May 6, 2015 / 2:28 PM / 2 years ago

Left turn in Canada's oil-rich Alberta leaves investors reeling

3 Min Read

CALGARY, Alberta, May 6 (Reuters) - A seismic political shift in Canada's oil-producing heartland of Alberta has left voters, investors and oil executives braced for change as a rookie left-wing government promises major reforms after 44 years of Conservative rule.

The New Democratic Party (NDP) swept to crushing victory in the Western Canadian province on Tuesday on a pledge to review oversight of the oil and gas sector, capitalizing on voter anger over low oil prices, entitled politicians and government budget woes.

While polls had predicted the come-from-nowhere victory by the NDP under leader Rachel Notley, its election in a province where conservative governments have long partnered with industry leaders has left many reeling.

"The vast majority of energy executives and professionals we spoke with downplayed the polls, projecting instead that 'people would come to their senses' and return the (Progressive Conservatives) to government," said analyst Andrew Bradford of brokerage Raymond James.

"Even now our inboxes are filling with messages expressing something between disbelief and dismay."

The NDP is expected to be far less accommodative to the powerful energy industry and its oil sands operations in the northern Alberta, which have been the target of heavy environmental criticism. The oil sands are the largest source of U.S. oil imports.

Canada's main stock index fell sharply at the open on Wednesday with hefty losses among energy companies.

In her victory speech, however, Notley moved to assuage oil-industry worries, saying she will work "to build Canada's energy sector so we build bridges and we open markets instead of having a black eye".

She proposes a review of oil and gas royalties and reduced support for some pipeline projects such as TransCanada Corp's controversial Keystone XL project. The NDP has also promised to hike corporate tax rates by 2 percentage points to 12 percent.

The election sparked the immediate resignation of Progressive Conservative Premier Jim Prentice as party leader. He also quit his legislative seat.

The decimation of the party in Conservative Prime Minister Stephen Harper's home province also cast doubt on Harper's hopes for re-election in October's federal election, though he benefits from a united right-wing vote nationally that was split in Alberta.

Following a month-long campaign, the NDP, which has never held more than 16 seats in the 87-seat provincial legislature, will lead a majority government.

Official results showed the NDP winning 54 seats, while the Conservatives took just 10, behind the even more staunchly conservative Wildrose Party, which will be the official opposition with 21 seats. (Additional reporting by Andrea Hopkins, Euan Rocha and John Tilak in Toronto; Editing by Peter Galloway)

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