Canada's federal government will offer C$1.6 billion of new funding for the nation's energy sector to help counter the effects of low oil prices and congested pipelines.
The funding will include C$1 billion from Export Development Canada, a federal agency, to fund working capital needs, new technology and exploration of new markets for energy products, according to a Dec. 18 statement. The Business Development Bank of Canada, another government financing arm, will be given C$500 million to "help higher risk but viable oil and gas small business enterprises weather the current market uncertainty," the statement said. The balance of the funds will go to economic diversification and clean energy development. The funds will be available immediately, Canadian Minister of Natural Resources Amarjeet Sohi said.
The aid package aims to help struggling oil and natural gas producers cope with problems created by the nation's congested export pipeline network. Canada's government bought Kinder Morgan Inc.'s Trans Mountain pipeline for C$4.5 million earlier this year to help save a planned capacity expansion that would have given producers increased access to markets outside the U.S. That expansion has since been stalled by a court ruling that invalidated federally issued construction permits. "These investments will help protect jobs and restore competitiveness during this difficult time," Sohi said in the statement. "We know that getting our resources to non-U.S. markets is the long-term solution to ensuring every barrel of oil gets its full value."
The federal funds drew a cool response from Alberta Premier Rachel Notley, who called the funding "a start." Her government has committed billions to buy and operate crude-by-rail tankers and imposed production cuts on oil companies in Alberta, the nation's biggest petroleum-producing province. "We didn't ask for an opportunity to go further into debt as a means of addressing this problem," Notley said at a news conference in Calgary. "We can only assume is that this is a first step, and that there is more to come. And I anticipate that there must be more to come, because, quite frankly, that's what this industry and this province and this city deserves."
Notley described the aid offered by Prime Minister Justin Trudeau's government as a "cut and paste" of federal assistance rolled out for steel, forestry and aluminum industries facing U.S. tariffs. The federal government should "remove the handcuffs" and devote more resources to crude-by-rail and increasing pipeline capacity as Alberta has requested. "The issue is not finding a market for our product, the issue is getting our product to that market," she said. "I don't know that we could have been much more clear about that."