REGULATORY REVAMP HOLDS KEY
IT’S ALL ABOUT STREAMLINING THE APPROVAL PROCESS AND ALLOWING THE PROVINCES TO HAVE MORE SAY IN THE AREAS WHERE THEY HAVE THE EXPERTISE. READ DEBORAH YEDLIN’S COLUMN ON PAGE
The spectre of the failed Mackenzie Valley pipeline haunts us still.
That’s why federal Natural Resources Minister Joe Oliver is on a mission.
This one does not involve knocking on 40,000 doors — as Oliver did when he was running for office — but selling the regulatory initiatives the federal government announced last week.
It’s all about streamlining the approval process and allowing the provinces to have more say in the areas where they have the expertise.
While the energy and mining sectors have long had their issues with the time it takes to achieve project approvals, it’s hard not see last week’s action as stemming from a perception from afar: Although Canada has an abundance of natural resources, it can’t get its act together to allow for development in a timely manner.
Between bites of toast and spoonfuls of porridge early Monday at the Palliser Hotel, the former investment banker and head of the Investment Dealers Association, made his case for the importance of the new regulations.
As someone who was once in the investmentbanking world, Oliver is well acquainted with the “time value of money” concept; lengthy time frames for project approvals not only cost companies money, but could also result in lost opportunity.
When trillions of dollars in economic activity, hundreds of thousands of jobs and billions of dollars in government revenues are at stake, making changes to the approval process is critical.
“If we don’t get on with it . . . if we get captured by anti-development forces, it will sit in the ground and we will squander the opportunity,” Oliver said.
Some might take that thread straight to the proposed Northern Gateway pipeline, currently in the midst of the hearing process, and wonder how much the government’s move has to do with moving that project forward.
Oliver isn’t interested in making that connection, saying the changes put forward should benefit all projects, not just Northern Gateway.
Nor should people expect it would ensure Northern Gateway’s approval.
“I am not saying it will gain the approvals, I am saying it will make a more efficient process with a reasonable time frame.”
One of the surprising aspects to the new regulations remains the fact the time constraints will be applied to existing and future hearings.
In the context of Northern Gateway, this has raised more than a few eyebrows because there are more than 4,000 submissions that are expected to take longer than the new timing constraints would allow.
What the regulations will allow, Oliver said, is an opportunity for the National Energy Board to evaluate the interveners at hearings in the context of the criteria provided by the regulatory changes.
“We don’t see the value in people who don’t have an interest, who just have an opinion, who aren’t implicated and who want to grandstand or want a delay. There are a lot of people who have anti-development views, irrespective of the project itself; . . . they say they are not anti-development, but they oppose every project.”
Reading between the lines, this shows the determination on the part of the federal government to capture the dollars being left on the table because of current infrastructure constraints and a lack of access to markets beyond Canada.
With prices for western Canadian crude trading at huge discounts to both Brent and West Texas Intermediate, Oliver is more than mindful of the value not being captured.
He is also keeping a close watch on the production of oil from shale plays in the United States, which, in addition to the established abundance of natural gas, both of which suggest a declining export market for Canadian producers and highlight the need for new markets.
While exporting to Asia — for both oil and natural gas — is clearly on Oliver’s radar, do new markets also include shipping oil eastward, as Transcanada Corp. suggested last month?
It’s one option, acknowledges Oliver, ever the former finance guy, who circles back to whether this would make sense from a financial standpoint.
“This is a market-driven economy and if the economics make sense then I see tremendous advantages of that happening because it is opening a new market. It’s reducing dependency on one particular route and it makes dramatically clear to people in the East that there are tremendous benefits to them.
“The farther away people are from resources, the less sympathetic they are to development and so if you start doing things in the East then I think it brings it closer.”
A pipeline to Eastern Canada would, as Oliver pointed out in a speech given at a conference here later Monday, reduce the input costs, boost margins and lower the product prices to consumers in Eastern Canada.
In a world where the enemy of investment is uncertainty, the regulatory changes announced last week should be seen as an important step forward to the efficient and responsible development of Canada’s natural resources.
As Prime Minister Stephen Harper said last week — and Oliver reiterated on Monday — length of process should not be confused with the integrity of the review.
Truth is, not only has there been duplication, resources have been stretched.
The plan to focus resources on bigger projects is simply an appropriate re-allocation of resources, while allowing the provincial authorities to do more, is long overdue.
Will the implementation be seamless? Unlikely. But the important thing is that a first step has been taken; one that will be positive for the long-term development of Canada’s natural resource wealth because it sends a strong message that the issue of regulatory uncertainty is being addressed while the high standards to which resource development is held, remain intact. It’s the right balance.