Left turn in Canada's oil-rich Alberta stuns energy industry

Wed May 6, 2015 6:18pm EDT
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By Scott Haggett and Nia Williams

CALGARY, Alberta (Reuters) - Canadian oil and gas shares tumbled and the country's main stock index hit a one-month low on Wednesday after the left-wing New Democratic Party surged to power in the oil-rich province of Alberta on promises that included energy industry reforms.

"Even now our inboxes are filling with messages expressing something between disbelief and dismay," analyst Andrew Bradford of Raymond James brokerage said after the party won an election on Tuesday to end 44 years of Conservative rule.

New Democrat Premier-elect Rachel Notley offered conciliatory words after her party swept to crushing victory, capitalizing on anger over the impact of the drop in oil prices on government programs.

The NDP is expected to be less accommodative of the energy industry and its Alberta oil sands operations, the target of heavy environmental criticism. Alberta is the largest source of U.S. oil imports.

Notley moved quickly on Wednesday to assuage oil-industry worries, saying she will reach out to executives and work collaboratively with them.

"I am hopeful over the course of the next two weeks they will come to realize that things are going to be A-OK over here in Alberta," she said.

She proposes a review of energy royalties, tighter environmental regulations and reduced support for some pipeline projects such as TransCanada Corp's controversial Keystone XL project.

The plans revived memories of a bitter 2007 battle when then Premier Ed Stelmach raised royalties as oil prices boomed. But his party was forced to backtrack as drilling slowed and the financial crisis hit.   Continued...

Alberta NDP leader Rachel Notley reacts to election results in Edmonton May 5, 2015.  REUTERS/Dan Riedlhuber