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U.S. shale cowboys do the unthinkable and bring mighty Saudis to their knees

U.S. shale cowboys do the unthinkable and bring mighty Saudis to their knees


ROME — The Globe and Mail

Published Friday, Oct. 21, 2016 12:27PM EDT

Last updated Friday, Oct. 21, 2016 12:29PM EDT


The oil war is pretty much over, and Saudi Arabia lost.

How did the world’s most powerful oil producer, which set prices for decades by riding herd over the member states of the Organization of Petroleum Exporting Countries, get it so wrong?

In a word: shale. The Saudis underestimated not only the strength and flexibility of the American shale-oil industry, but also that of the financing machine behind it. American capitalism proved to be the superior fighting force.

The Saudis sat uneasily for a decade as they watched the shale-oil industry go from technological curiosity to production juggernaut, propelling the United States into the global energy big leagues. At last count, total American oil production (from conventional, offshore and shale wells) was about 9.2 million barrels a day, not much less than that of market leaders Russia and Saudi Arabia.

Their global market share withering, the Saudis lost all patience and finally snapped a year ago. Production would not be reined in to prop up prices. Saudi Arabia and any other OPEC member with spare capacity opened the spigots and a flood of oil sloshed through the global markets. In mid-2014, oil was trading at $100 (U.S.) a barrel or higher. By the start of this year, it had fallen to $30, a price that was transmitting pain to every sector of the oil industry.

Capital expenditures declined from $700-billion (U.S.) in 2014 to this year’s estimated $400-billion, according to the energy consultancy Wood Mackenzie. The weakest OPEC members went into economic free fall; Venezuela is on the verge of collapse. Expensive production projects in the North Sea, the Canadian oil sands and other high-cost areas were put on ice and share prices got slaughtered. Hundreds of small oil companies went bankrupt. The survivors, big and small, launched savage cost-cutting exercises as their bankers got twitchy.

But guess what? A few American shale companies didn’t make it, but the vast majority kept pumping away. As a result, overall U.S. oil production (including shale) fell by only about 500,000 barrels a day this year over last year.

Much to the Saudis’ regret, the shale companies proved remarkably resilient. Falling prices triggered an all-out innovation exercise that, combined with squeezing suppliers and labour, saw production costs sink by an astounding 40 per cent since 2014, dropping the break-even price.

While the flow of capital to the shale industry fell, it did not disappear. Earlier this year, as prices recovered somewhat from their January lows, small American (and Canadian) exploration and production companies had little trouble raising equity financing. Last week, Extraction Oil & Gas of Denver raised $633-million (U.S.) in an initial public offering, the first oil IPO of the year.

Faced with the extraordinary adaptability of the shale industry, and watching is own finances deteriorate at an alarming rate, the Saudis cried uncle last month. At a meeting in Algiers, the OPEC countries (except for Libya, Nigeria and Iran) tentatively agreed to a small production cut to prop up prices. While infighting could wreck the deal, the details are supposed to be agreed next month at OPEC’s Vienna meeting. In reality, it is the Saudis who will have to do most of the cutting.

The reluctant U-turn by the Saudis – a signal that managed supply was making an inglorious comeback – immediately sent prices soaring. By Friday, there were up about 15 per cent, to almost $52 (U.S.). “We are at the end of a considerable downturn,” Khalid al-Falih, the Saudi Energy Minister and Saudi Aramco chairman, declared at a recent oil conference.

The good news for Saudi Arabia is that the rising price will remove some of the financial pressure on its budget. The bad news is that the Saudis will need a much higher price to clear its budget – the International Monetary Fund put the fiscal break-even price at $79.70 a barrel (though that’s a big improvement from the $92.90 needed in 2015). The really bad news is that the inevitable rebound in U.S. production seems likely to prevent oil from reaching that level any time soon.

