Tuesday, January 05, 2010

Energy Sector Team rolls out red carpet for Alberta energy industry, recommends gov’t harmonize labour and OH&S regulations with western provinces

On November 18, 2008, the then Enterprise and Innovation Minister Lyle Stewart officially launched 18 sector teams specifically dedicated to an economic sector of the Saskatchewan economy.

Reporting to the Enterprise Saskatchewan board of directors, the sector teams are accountable for identifying and reporting on the barriers to growth, making recommendations to remove barriers, prescribing prioritized action, and reporting on the progress on an annual basis.

At the time of Stewart’s announcement, at least two sector teams were already up and running: the minerals and energy teams held their first meetings on November 7 and 12 respectively. The energy sector team didn’t waste any time turning things over to the Saskatchewan Party’s friends in the energy industry who have donated more than $1.17-million to the party since 1998.

The nine member team includes:

▪ Michael (Mick) MacBean, Chair, Diamond Energy Services (Swift Current)*
▪ Carolyn Preston, Petroleum Technology Research Centre (Regina)
▪ Brent Dunnigan, Arista Energy Limited (Calgary)*
▪ Jim Goldmann, Alliance Pipeline (Calgary)*
▪ Steve Halabura, North Rim Exploration (Saskatoon)
▪ John Jenkins, TransCanada (Calgary)*
▪ Brenda Kenny, Canadian Energy Pipeline Association (Calgary)*
▪ Tony Marino, Baytex Energy Trust (Calgary)*
▪ Roger Soucy, Petroleum Services Association of Canada (Calgary)*

Seven of the members (*) represent companies that have contributed to the Saskatchewan Party with six of them headquartered in Calgary.

At the second meeting, held in Regina on January 13, 2009, the minutes show that team members were reminded that Enterprise Saskatchewan has indicated that sector teams “are to be a direct link between private industry and the government; the government is anxious to hear the recommendations, regardless of its ability to act on them. There is no timeline on a deliverable to cabinet.”

An issue was raised about inviting industry associations to contribute their input to the team. “This would include the Coal Association of Canada, CAPP, SEPAC, CEPA, CAODC and PSAC and others. The Team discussed the timeline for this Sector Team and the desire to have a deliverable by the end of Meeting 4,” the minutes state.

The recommendation was made that the “next meeting take place in Calgary and that major industry associations in the Energy Sector be invited in advance to submit a list of key barriers and constraints to development and expansion of the Energy Sector in Saskatchewan. This list of barriers will be summarized before the meeting and distributed to Energy Sector Team members; selected association members will be asked to present to the Energy Sector Team meeting in Calgary. The Chair will also meet with SaskPower and SaskEnergy to solicit their perspective on the Energy industry and issues.”

The energy sector team’s third meeting was held April 7-8, 2009, at Alliance Pipeline’s head office in Calgary. The minutes show that all members attended.

The facilitator/recorder for the meeting was Stuart and Muriel Garven of Garven & Associates Consulting Ltd. in Saskatoon. Stuart is a brother to Garnet Garven, the former deputy minister to Premier Brad Wall.

Observers at the meeting included Derek Lamers, Enterprise Saskatchewan’s manager of business solutions and IT services, and Ranga Ranganathan, director of business development with the Saskatchewan Research Council.

The purpose of the meeting “was to receive a cross-section of presentations from several representatives on barriers to development of the energy sector in Saskatchewan.”

Sector team members took this input and on the second day “further identified barriers and conducted a gap analysis of the issues. The Team ranked the barriers in order of importance as determined by the Team. Initial recommendations emerged from the session.”

Presentations were received from the following associations or energy sector representatives:

▪ Coal Association of Canada (CAC)
▪ Small Explorers and Producers Association of Canada (SEPAC)*
▪ Canadian Association of Oilwell Drilling Contractors (CAODC)*
▪ Canadian Energy Pipeline Association (CEPA)*
▪ Petroleum Services Association of Canada (PSAC)*
▪ Canadian Association of Petroleum Producers (CAPP)*
▪ Crescent Point Energy Trust*
▪ Spur Resources

Of the eight presentations made six were from organizations (*) that have contributed to the Saskatchewan Party. Two of the presenters – CEPA and PSAC – are represented on the Energy Sector Team.

According to the meeting minutes “a common theme from the presenters was that Saskatchewan had established a positive environment for the sector’s development.” You wouldn’t know it though by looking at the list of 25 “development issues and barriers” that the presenters identified.

On April 8, 2009, the facilitator assisted the team in prioritizing the barriers and issues tabled the previous day. Number three on the list – right behind land management and fiscal regime – was harmonization. The following issues were cited for further action:

▪ Harmonization of regulations, certifications and safety training.

▪ Labour legislation and regulations need to be harmonized within western Canada. Where practical – ‘one standard fits all’.

▪ Harmonization of weights and over-dimension regulations from province to province.

▪ Sunday rig moves for over-weight or over-dimension rigs.

