially reduced since the government used $4.4 billion in funds from the Heritage Savings Trust Fund over the past three years to pay it down. “That is like pulling money out of your RRSP to pay down your credit cards,” Swann said. “It makes no sense. It is robbing future generations of Albertans just to deal with a current financial problem.” Today’s events December 3 at 10:30 a.m. – Edmonton The NDP cabinet will meet in the cabinet room in the Alberta Legislature at 10:30 a.m. and again at 3 p.m. The NDP caucus will meet at 1 p.m. and 6:15 p.m. December 3 at 11:30 a.m. – Edmonton Indigenous Relations Minister Richard Feehan and Métis Settlements General Council president Gerald Cunningham will hold a ceremony at the Alberta Legislature on the 80th anniversary of the founding of Alberta’s eight Métis settlements. December 3 at 11:30 a.m. – Edmonton The government is hosting an event to recognize International Day of Persons with Disabilities in the Legislature rotunda.