The U.S. drilling rig count, which fell by about 80 per cent during the oil crash, is up by a quarter since the late spring alone. American oil companies are raising money again and making plans to lift output. Meanwhile, Iran plans to raise production as does Libyan National Oil Corp., whose stated goal is to bump output from the current 550,000 barrels a day to 900,000 by the end of the year (some analysts don’t believe it will get anywhere near that target, because of pipeline blockades, lack of funding to repair busted oil fields and general nastiness in a country with three competing governments).

The Saudis have learned the hard way that the oil industry’s spare capacity reserves are shifting from OPEC to the United States, where shale-oil production can be dialled up and down virtually at will. Saudi Arabia is running a 10-per-cent budget deficit, its economy is close to recession and, for the first time, it is selling bonds on the international market to shore up its finances.

Its effort to shatter the U.S. shale-oil industry failed badly and, for that, it must overhaul its economy in a hurry if it is to avoid a downward financial spiral and perhaps social unrest.

Only a few years ago, it was impossible to imagine that the cowboys running the American shale-oil drillers would bring the mighty Saudis to their knees.




Energy East pipeline ‘will happen,’ but taking too long: Arthur Irving

Energy East pipeline ‘will happen,’ but taking too long: Arthur Irving


HALIFAX — The Canadian Press

Published Friday, Oct. 21, 2016 9:06AM EDT

Last updated Friday, Oct. 21, 2016 9:09AM EDT


The chairman of Irving Oil confidently predicted Thursday the proposed Energy East Pipeline still being examined by federal regulators “will happen,” though he thinks the process is taking too long.

Arthur Irving said Thursday that Alberta’s struggling economy urgently needs the pipeline to transport its crude oil, and his firm is eager to partner with TransCanada to build a deepwater terminal in the Bay of Fundy.

“That will happen, but it’s taking a little longer than it should. But it will happen because it’s the right thing to do for Canada. They can’t get along without it. Alberta needs it and the East Coast needs it,” he said during a speech.

The Saint John, N.B.-based businessman, made his comments while announcing his company’s completion of its Halifax harbour terminal – and as the regulatory process for the pipeline emerges from controversy.

The National Energy Board panel reviewing the proposal was recused last month after it became known publicly that two of the three panellists met last year with former Quebec premier Jean Charest, then a consultant for project proponent TransCanada.

Natural Resources Minister Jim Carr has said appointing new panellists means the review period for the project could be delayed, as could the NEB’s goal of having a decision on Energy East by March 18, 2018.

On Thursday, Carr also announced the appointment of four temporary members to the National Energy Board, saying they would travel along the proposed Energy East pipeline route to carry out enhanced community and Indigenous engagement.

Irving said he was recently in Alberta and observed the oil-rich province’s economic struggles, saying it needs a way to transport its product to the ocean for export.

“That pipeline will be built because Alberta has to have it. … Calgary misses the pipeline now,” he said.

The 4,500-kilometre pipeline would cost $15.7-billion and carry 1.1 million barrels of oil per day from Alberta to New Brunswick. About two-thirds is already in place as a natural gas pipeline.

Following Irving’s comments, the Nova Scotia energy minister also weighed in, saying the province intends to tell senators holding hearings in Halifax on Friday that the project is a good one for Atlantic Canada.

“I’ll be making a presentation to the Senate committee … to indicate our premier and our government support the Energy East Pipeline and see it as part of our energy security here in Nova Scotia,” said Michel Samson.

However, Stephen Thomas, energy campaign co-ordinator with the Halifax-based Ecology Action Centre, said it’s a bit early to be declaring victory for the proposal.

“We think it’s inappropriate that a proponent in an ongoing regulatory process will make a prediction about how it’s going to go. That’s quite telling about the process itself,” he said in a telephone interview.

Thomas said the pipeline is strongly opposed by over 300 Quebec municipalities, the assembly of First Nations of Quebec and Labrador, a Treaty Alliance of over 50 First Nations across Canada, and many local businesses, fishermen and people who live along the shore of the Bay of Fundy.

“The bitumen in this pipeline … is set to be exported raw through the Bay of Fundy. With little gain for Atlantic Canadians, this pipeline and export project simply isn’t worth the risk,” he wrote in an email.

