From the Financial Post – May 3, 2011

by Claudia Cattaneo

Stephen Harper’s big election sweep bodes well for Canada’s energy sector — but that doesn’t mean it will get a free pass.

While the Conservatives are now in a position to make decisions, they
are facing a strong NDP opposition with a big Quebec voice, as well as
continuing input from the large constituency of players with a say in
the energy agenda, from provincial governments to the environmental
movement.

“The worst thing the energy sector can do right now is to assume: ‘We
submit a laundry list and we get it.’ It’s not real,” said a senior
energy industry lobbyist.

“There will still be a lot of opposition influence, so things like
oil sands, climate change, are still issues. People shouldn’t think they
go away.”

Still, some immediate threats to industry expansion are off the table.

Plans to develop new markets for Canada’s oil in Asia are not likely
to be hindered by a ban on oil tanker traffic off northern B.C. coast
any time soon. During the campaign, Mr. Harper said he did not favour
formalizing the ban, which is supported by many British Columbians
worried about possible oil spills and was embraced by opposition
parties.

However, uncertainty over the Asian push remains in areas outside
federal control, such as B.C. First Nations and environmental
organizations opposition to the Northern Gateway pipeline proposed by
Enbridge Inc.

Access to Asian market is key to industry growth.

“The current markets for oil and gas produced in B.C. and Alberta are
almost entirely continental, and those markets are in trouble,” Roger
Gibbins, president and CEO of the Canada West Foundation, said in a
statement Tuesday, calling for a full public discussion over whether
local communities should be able to block West Coast access of major
resource projects.

A cap-and-trade system proposed by the NDP and the Liberals is
probably on the back burner now, although other climate change
initiatives will continue to be a priority, with the lead coming from
outside Ottawa — the United States, interest groups, provincial
governments and even industry itself.

Rick George, president and CEO of Suncor Energy Inc., Canada’s
largest oil sands developer, suggested as much Tuesday when said he
expects progress on greenhouse gases to be made on many fronts,
including industry initiatives to reduce impact on air, land and ground.

“We are not the only oil company that feels like that and that are
making big investments in R&D and making a difference,” he said in a
conference call in response to an analyst question about his
expectations on greenhouse gas legislation now that the Conservatives
have a majority.

Ottawa’s support of the oil sands will also continue, but Ontario’s
contribution to the Tory majority will likely bring a more balanced view
of oil and gas development at the cabinet table.

Some Tory moves could even upset the oil patch. The Tories are now in
a position to move forward with the elimination of the Accelerated
Capital Cost Allowance for oil sands investment by 2015, which was
proposed in the budget and is worth $490-million. The Tories also
promised increased monitoring of environmental impacts.

Also, don’t rule out greater scrutiny of foreign takeovers, as more
energy companies court partners to accelerate development of projects,
whether in the oil sands in Alberta or in shale gas in British Columbia.

Now that he can, Mr. Harper may even be persuaded to take on the
development of a Canadian energy strategy, an initiative supported by
many groups, from think tanks to environmental organizations.

The problem is whether Mr. Harper wants to go down a road where
finding common ground and real solutions may be bigger than his newfound
majority.

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