Alberta critical of Ottawa’s $1.6B package for ailing energy sector

Click to play video: 'Federal government commits $1.6B to energy sector'
Federal government commits $1.6B to energy sector
WATCH ABOVE: Natural Resources Minister Amarjeet Sohi announces the federal government is committing $1.6 billion to Canada's oil industry – Dec 18, 2018

The federal government is injecting $1.6 billion into Alberta’s strained oil and gas industry to help companies hard hit by plummeting crude prices.

Natural Resources Minister Amarjeet Sohi and International Trade Diversification Minister Jim Carr made the announcement Tuesday morning at the NAIT college campus in Edmonton.

Sohi says the money, largely in the form of commercial loans, is available immediately.

Breaking down the $1.6 billion

The money will be divided among several programs, including to help companies invest in clean growth, loans and other financial supports to help companies find new markets away from the United States, as well as investments in training and new technology.

“Export Development Canada will make available approximately $1 billion in commercial financing initiatives to oil and gas exporters of all sizes,” Sohi said in his speech.

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WATCH: Calgary political scientist says feds would’ve been better ‘doing nothing’ for Alberta.

Click to play video: 'Calgary political scientist says feds would’ve been better ‘doing nothing’ for Alberta'
Calgary political scientist says feds would’ve been better ‘doing nothing’ for Alberta

READ MORE: As oil price struggle continues, Alberta finance minister calls for changes to equalization program

An additional $500 million in commercial financing will be provided by the Business Development Bank of Canada over the next three years to help “higher risk but viable” small oil and gas businesses get through the current price differential challenges.

Sohi announced another $50 million from his department’s Clean Growth Program to support oil-and-gas projects.

WATCH BELOW: The federal government is injecting $1.6 billion into Alberta’s strained oil and gas industry to help companies hard hit by plummeting crude prices. Natural Resources Minister Amarjeet Sohi joins Global News at Noon Edmonton to talk more about the money.

Click to play video: 'Natural Resources minister says Alberta workers need support, announces $1.6B for oil and gas industry'
Natural Resources minister says Alberta workers need support, announces $1.6B for oil and gas industry

Alberta Premier Rachel Notley says Ottawa’s aid package for the oilpatch will help, but is essentially tone deaf and won’t fix the pipeline bottleneck crippling the province.

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“We don’t need help finding more markets. We need help moving our product, and I don’t know that we could have been much more clear about that,” Notley said Tuesday in Calgary.

“Offering Alberta business owners and industry the opportunity to go further in debt is not any kind of long-term solution.

“Especially not when we are a province and we are talking about an industry that is very good at being profitable if given the freedom to do so.”

No one from Notley’s government was at Sohi’s news conference. Notley called the announcement a start.

“We’ve heard from some small producers that this will help them get access to capital in trying times and perhaps tide them over, but it is not entirely what they were looking for, too,” she said.

WATCH: Alberta Premier Rachel Notley responds to the federal government’s announcement of $1.6 billion to Alberta’s oil and gas sector.

Click to play video: 'Federal government needs to listen to folks from Calgary: Notley'
Federal government needs to listen to folks from Calgary: Notley

Tim McMillan, CEO of the Canadian Association of Petroleum Producers, said the industry appreciates federal recognition of the oilpatch problems, but said it didn’t ask for money under federal government programs.

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“We’re a job-creating industry and an investment attractive industry if we can get our fundamental building blocks right and that’s what we’ll continue to push for,” said McMillan.

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Political opponents dismissed the money as a politically motivated and ultimately ineffective gesture.

READ MORE: Large crowd gathers in northern Alberta city to rally for oil pipelines

“Today’s handout is nothing more than a desperate, election-year attempt to trick western Canadians into thinking (Prime Minister Justin Trudeau) cares,” said federal Conservative Leader Andrew Scheer.

“He is trying to save a handful of Liberal seats, nothing more.”

Watch: The federal government is offering the oil and gas industry a $1.6-billion bailout to deal with uncertainty but some say it’s missing the point. Tom Vernon explains.

Click to play video: 'Political reaction to feds’ $1.6B bailout for energy sector'
Political reaction to feds’ $1.6B bailout for energy sector

Alberta United Conservative Leader Jason Kenney agreed.

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“This announcement is too little, too late for those families suffering as the result of the Trudeau government’s anti-oil-and-gas agenda,” he said.

Randy Ollenberger, a financial analyst who covers major oil and gas firms for BMO Capital Markets, said the programs will likely be used only by very small companies and are unlikely to have a meaningful effect on job creation.