Irving said his company is committed to promoting the Atlantic Canadian economy, citing the firm’s $80-million investment in the Halifax terminal facility as an example.

Last year, the firm announced it would reactivate the facility, enabling the storage and distribution of gasoline, diesel, home heating oil, marine transportation fuel and jet fuel for customers in Nova Scotia.

Samson said the terminal improves energy security in Nova Scotia, where gasoline shortages created confusion and panic buying in August 2015.

At the time, delays in tanker arrivals at the nearby Imperial Oil terminal resulted in a three-day shortage in the province.


Enbridge chops 530 jobs, mostly in Canada


  • 20 Oct 2016
  • Calgary Herald
  • Financial Post

Enbridge chops 530 jobs, mostly in Canada

Company says cuts related to ‘growth strategy’ and not Spectra merger

Canada’s largest pipeline operator Enbridge Inc. announced Wednesday it plans to cut more than 500 positions at the company, further diminishing the oil and gas sector’s already-reduced workforce.

Calgary-based Enbridge, in an emailed statement, said it “took the difficult step today of reducing our workforce.”

The layoffs account for about five per cent of the roughly 11,000 people that work for the company.

Enbridge said the cuts are not related to its recently proposed $37-billion merger with Houstonbased Spectra Energy Corp. announced in September. A spokesperson said the layoffs were instead part of a review earlier this year aimed at allowing the company to “achieve our strategy of growth and diversification.”

The company slashed a total of 530 positions from its workforce, 370 of which are from its Canadian division.

The other 160 are U.S. positions, the company said.

Wednesday’s cut is similar to an announcement the company made one year ago, when it also removed 500 positions from its workforce.

The cuts are the latest in a wave of retrenchment in the hard-hit Canadian oil and gas sector, which has suffered lower oil prices since the second half of 2014.

According to various estimates, Alberta’s oil and gas sector has lost as many as 44,000 jobs since prices began their descent. Most of those cuts took place in 2015, when the oil rout was at its deepest.

Pipeline operators such as Enbridge are not exposed to low oil prices as directly as producers are, and therefore have not cut their workforces on the same scale as their peers.

However, midstream companies have still felt the knock-on effects of low prices, which has helped spur a recent rise in consolidation among operators.

Enbridge rival TransCanada Corp. in July closed its US$13billion acquisition of Columbia Pipeline Group Inc., a Houstonbased company with a network of natural gas pipelines in the U.S. and Mexico.

Enbridge later announced its own plans for a mega-merger, buying up pipeline giant Spectra. The purchase put Enbridge firmly in place as North America’s largest energy infrastructure firm, with a broad portfolio of assets including oil and gas pipelines, storage facilities and power generation plants.

The merger still has to be approved by antitrust regulatory bodies, but could be completed in the first quarter of 2017.

Despite its relative stability, Enbridge’s balance sheet has suffered amid low oil prices. The company’s net earnings for the three months ended June 30 were $189 million, compared with $620 million the year prior. Its revenues were $7.94 billion over the three-month period, compared with $8.63 billion one year earlier.

Shares of Enbridge Inc. rose 63 cents, or about 1.1 per cent, to $58.79 on 1.4 million shares Wednesday.



Wall wants to solve the problem, not create taxes

See also Premier Wall’s Outline On Saskatchewan’s Plan for Climate Change


Wall bucks trend on climate file


  • 19 Oct 2016
  • Calgary Herald
  • The Canadian Press

Wall bucks trend on climate file

Saskatchewan premier wants more spending at home on carbon capture

Brad Wall is basically proposing to take action on climate change in the most expensive way possible.

Saskatchewan Premier Brad Wall says the federal government should consider cutting money intended to help developing countries tackle climate change and using it for research in Canada that could reduce global emissions.

Wall wants to see the $2.6 billion Ottawa has earmarked for developing countries added to an existing $2-billion federal low-carbon economy trust.

