Crude Oil: WTI for July delivery added $1.40 to US$53.99 on the New York Merc, Both benchmarks perked up on comments from Saudi Energy Minister Khalid al-Falih, who told a conference in Russia yesterday that OPEC and its non-OPEC cohorts are all but certain to extend their production-cutting pact into the second half of this year (the current pact runs out at the end of this month). He mused that "calibration" might be required as to the size of the pact. More discussions are needed, but presumably Mr. al-Falih and his fellow ministers will have a better sense of numbers heading into the OPEC meeting on June 25 and the joint OPEC/non-OPEC meeting on June 26, both in Vienna. Meanwhile, Western Canadian Select traded at a discount of $13.38 to WTI, down from a discount of $13.31. Natural gas for July added one cent to $2.34. The TSX energy index added a fraction to close at 139.07.
Despite the oil price boost from OPEC, it was a gloomy day in the oil patch, as the Canadian government showed every intention of pushing through controversial energy-related legislation despite how damaging it would be to the industry. Two blows were struck in two Senate votes yesterday evening. One had to do with Bill C-48, the so-called B.C. tanker ban. (This is a bit of a misnomer. The bill ostensibly bans oil tanker traffic in Northern B.C. waters, but in reality only Canadian oil tankers would be affected, not foreign vessels carrying the exact same product. The effect is to target the Canadian energy industry exclusively.) Last month, a Senate committee rejected Bill C-48, essentially telling Ottawa that the bill should be killed. Now the Senate has ignored its own committee and voted to keep the bill alive. A frustrated Jason Kenney, Premier of Alberta, warned on social media yesterday that if Bill C-48 becomes law, "Alberta will launch an immediate constitutional challenge." The bill will now proceed to third reading, during which amendments can be proposed.
In a separate vote yesterday, the Senate passed a heavily amended version of Bill C-69, the environmental assessment legislation that critics have dubbed the No More Pipelines Act. (The Canadian Energy Pipeline Association has stated in no uncertain terms that it is "difficult to imagine that a new major pipeline could be built" if the bill becomes law.) Last month, a Senate committee approved nearly 200 amendments to the bill, some of which were suggested or supported by the industry. For example, the amendments would reduce cabinet discretion to intervene in the assessment process, and would make it harder for people to launch court challenges to project approvals. That the Senate has now passed the amended bill could be taken as a good sign. The above Mr. Kenney, for his part, stated yesterday that he urges the government to pass the fully amended bill, which is "still problematic" but is better than before. Of course, among skeptics, the idea that the government will actually accept all of the amendments is laughable. The bill will now head to the House of Commons for debate next week, at which point the government's intentions will become clearer.
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