“If you can’t physically export (oil or gas), what difference does it make?” said Ollenberger. “This is a globally traded product and we just have to be able to move it to that market.”

No money for rail

The package does not include money for more rail cars that Alberta is planning to purchase to help move the glut of oil that is behind the low prices. The price gap is costing Canada’s economy an estimated $80 million per day, according to both the Alberta and federal governments.

Notley plans to buy as many as 80 locomotives and 7,000 rail tankers — expected to cost hundreds of millions of dollars — and has announced an 8.7 per cent oil production cut to begin next year. That has helped push the price back up.

Earlier this month, the federal government indicated it is willing to consider buying tanker cars to help Alberta move oil by rail, but has yet to commit to doing so.

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WATCH BELOW: Conservative leader Andrew Scheer wouldn’t commit to an oil sector bailout or money for rail cars, saying a pipeline is the best way to get Canadian oil to market

Click to play video: 'Scheer won’t commit to helping Alberta with rail car purchase'
Scheer won’t commit to helping Alberta with rail car purchase

In a recent interview with Global TV’s The West Block, Conservative Party leader Andrew Scheer said he believes buying rail cars won’t solve the problem.

“I understand where the government of Alberta is coming from,” he said. “The situation in Alberta is very, very dire so it’s natural that you have a provincial government that’s looking for literally any solution that might improve the capacity issue. But it’s not a long-term solution.”

READ MORE: Rail cars for oil transport ‘not going to solve the problem’ for Alberta: Scheer

Notley has also announced the desire to build new refineries or expand existing ones.

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Although the price for Alberta crude has rebounded slightly from just $11 a barrel late last month, it is still trading at about just half the price that Texas oil producers are getting — between $26 and $28.

“I am an Albertan. I have lived here for 34 years and I know people who are struggling,” Sohi said. “The lack of ability to build pipelines in Canada is something we need to fix.”

WATCH BELOW: Natural Resources Minister Amarjeet Sohi says the solution to the disparity between the price of Canadian oil and oil from other parts is of the world is increasing pipeline capacity.

Click to play video: 'Minister Sohi on oil price differential'
Minister Sohi on oil price differential

Frustrated Albertans protest low prices, lack of pipeline capacity

The move comes as frustration among Alberta workers and politicians appears to be growing closer to a boiling point over the province’s inability to fetch the same prices for its oil as other oil-producing regions.

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One oil and gas worker who attended Tuesday’s news conference said the $1.6 billion was “too little, too late.”

“You could dump that into Suncor and you wouldn’t see a difference,” Mark Jacquard said. “I’ve been working the industry for 20 years. And the last 10 years, it has been going downhill.”

WATCH BELOW: Coverage of the federal government’s announcement committing $1.6 billion to Canada’s oil industry on Dec. 18, 2018.

On Monday, protesters gathered in downtown Calgary for what became, at times, a heated rally in support of increasing Canada’s pipeline capacity.

READ MORE: Tensions run high at Calgary pro-pipeline rally as council declares support for oil industry

Calgary Mayor Naheed Nenshi was interrupted by some in the crowd who booed him when he mentioned climate change and when he spoke in French.

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“For those of you who are saying: ‘No, I don’t believe in climate change,’ good luck changing hearts and minds,” Nenshi told the crowd.

On Sunday, at least 1,500 people held a pro-pipeline rally in Grande Prairie, a northern Alberta city of 62,000. Many in Sunday’s crowd held signs blaming Prime Minister Justin Trudeau and his Liberal government’s policies for the problems plaguing Alberta’s oilpatch.

WATCH BELOW: (From Dec. 16, 2018) Organizers of Sunday’s rally wanted to highlight to politicians and ordinary Canadians how important the oil and gas sector is to the entire country

Click to play video: 'Hundreds gather in Grande Prairie for pro-pipeline rally'
Hundreds gather in Grande Prairie for pro-pipeline rally

Alberta Energy Minister Marg McCuaig-Boyd said Monday that’s she’s not surprised by Albertans’ growing anger over a lack of progress on the pipeline issue.

“It’s an industry we hold so important and it is somewhat hurtful when people don’t appreciate it,” she said.

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Notley has said the oil price problem is magnified by the fact that Canada’s oil exports mostly go to just one market: the United States.

Sohi recently asked the National Energy Board to review Canada’s current pipeline capacity to ensure it is being used as efficiently as possible and to explore whether there are any short-term measures that could increase rail capacity to move more oil.

The NEB has said it will provide Sohi with a full report in February 2019.

READ MORE: Alberta senator invites Quebec premier to visit oil and gas industry

—With files from Dean Bennett, the Canadian Press

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