Royal Dutch Shell PLC has extended an olive branch to Alberta Premier Rachel Notley after releasing news about the company’s plans to cancel its Carmon Creek project Tuesday afternoon, casting a pall on the new provincial budget unveiled at the same time.
As Alberta’s budget was being tabled on Tuesday, Shell announced it was halting work on its multibillion-dollar Carmon Creek oil sands development in northwestern Alberta. A weak crude market means that it has become commonplace for future oil sand projects to be postponed or cancelled outright.
But the news from Shell this week was seen as particularly ominous because it broke with a widely held belief that projects in which capital was already committed would proceed. Shell cited both low global oil prices and insufficient pipeline capacity in its decision.
Critics, including those on social media, immediately jumped on the news as proof that the NDP government is scaring away economic investment.
However, Tara Lemay, a spokeswoman for Shell Canada, sent a note to the Premier’s office on Wednesday with a conciliatory tone.
“I’ve heard there was some thinking that the release was timed to coincide with the Alberta budget being released. This was certainly not the case,” Ms. Lemay wrote in an e-mail provided to The Globe and Mail by Ms. Notley’s spokeswoman, Cheryl Oates.
Ms. Lemay wrote that the timing of the announcement was due to a market disclosure in advance of the company’s quarterly results this week.
“We were given a brief window after the market closed to release the results and inform staff,” she said. “This announcement was the result of difficult but sound investment decision-making. Its timing was driven by our quarterly results and was not intended as a commentary on Alberta’s provincial budget.
She added that Shell values its relationship with Ms. Notley and her government, “and we look forward to continuing co-operation in the best interests of Albertans.”
The Premier is calling it an apology.
The Wildrose Party, the Official Opposition – which has taken issue with the NDP government’s decisions to raise corporate taxes, review the province’s energy royalty regime and run a deficit for both operational and capital spending – argues the new budget creates more uncertainty in an already stressed economy. During Question Period in the legislature on Thursday, Wildrose Party Leader Brian Jean noted the potential for job losses in the Peace River area, where the Carmon Creek project had been slated to proceed.
“How can the Premier be so oblivious to the impact her policies are having on jobs all across Alberta?” he asked.
In response, Ms. Notley said to suggest that the cancellation of the Shell project had anything to do with her government’s budget or policies is “fear-mongering” and “ridiculous.”
She added, “I have here a letter and a memo from Shell apologizing for the fact that it happened to happen on that day, because there was no connection.”