Oil and gas "existential crisis" looming in rural Alberta

Canada need to start becoming more energy-independent and the country needs to start working toward a national energy strategy to protect itself from volatile market changes, like the cancellation of the Keystone pipeline, says the president of an organization representing rural Alberta municipalities.

Paul McLauchlin, president of Rural Municipalities of Alberta (RMA), said relying on international energy markets is fraught with risk, but looking inward as a country for an energy strategy – for all types of energy – is something the country can control.

McLauchlin said rural municipalities weren't surprised to hear the Keystone pipeline was cancelled, but said it is now more important than ever for rural Alberta to pivot toward a different energy strategy.

While the cancellation of Keystone last week by U.S. President Joe Biden impacted many rural communities in the east of the province, McLauchlin said the decline in the oil and gas sector is felt across the province overall, with many rural jurisdictions pulling much of their tax base from the industry.

"It's touching on an existential crisis. It definitely is getting close to that," McLauchlin said.

"If you see a negative trajectory in our oil and gas industry, that definitely changes rural Alberta. It's core to the majority of the rural municipalities that I represent. Oil and gas is core to our existence as it is now. "

Without action, McLauchlin said the province runs the risk of becoming the Rust Belt – a region from New York through the Midwest that was once dominated by manufacturing but has now become synonymous with regions facing industrial decline – or northern Scotland in the '80s.

"We don't want to become one of these hollowed-out industrial centres where we've got rusting gas plants and then it becomes a shadow of its former self," he said.

"I think we have to force ourselves to innovate because I don't think (we) have a choice, right? Apathy isn't your choice – that's not going to work."

Municipalities can be leaders in creating a national energy strategy because they are so close to the situations on the ground, he noted – they can build a consensus together and then bring a plan forward to the federal government. An energy plan that deals with the climate change goals the country has and takes the strategy down to a local level is possible, McLauchlin said, allowing small communities to thrive and to utilize the resources and skills in the country.

Natural gas can be a "phenomenal product", McLauchlin said, and in the right situation and treated the right way, can be a low carbon fuel. The country needs to also supply different markets with blue hydrogen, a product made from natural gas in the process of steam methane reformation, with the resulting emissions curtailed through carbon capture and storage or green hydrogen, which is a hydrogen fuel that is created using renewable energy instead of fossil fuels.

Right now, some jurisdictions in southern Alberta are already capitalizing on renewable products and showing a lot of success, with up to 20 per cent of municipal tax assessment coming from renewable energy.

But McLauchlin said the province has to move fast on finding solutions or it will get left behind.

"We have to find the solutions and we have to move fast on this. None of this is theoretical," McLauchlin said.

"(We need to) start to use future planning as the way we deal with our energy industry instead of looking backwards."

Doug Irving, Mayor of Hardisty, where the Keystone pipeline starts, said the news of the project's cancellation was disappointing, but not devastating.

The pipeline is owned by TC Energy and starts at the Hardisty Terminal, which is a major storage and pipeline export hub for the province.

"With all of these pipeline works, we seem to get a lot of ups and downs," Irving said.

"We're all excited and then jobs get cancelled, but they cancelled outside what we can do. The Town of Hardisty really has no say in permits or who approves things."

The project brought some 600 workers into the town, which has a permanent population of 540 people – a huge boom for Hardisty's hospitality industry.

"It's a major economic disruption, that's for sure," Irving said.

"it is a big blow to us."

The Alberta government expected the pipeline to bring 2,000 construction jobs to the province over two years and then generate $30 billion in revenue after it was complete. The government invested $1.5 billion in the project in March 2020 to get construction started on the extension after it was approved by the U.S.

Irving hopes the project will be reconsidered and reviewed and somebody else will issue a permit for it.

"Maybe we can get a reversal on the permit. I don't think it'll happen very quickly. But that's the sort of view of Hardisty. It's outside our control and we have to work around it as best we can and hope for the best in the future."

Jennifer Henderson, Local Journalism Initiative Reporter, St. Albert Gazette