The resignation of Jason Kenny has created more uncertainty for the Alberta oil patch

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The bombing announcement by Alberta Premier Jason Kenny that he will resign as leader of the United Conservative Party has added a layer of uncertainty to investors in Canada’s oil patch when they were already uncertain about the province’s commitment to contribute to decarbonization.

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The news comes as companies operating in Alberta are looking to the provincial government to clarify stimulus and control plans to create carbon capture and storage projects, including deep-ground carbon dioxide sequestration. The federal government promised a tax credit that would cover 75 percent of the cost for some projects, but oil companies are stuck with the provincial government for top-ups, arguing that the financial risk is too high without additional offset. .

Hundreds of millions of dollars depend on how they deal with this investment

Richard Mason, Chairman of the World Petroleum Council Canada

Alberta has already approved six carbon storage hub projects near Edmonton, and dozens of other applications are in the process of being reviewed. But questions remain about how the province will determine which proposals have been approved, and sector leaders have complained of a lack of transparency.

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“I don’t think it’s going to be easy for the provincial government to decide this kind of thing in a few months because of the possibility of a change of ministers and deputies and everything that comes with a change of prime minister,” said Richard Mason, former CEO of the Alberta Petroleum Marketing Commission (APMC). The current chairman of the World Petroleum Council Canada is 6

“Hundreds of millions of dollars will depend on how they deal with this investment.”

Kenny announced his resignation on May 18, receiving only 51.4 percent of the vote in a review of his leadership. Although the UCP has since made it clear that Kenny will remain there until a new leader is elected by party members, political observers say the politically depleted Kenny, under the supervision of a volatile Caucus, expects it to be a turbulent few months.

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Meanwhile, companies and investors are urging the province to streamline the process of granting underground drilling space rights for carbon capture to be more closely aligned with existing regulations for the approval of new oil and natural gas wells.

Tristan Goodman, president of the Canadian Explorer and Producers Association, said: “The approach the province is taking has a lot more government control and it really should allow the market to make those decisions like what happened in Saskatchewan.”

The sector needs to move quickly to deploy the company’s carbon capture, utilization and storage (CCUS) technology to address concerns over provincial regulations if the sector wants to meet its own net-zero emissions target. New technology is still seen as the industry’s best hope for decarbonizing.

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And while oil and gas companies have enjoyed a lucrative bonanza this quarter, due to high energy prices, many of them are facing questions about how they plan to repay the principal debt and raise capital outside of shareholder returns – including questions about capital expenditure on carbon capture technology.

“Companies are trying to figure out what they’re going to do,” Mason said. “They got all this cash flow from high prices and the next question is, well, what are we going to do with it?”

“When we go into the planning cycle for this fall and set the capital budget, that’s the question on everyone’s mind. And with the government probably not making many decisions in the next few months, it will be a little harder for them to say: ‘I want to invest in Alberta.’

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Kenny’s announcement also came during a high-profile appearance before the U.S. Senate Energy and Natural Resources Committee, where Kenny championed Canadian power and called for a new pipeline between Alberta and the United States.

Proponents of the sector say they expect Alberta to continue to support oil and gas for its next premier.

“We were pleased to see the Prime Minister go to Washington and represent the interests of the Albertans there, and we hope that the next Prime Minister will do the same with the other provinces, with the federal government and with the governments of the world, which is our natural market.”

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