The premier says Saskatchewan has already laid the groundwork with a $1.5-billion carbon-capture facility to reduce greenhouse gas emissions at a coal-fired power plant.

“Let’s develop the technology. We can do that here in Canada,” Wall said Tuesday after releasing a policy proposal on climate change.

“We would be better to focus on developing the technologies here, where we already have those capacities, and make them available to the Third World.”

Wall pointed to a report released last December at the Paris climatechange summit that said there are more than 2,400 coal-fired plants planned or under construction globally. Developing technology that can be used anywhere to reduce emissions “is the logical response if we actually want to solve the problem,” he said.

But Keith Stewart of Greenpeace Canada says research shows carbon capture and storage is one of the most expensive ways to reduce emissions “and the only people who really like it are coal companies.”

“Brad Wall is basically proposing to take action on climate change in the most expensive way possible,” Stewart said in an interview.

“That is not conservative. That’s not good for taxpayers. That’s not good for people who are going to have to live with the impacts of climate change.”

Stewart adds that Wall’s proposal to cut money from developing countries “is a slap in the face” to anyone who wants a constructive debate on fighting climate change.

Wall has repeatedly criticized Prime Minister Justin Trudeau’s plan to charge $10 per tonne of carbon starting in 2018 and increasing to $50 by 2022.

He says a carbon tax would hurt the backbone of the province’s economy — energy, mining and agriculture — while having the least impact on reducing emissions.

“What then are we prepared to risk for bromides and slogans and international cheerleading,” Wall asks.

The Pembina Institute, which does research on climate change and other energy issues, called Wall “out of step with economists and business leaders,” who it said support carbon pricing.

“In reality, an economywide carbon price is a critical tool for Saskatchewan — and for Canada — to support private-sector innovation and low-carbon economic development,” Erin Flanagan, the institute’s director of federal policy, said in a statement.

The Canadian Taxpayers Federation backs Wall, saying that a carbon tax doesn’t work and hasn’t reduced emissions in British Columbia.

“We’ve got to look for better ways,” said Todd MacKay, the federation’s Prairie director.

“Now we still have to evaluate those better ways and make sure that they’re actually worthwhile and will work, but every moment that we spend working on a carbon tax and putting resources into a carbon tax is a moment that we’re not moving forward and helping the environment.”

The policy paper calls for Saskatchewan to work with the federal government to further develop carbon-capture technology.

It repeats the government’s already-stated goal of having half of Saskatchewan’s power come from renewable sources such as wind and solar by 2030.

Wall says that’s part of the answer because it has zero emissions.

Public Safety Minister Ralph Goodale, the lone Liberal member of Parliament from Saskatchewan, said the policy paper is useful in the climate-change discussion.

“As to whether or not this plan would actually get Saskatchewan to where it needs to be in terms of the issue of carbon emissions, we just don’t have enough detail yet to say,” Goodale said in Ottawa.



Wall’s plan keeps focus on carbon capture research

  • 19 Oct 2016
  • The StarPhoenix

Wall’s plan keeps focus on carbon capture research


Premier Brad Wall’s prescription for climate change includes a hearty dose of adaptation — like heat-resistant crops that “effectively fix greenhouse gases to the soil” — and also more federal money for research and for those most affected by climate change, like remote northern communities.

But the focus of his plan, unveiled Tuesday in Regina, is research in Canada on “next-generation” carbon capture and storage (CCS) technology to clean up emissions from the more than 2,400 new coal-fired power plants that last year’s Paris climate change conference was told are being planned or under construction around the world.

Wall pulled no punches about the seriousness of climate change, but kept up an attack that Ottawa’s carbon tax is the wrong response.

The worldwide angle dominated the speech by Wall, who said the greenhouse gases (GHGs) generated by new coal-fired plants in countries like China, India, Indonesia, Malaysia and the Philippines would more than wipe out any gains from carbon reduction in Canada and other western countries.

