Ambassador gives U.S. a head’s up on oil cuts

White House didn’t raise the issue, McNaughton says

Canada’s ambassador to the United States says he has done some pre-emptive diplomacy with the Trump administration on Alberta’s plans to force output cuts on its oil industry.

Ambassador David MacNaughton says no one in the U.S. government has raised Alberta Premier Rachel Notley’s move with him.

Still, MacNaughton says he has reached out to his counterpart Kelly Craft to emphasize the cuts are only temporary and that Canada does not feel they violate existing free-trade rules.

Notley has ordered a mandatory 8.7-per-cent cut in oil production to reduce a glut of Alberta oil that is forcing steep price discounts.

MacNaughton notes the production cuts are not universally loved within the industry and some unhappy players are likely in the ear of the U.S. administration.

He says he wants to make sure Craft is informed on the issue.

“It’s always better to make sure the facts are on the table,” MacNaughton said Tuesday.

“She was very receptive. I was at her Christmas party on Sunday night so we had a good chance to chat about it.”

The Trans Mountain pipeline expansion project, which would triple capacity to the B.C. coast, is now in legal limbo despite being approved two years ago as Ottawa revisits the impacts on First Nations and B.C.’s marine environment.

Leaders from several northcoast B.C. First Nations said Tuesday in Ottawa if the Senate doesn’t approve a bill barring super-sized oil tankers from the region their fragile but thriving marine-based economies will die.

The legislation would put into law an existing moratorium on tankers carrying more than 12,500 tonnes of crude oil in the waters between the northern tip of Vancouver Island and the Alaska border.

The legislation passed the House of Commons last spring and is now being debated in the Senate.

Chief Marilyn Slett of the Heiltsuk Nation is leading a delegation of chiefs and elected leaders in Ottawa this week to lobby senators to pass the legislation, which cleared the House of Commons last spring.

The bill is strongly opposed by the Alberta government, which believes it cuts off an entire option for shipping crude oil. Notley has added it to the list of irritants between her province and the federal government.

Slett says the waters the ban covers are difficult to navigate and a single major spill would be the end of her nation’s livelihood.

MacNaughton says he also noted to Craft that getting the Keystone XL pipeline finally approved through the U.S. would also help with Alberta’s problems. That project, too, has been tied up in the courts.

Meanwhile, Alberta’s mandated crude production cuts have already prevented layoffs from at least one Canadian oil producer.

MEG Energy Corp. chief executive Derek Evans said his company was considering laying off workers and slashing production at its Christina Lake project by 30 per cent until Alberta’s mandated oilproduction cuts lifted Canadian heavy crude prices.

“As of last Friday, we were trying to figure out how we could minimize, absolutely minimize, our capital expenditure,” Evans said in an interview with BNN Bloomberg Television.

“We were looking at laying people off. We were looking at how we were going to make it through the first quarter and the first half of 2019.”

The cuts announced Sunday have “taken away the belief that we’re going to have to lay off people before Christmas,” he said.