CHANGES IN ALBERTA

Smoky Lake Signal Article No. 229 (July 25, 2012) Whispering in the Wind Two important “political” events occurred just two days ago with another unfolding as this column is published. Collectively, these three events will end up showing the effectiveness of Canadian “cooperative” federalism – or show that “cooperative” federalism is just not working. NEXEN Inc. Takeover China’s state owned China National Offshore Oil Company (CNOOC) put in a bid on Monday to take over the interests and assets of Calgary based, NEXEN Inc. for $15.1 billion. The CNOOC will have to go through a lot of hurtles but in the end I don’t see any Canadian foreign investment review process turning down the application. For many in Ottawa it is particularly welcome news and demonstrates that Prime Minister Harper’s strategy of diversification of markets is working. The Prime Minister also wants Alberta’s oil sands development to be the cornerstone of Canada’s national energy strategy that identifies Canada as being an international energy “superpower” with locked in markets – the logic fits in perfectly with Premier Redford’s call for a National Energy Strategy. Nevertheless there are consequences for supporting the NEXEN takeover and the loss of some control over Alberta’s (if you will Canada’s) oil sands resource base. In my view the NEXEN has to be put into some sort of context, here is my first attempt: 1. Two studies that I have read about indicate that about two thirds (or about 71 percent) of oil sands production in Canada is owned by foreigner entities. 2. The Peoples Republic of China through state owned companies have invested something like $11.7 billion in oil sands production (between 2007 – 2011) which is about 16 percent of total investment of $73.6 billion (between 20907 – 2011). The NEXEN takeover price is $15.1 billion, one could conclude that China’s interest in Alberta’s oil sands development has increased to somewhere around 30 percent. 3. The NEXEN news releases regarding the CNOOC bid stress the fact that a good deal of their activity is international in scope, but it should be pointed out that NEXEN has significant interest in oil sands development: they have a 7.23 percent interest in Syncrude; have an operating project at Long Lake that NEXEN own 65 percent and CNOOC owns 35 percent. In total NEXEN has something like 300,000 acres of leased land in the Athabasca region with something like 3 – 6 billion barrels of recoverable oil sands resource. If the China National Offshore Oil Company is successful in the purchase of NEXEN, the CNOOC plans on opening a head office in Calgary which would control their North and Central American operations. CNOOC will also register on the stock market, something I find strange? British Columbia Demands More Benefit and Less Risk On Monday the British Columbia government released it’s conditions regarding their support for the proposed Enbridge Northern Gateway Pipeline project which, if approved, will move bitumen from Alberta to Kitimat, British Columbia and then onto Asian markets. For the British Columbia government the demands are quite straight forward; they want a greater share of the benefits (currently estimated at 8 percent) and a greater spread on the potential environmental risks attached to the project (both marine and pipeline). The Alberta government has rejected both demands indicating that the government of British Columbia, in making demands that will pit one province against another. The real question is going to be how Prime Minister Harper is going to deal with the aboriginal questions; where the proposed pipeline route will be going through hundreds of reserves. Council of the Federation Meeting The Premiers of Canada are meeting this week in Nova Scotia and there appears to be a lot of frustration regarding the apparent cool relationship between the Premiers and the Prime Minister. That coolness is not only reflected in the lack of First Ministers Meetings (none have been held for years) it is also reflected in the PM’s reluctance to have national discussions on topics like healthcare, education and of course, a national energy strategy. Premier Darrell Dexter is hosting this years meeting and suggests that there is some “consternation” amongst the premiers in that the Prime Minister is not engaging the provinces when the provinces are directly impacted by decisions made in Ottawa. What transpires at this meeting in Nova Scotia is not only going to be interesting the question is going to come down to will Prime Minister change his mind and do some NATION BUILDING with the premiers?