That’s why “we’d better find the technology that will work in a costefficient way,” he said. Wall continues to have special ire for Ottawa’s plan for an “ill-considered, rash and risky” mandatory carbon price or tax that he claims would harm Saskatchewan and thousands of its citizens “in tradeexposed, carbon-intensive industries that are especially vulnerable,” citing the examples of farm families or those with a breadwinner at Regina’s Evraz steelworks.

“We’re all concerned about climate change, but we’d better pick the right fight,” said Wall, who repeatedly cited SaskPower’s plan to get 50 per cent of its electricity from renewable sources by 2030.

He said Prime Minister Justin Trudeau, in a phone conversation two weeks ago, “deflected” questions about the carbon’s tax’s economic impact on Canada or Saskatchewan without offering an answer.

Speculating on why Ottawa suddenly launched the carbon tax/ price, he said, “I’m concerned that the government, and others, want something to make themselves feel better.”

Wall added: “Saskatchewan people want to contribute to this country economically and in every way, including the fight against climate change. But we will defend our interests. We will defend our economy that pays for the quality of life we want for all Saskatchewan people and we will fight for our interest, in the court of public opinion and, if need be, in the courts of the land.”

Stating he wants to change the conversation around climate change to adaptation and technology “that actually will make a difference,” the premier wants Ottawa’s own spending in this field to double.

He also wants a redeployment of its existing $2.65-billion commitment to help other countries to cut emissions brought home to Canadian labs and to focus on projects with “the potential to reduce emissions worldwide with technologies like CCS and small nuclear reactors.”

He seeks Ottawa’s recognition of the role of “carbon sinks” — the carbon stored in Canada’s forests, wetlands and farmland.

Also needed from Ottawa is word on whether it will count Saskatchewan’s past investment on CCS here toward its carbon price, said Wall, who in a post-speech session with reporters talked about the possibility of a follow-on to the CCS project at Boundary Dam near Estevan.

And when the resource economy strengthens, he pledged a provincial fund — supported by a levy on large emitters and insulated from general government revenues — for development of new technologies and innovation to cut GHGs.




Gensource closer to stage for financing

  • 19 Oct 2016
  • The StarPhoenix

Gensource closer to stage for financing


The head of a Saskatoon based junior mining company says it has cleared several important obstacles standing in the way of its plan to disrupt the global fertilizer industry.

Gensource Potash Corp.’s purchase of mineral extraction leases, signing of a fiveyear sale agreement and launch of a feasibility study all advance its plan to build a 250,000 tonne-per-year potash mine in southern Saskatchewan, Mike Ferguson said.

“This is all an effort to set up a situation where we can put the (capital expenditure) financing together,” Ferguson said.

Gensource’s business plan is based on its chief executive’s belief that conventional potash companies have reduced demand for the fertilizer by pricing potential buyers out of the market — a problem he thinks vertical integration will solve.

The company controls two properties in Saskatchewan, and proposes to sell potash extracted from a small “selective dissolution” mine built on its Vanguard site near Tugaske, north of Moose Jaw, directly to end-users around the world.

This summer, Gensource spent $2.48 million to buy two potash exploration leases for its Vanguard property from Yancoal Canada Resources Co. Ferguson said Tuesday that the agreement is now complete. The company also signed a renewable five-year agreement that will result in the Chinese company — which is working toward building its own potash mine near Southey — buying 250,000 tonnes of potash per year at market prices.

Last week, Gensource hired three consulting and construction companies to complete a feasibility study for its proposed Vanguard mine. That work is expected to be finished in the first quarter of 2017.

“The goal is to arrive at the end of the feasibility study with all of the technical and commercial issues pinned down … so that you have something that is financeable,” Ferguson said.

Industry experts have questioned plans proposed by Gensource and other junior miners, citing high production costs, a lack of established distribution networks and extremely weak global prices as significant challenges.

Other companies with similar plans have failed to secure financing. In August, Karnalyte Resources Inc.’s plan to start work on a 650,000 tonne-per-year mine near Wynyard this fall was jeopardized after a financing deal worth about $700 million fell apart.

