'Black cloud': Alberta's latest fight with Ottawa could drive oilpatch investment away

As the province and Ottawa take part in yet another constitutional squabble over jurisdiction, some oil and gas sector watchers are worried about the effect on the industry caught in the middle.

On Tuesday, Alberta Premier Danielle Smith signalled her government's intent to table a motion invoking the Alberta Sovereignty within a United Canada Act to push back against federal draft regulations that would require oil and gas producers in Canada to limit greenhouse gas emissions by 35 per cent below 2019 levels. 

The Alberta Sovereignty Act is intended to allow the province to declare federal laws unconstitutional or harmful, and to issue orders to provincial entities not to comply with federal rules.

The motion begins by asserting Alberta's jurisdiction over the "exploration, development, conservation, management and production" of non-renewable natural resources in the province.

It would designate emissions data as proprietary information owned exclusively by the Alberta government, with all reporting of that data to be at the province's direction.

It would also prohibit site visits by federal employees or contractors without authorization by the province.

Federal Environment Minister Steven Guilbeault was quick to criticize the proposed motion, telling reporters on Wednesday the restrictions on emissions reporting would be a "violation of federal laws."

Those comments prompted a swift rebuke from Guilbeault's provincial counterpart, Alberta Environment Minister Rebecca Schulz.

"I can tell you that Minister Guilbeault is lying. He is lying because he has to lie. Because if he says anything else, he knows what we know, which is that his oil and gas production cap will be found unconstitutional when we challenge it in court," Schulz told reporters on Wednesday.

This week's back and forth is just the latest battle in a long war of words — and lawsuits — between the governments of Danielle Smith and Justin Trudeau concerning jurisdictional authority over emissions generated by Alberta's oilpatch. The fighting has created uncertainty in the oil and gas sector, according to some insiders, and the latest provincial salvo is only going to create more of it.

Richard Masson is an executive fellow with the University of Calgary's School of Public Policy and the ex-CEO of the Alberta Petroleum Marketing Commission.

He told CBC News that the oil and gas sector is very worried about the federal emissions cap, and he has argued for years it is not a good idea. But according to Masson, this week's provincial announcement is just going to lead to confusion. 

For one thing, he can't imagine oil and gas companies not following federal rules for emissions reporting in order to comply with provincial legislation that hasn't been tested in court.

"They [oil and gas companies] are not going to not comply with federal law. It's just not going to happen," Masson said.