The minutes show three recommendations for development and consideration were prepared:

▪ PST refund administration is onerous and the Sector Team requests simplification of the process based on exemptions. (Similar to the methods that are used in British Columbia.)

▪ Harmonize … labour, weights and dimensions, OHS safety regulations, trade certification, etc. (Use CAODC and PSAC recommendations.) with other western provinces.
– Benefits to the industry in efficiencies and industry investment. Rather than individual provincial regulations, the industry can invest in a broader based, broadly accepted set of regulations and standards. There is strength in building common regulations and standards to enhance a western Canadian market.

▪ Review the policy for transportation of overweight and over-dimension equipment.

Based on the industry presentations one of the biggest complainers seemed to be PSAC who presented a list of five clauses in Saskatchewan’s Labour Standards Act that it wished to see addressed:

▪ 13(1) states that employees must receive a rest period of one day in every seven days.
– Not practical for this sector due to remote locations.
– Typical work schedules in this sector are 15 days on / 4 or 5 or 6 days off, or 21 days on / 5, 6 or 7 days off.

▪ 12(1) states that no employee shall be required to work more than 44 hours in any week, except in the case of emergency circumstances.
– With recent activity levels, labour shortages and work schedules this is not practical.

▪ 13.2(1) requires that employees have a period of eight consecutive hours of rest in any 24 hours, except in emergency circumstances.
– Nature of work on live wells means some services can take even longer than 24 hours.

▪ 6(2) states that employees who work more than eight hours in any day or 40 hours in any week shall be paid at the rate of time and one-half for each hour or part of an hour in excess of eight hours in any day or 40 hours in any week.
– Nature of work means some weeks very busy while others light.
– Proposal: Overtime is payable when hours of work exceed 12 in a day or 191 in a work month.

▪ 46(b) requires that no employer shall, unless authorized by the minister pay wages to employees later than the period during which the wages are earned.
– Oilfield services workers paid on ‘salary plus bonus’ system.
– ‘Bonus’ or ‘field pay’ based upon the work and revenue generated by the employer on each job and can only be determined once the job is complete and the customer agrees by paying the invoice.

And what’s PSAC’s solution? It told the sector team that the “desired outcome” is “harmonization across western provinces. (TILMA)”

The next Energy Sector Team meeting occurred on June 23, 2009, at the offices of the Petroleum Technology Resource Centre in Regina. It was at this meeting that members reviewed recommendations under consideration from the previous two meetings.

The minutes state that ten draft recommendations were developed during the meeting and were ready for due diligence review by Enterprise Saskatchewan. On the issue of harmonization the following two recommendations were made:

▪ That the province negotiate with other western provinces to harmonize labour, weights and dimensions, OH&S regulations, and trade certification with other jurisdictions.
▪ That the ES Board recommend to Cabinet that companies be given permits to move drilling rigs on Sundays.

Due diligence on the recommendations were to be completed “over the summer with the recommendations being presented for decision to the ES Board in the fall.”

It was noted that the chair, Mick MacBean, was “in contact with Premier Brad Wall” who is “hoping that he can move some issues forward and that action can be taken based on this Team’s work.”

MacBean and Wall both live in Swift Current, the premier’s hometown. On February 14, 2008, Wall appointed MacBean to the SaskPower board of directors. [Order in Council 52/2008]

SaskPower was named by the sector team on at least two occasions as being a barrier to development. Once for its “regulations” and the other through “increases in power costs – the monopoly does not provide for competition and choice.”

The minutes indicate that Enterprise Saskatchewan was expected to complete a review of harmonization issues in time for the sector team’s next meeting, which was scheduled for September 2, 2009, in Regina.

TILMA and its offspring the Western Economic Partnership Agreement (WEPA) being negotiated between British Columbia, Alberta and Saskatchewan loom large.

On December 18, 2009, Enterprise Saskatchewan released the board’s most recent progress report covering the period from April 1, 2009, to September 30, 2009.

The board received presentations and recommendations from several sector teams and strategic issues councils but strangely energy was not among them.

The report notes that prior to meeting with the Alberta and British Columbia cabinets on September 11, 2009, Premier Wall asked the ES Board for opinions about the new partnership.

“The Board expressed its support for the WEP. The agreement aligns with what the ES Board is promoting by removing barriers to trade and making Saskatchewan businesses more competitive,” the report states.

Since forming government in November 2007, the Saskatchewan Party has spent an inordinate amount of time attacking labour with various pieces of legislation designed to appease business and weaken the influence of unions in the province.

WEPA takes the fight one step further by going after government measures in all economic sectors such as standards and regulations that some claim are creating unnecessary barriers to trade. Through the sector teams the Wall government is allowing the private sector to determine what those barriers are and is refusing to let the people of Saskatchewan see the agreement before it’s signed – just like former Alberta Premier Ralph Klein and BC Premier Gordon Campbell did with TILMA in April 2006.