Ferguson has said finding $247 million — the amount company documents show a mine will cost — is Gensource’s biggest challenge. At the same time, he thinks each step forward the company takes brings it closer to raising that cash.

“All these little steps … reduce the risk, make the whole thing much more solid in financial institutions.”




World’s top miner BHP Billiton finally sees signs of recovery in mining

World’s top miner BHP Billiton finally sees signs of recovery in mining

Cecilia Jamasmie

Oct 19 2016


For the first time in about five year the world’s No. 1 mining company BHP Billiton (ASX, NYSE:BHP) (LON:BLT) has said it was finally seeing clear signs of a commodity market turnaround.

Announcing the results of an operational review ended Sep. 30, chief executive officer Andrew Mackenzie said there were “early signs of markets rebalancing.”

“Fundamentals suggest both oil and gas markets will improve over the next 12 to 18 months. Iron ore and metallurgical coal prices have been stronger than expected, although we continue to expect supply to grow more quickly than demand in the near term,” he said, while flagging that BHP’s own production was mostly lower in recent months than around the same time a year ago.

The miner, which is the world’s third-largest iron ore producer behind Brazil’s Vale SA (NYSE:VALE) and Australia’s Rio Tinto (ASX, LON:RIO) also said it was on track to meet its fiscal 2017 production guidance for iron ore of 265 to 275 million tonnes, compared with 257 million tonnes last year. The positive outlook was not dented by the firm’s 1% on-year decline in total output to 67 million tonnes in the quarter to September.

Spot iron ore hit $58.37 a tonne on Wednesday according to The Metal Bulletin, the highest price in over a month, while coking coal prices have more than doubled this year to around $230 a tonne.

BHP recently singled out oil and gas as one of the main areas in which it has the capability to ramp up drilling quickly, while in line with prices. The Melbourne-based firm decided in May not to wait for commodity prices to recover and resumed expansion plans. It has said is actively looking for possible acquisitions, particularly of copper and oil assets, but no major deals have been made so far.

The miner is not the first major player to flag green shoots in the mining industry. Caterpillar (NYSE:CAT), the world’s largest heavy machinery maker, said last month it had had more discussions about potential sales in recent months than in the last two or three years combined.




Premier Wall’s Outline On Saskatchewan’s Plan for Climate Change

Premier Wall Outlines Saskatchewan Plan for Climate Change

Released on October 18, 2016

White Paper is found HERE

Premier Brad Wall today released Saskatchewan’s White Paper on Climate Change, outlining an alternative approach to Prime Minister Trudeau’s national carbon tax.

“There are three approaches we can take to fighting climate change – adaptation, innovation and taxation,” Wall said.   “Of the three, a carbon tax will do the most harm to the economy while having the least positive impact on reducing emissions.

“We should be focusing our efforts on innovation and adaptation, not taxation.”

Wall noted that there are more than 2,400 new coal-fired power plants planned or under construction around the world, according to a report released last December at the Paris climate change summit.  Those plants alone will emit 6.5 billion tonnes of carbon dioxide (CO2) a year – nearly nine times Canada’s annual Greenhouse Gas (GHG) emissions.

“This is why innovation – developing technology that can be used around the world to reduce emissions – is the logical response if we actually want to solve the problem,” Wall said.  “In Saskatchewan, we’re focused on making a difference in that battle through the development of carbon capture and storage (CCS) that could dramatically reduce the emissions from those 2,400 new coal-fired plants.”

