Stephen Ewart and Chris Varcoe
Calgary Herald
April 9, 2001

PM faces challenge of charting new strategy for 21st century

In the corridors of power in Ottawa and Washington, the e-word is back.

In an era of pump-price angst, unprecedented home heating bills and an electricity crisis in California, energy has returned as a key political issue in the White House and on Parliament Hill.

As Prime Minister Jean Chretien addresses a luncheon of oil executives in the Palliser Hotel today, the eyes of the entire sector will be on the former energy minister as his government grapples with a new energy policy for the 21st century.

“I’ll be interested in hearing what he has to say about the energy sector,” says Dick Auchinleck, chief executive of Gulf Canada Resources, one of Canada’s biggest petroleum producers.

“When the politicians have been involved in the energy business, our experience out here in Alberta certainly has been less than positive.”

Energy matters have seldom held as much sway in Ottawa as they do right now, and when they have, Chretien has been right in the thick of it. Few politicians have played as big a role in federal energy policy over the past three decades.

Chretien was a keen supporter of Arctic oil and gas development when he was minister of Indian Affairs and Northern Development during the 1973 Arab oil embargo. In 2001, Arctic gas development is back on the front burner inside the industry.

As energy minister in the 1980s, Chretien watched as Petro-Canada expanded its foothold in the oil business; today, experts are waiting for Ottawa to unload its last stake in the former Crown corporation.

Chretien also oversaw the reviled National Energy Program when he took on the energy portfolio. Much of the sector is fearful that a Son of the NEP will emerge as Ottawa struggles to live up to its Kyoto accord commitments to curb greenhouse gas emissions.

But, like it or not, energy is back in vogue in Ottawa.

Against a backdrop of high commodity prices, Kyoto and U.S. President George W. Bush calling for a continental energy pact, Chretien has struck a high-powered cabinet committee to deal with “all things energy,” says one government source.

The committee includes Finance Minister Paul Martin, Natural Resources Minister Ralph Goodale, Pierre Pettigrew from International Trade, Brian Tobin from Industry and others.

The power brokers in cabinet prove that the issue is back on the government’s agenda.

“You have these crises squeezing voters,” said analyst Brian Prokop of Calgary energy investment firm Peters & Co.

“As soon as energy becomes a voter issue, it’s a policy issue.”

Energy has also been a major topic of discussion in recent talks between Chretien and Bush, as well at meetings between members of their cabinets. Canada’s petroleum producers have also been asked for their input on U.S. energy policy.

In an interview with the Herald, Goodale was adamant that discussions on a continental energy plan do not mean that Washington will dictate policy to Ottawa. He said access to the

U.S. market is the key issue for Canada

Canada already supplies more than $50 billion a year in oil, natural gas and electricity to U.S. consumers.

“The objective from our point of view is finding the means to make it grow,” Goodale said. “There is great potential for that.”

Government sources said Chretien’s speech today includes a commitment to securing markets for oil and gas, a pledge of no new taxes on the energy industry and a reminder it’s been more than 20 years since Ottawa’s ill-fated incursion into the oilpatch through the NEP.

There are still a lot of skeptics, even outside corporate Calgary.

“He’s got a lot of baggage on this . . . on energy subjects, Chretien suffers a big credibility gap,” said Tom Adams of Toronto-based environmental group Energy Probe.

Yet, much of the current debate about energy has been driven by the new U.S. president.

In addition to abandoning support for the Kyoto treaty, Bush wants Mexico and Canada to help the U.S. overcome an addiction to overseas oil.

Vice-President Dick Cheney — who, like Bush, is a former oilman – – has been given the job of developing the plan.

U.S. administration watchers such as Prof. Charles Doran of the School of Advanced International Studies at Johns Hopkins University said the industry should have little fear of a heavy-handed approach by the Bush team.

“This group of people in the White House is fully aware of the power of the market forces and is not trying to set aside the market forces,” said Doran, an expert in U.S.-Canadian relations, NAFTA and energy policy.

“They have deep confidence in what the market can do.”

North of the border, Canadian policy is also crucial to Bush.

For example, the president said he will look to the Canadian North for new gas supplies if drilling is denied in the environmentally sensitive Arctic National Wildlife Refuge.

Chretien has also encouraged the Americans to look at Alberta’s massive oilsands resources to help resolve their deepening energy shortage.

For Canadian energy executives, the biggest issue may lie in the ground — the decision on whether a pipeline to bring natural gas from the Arctic travels through Alaska or down the Mackenzie Valley in the Northwest Territories.

But for Chretien, the times are a changin’.

Unlike his days as Canada’s energy minister, direct government intervention in the oil and gas sector does not seem to be in the cards.

There have been calls for Ottawa to use America’s appetite for Canadian gas as a bargaining chip to win concessions in areas such as pipelines, Kyoto or the lumber dispute.

But Goodale said Ottawa will not be heavy-handed with the Americans in talks over energy and other trade issues.

Such talk is music to the the ears of Canada’s energy executives.

“You want to leave the business to the businessmen, generally speaking,” said Auchinleck.

“Going on past history, our preference would be to leave us to do what we do best — continue the growth and development of our business without any help.”