Wall’s plan for action by the Saskatchewan and Canadian government includes:

  • Calling on the federal government to double funding for climate change adaptation research, planning and infrastructure, targeted specifically at areas affected by the impact of climate change, like remote northern communities;
  • In Saskatchewan, supporting the Crop Development Centre and the Global Institute for Food Security as they continue working on new crop varieties that are better able to withstand climate change and that effectively fix GHGs to the soil;
  • Partnering with the federal government through SaskPower and the International CCS Knowledge Centre to develop the next generation of CCS technology for coal plants to enable cost-effective global deployment of post-combustion technology and securing recognition for investments made by the people of Saskatchewan through SaskPower in CCS technology;
  • Calling on the federal government to redeploy its $2.65 billion, five-year commitment to developing countries to deal with climate change by adding it to the existing $2 billion federal Low Carbon Economy Trust and use that funding for research and innovation in Canada that has the potential to reduce emissions worldwide, with technologies like CCS and small nuclear reactors;
  • Increasing SaskPower’s renewables like wind and solar to 50 per cent of its generating capacity by 2030;
  • Pushing for recognition of emission-reducing carbon offsets, like hydro exports from BC, Manitoba and Quebec, and the carbon stored in Canada’s vast forests, wetlands and farmland; and
  • When the resource economy strengthens, moving ahead with plans for a fund supported by a levy on large emitters, with the fund’s expenditures limited to new technologies and innovation to reduce GHGs and not for general revenue.

Wall said these actions represent a much better approach than a carbon tax.

“Make no mistake – a carbon tax will harm Saskatchewan,” Wall said.  “Thousands of people make their living in trade-exposed, carbon-intensive industries that are especially vulnerable.  Energy, mining, agriculture – the backbone of Saskatchewan’s economy – will be hit hard by a carbon tax.

“Saskatchewan people want to contribute to this country economically and in every way, including the fight against climate change, but we will defend our interests.  We will defend our economy that pays for the quality of life we want for all Saskatchewan people and we will fight for our interests, in the court of public opinion and if need be, in the courts of the land.”


For more information, contact:

Kathy Young
Executive Council
Phone: 306-787-0425
Cell: 306-526-8927

Carbon tax gets thumbs down from Sask. Heavy Construction Association

Carbon tax gets thumbs down from Sask. Heavy Construction Association

Industry group says incentives to buy newer, greener machines would be better

By John Weidlich, CBC News Posted: Oct 16, 2016 9:00 PM CT Last Updated: Oct 16, 2016 9:00 PM CT
Members of the Saskatchewan Heavy Construction Association are concerned about the possible imposition of a carbon tax, noting such a move could lead to significant added costs for road building and other infrastructure work.

‘There will be costs.’- Shantel Lipp

“We don’t have a lot of details,” Shantel Lipp, president of the association, said Sunday, referencing a recent announcement by the federal government which insisted that a carbon pricing system be in place in Canada within the next few years.

Lipp’s organization — which represents over 200 businesses that perform a range of work, from building roads and bridges to underground utility systems — is especially worried that a levy would impact their bottom line.

“We definitely do think there will be costs,” Lipp said, adding the association wants to know how a carbon pricing scheme would raise revenues.

“It’s still unclear exactly how it’s going to be applied,” she said, noting the industry has asked for more information.

Incentives preferred

The association sent a letter to federal officials outlining their position and, in a media release Sunday, called on the government to consider other ways to address carbon emissions.

One alternative advocated for by the industry is to provide incentives to encourage businesses to replace older pieces of equipment with newer and more energy-efficient machines.

“We think the industry should be incented,” Lipp said. “That doesn’t seem to be on the table.”

Lipp said a statement by federal cabinet minister Ralph Goodale that revenues raised by a carbon levy would remain in Saskatchewan was not helpful as it wasn’t certain how the money would be spent.

She said incentives would be a better way to promote green initiatives, compared to a tax.

“Any time that you’re imposing an additional tax, it’s a burden,” she said.

“We understand that emissions are a problem,” Lipp said, but noted a tax will hurt the industry and cost jobs. “Of course we want to try and do what’s best for the environment, but the industry needs to be successful.”

The industry’s suggestion involves allowing companies to accelerate the rate at which they can depreciate assets. That could provide a financial incentive to switch to new technologies sooner.

“We support the position Premier [Brad] Wall has taken on this,” Lipp added, speaking approvingly of the Saskatchewan government’s opposition to the federal move.


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