2016 in review: a year to (mostly) forget
Record-low oil prices, natural disasters, credit woes ... what didn't go wrong in 2016?
by Alberta Venture Staff
There’s no getting around it: It’s been a tough year. Most economic indicators trended the wrong way, public finances are bleeding red and Fort McMurray was laid low by a wildfire. But Albertans are nothing if not resilient, and as those same indicators began to turn for the better towards the end of the year, optimism was beginning to leak back into the public square. Here’s to a better 2017.
Unite the Right
Alberta’s Progressive Conservatives were nearly wiped off the electoral map in the 2015 election that catapulted Premier Rachel Notley into power. The first politician to claim the wreckage of the PC dynasty was (now former) MP Jason Kenney, who in July declared his intent to lead the PCs to victory by merging with the Wildrose Party, Alberta’s official opposition. Although schemes to combine the ideological twins have been floated for years (remember the floor crossing of 2014?), under Kenney the plea gained momentum. “I’m not asking people to vote for me because of a set of policy proposals,” Kenney said. “I am asking people to vote on whether or not they support the concept of uniting free-enterprise Albertans.” This, despite the Wildrose’s adamant, “Thanks, but not interested.”
Will it work? It’ll be an interesting time either way. As of press date, there were four other candidates for the PC leadership, none of whom expressed interest in a merger. In another twist, Sandra Jansen – a favourite among lowercase progressive conservatives – said she’d quit if Kenney wins.
The urge to merge
In September, Saskatchewan’s Potash Corporation and Calgary-based Agrium agreed to a merger that would create a $36-billion agricultural behemoth. The deal will see Potash shareholders get 0.4 shares per Potash share they own, giving Potash shareholders 52 per cent of the new company. In a loss for Alberta, the company’s new headquarters will be in Saskatoon.
Suncor Acquires Canadian Oil Sands
“If you do nothing and our offer is rejected, you can expect the value of your shares to drop – sharply. – Steve Williams
After public mudslinging, Suncor’s $4.2-billion acquisition of Canadian Oil Sands gave the company the largest stake in the Syncrude joint venture, with a 37 per cent share. (Suncor already owned 12 per cent of Syncrude.) After bouts of underperformance, including technical problems and smaller-than-anticipated output levels, Syncrude will now be Suncor CEO Steve Williams’s ship to turn around.
The snail’s pace at which pipelines are approved in this country continues to make headlines. The major newsmakers were Enbridge’s Northern Gateway, Kinder Morgan’s Trans Mountain Expansion, and TransCanada’s Energy East. In June, the Federal Court of Appeal overturned the approval of Northern Gateway, citing inadequate consultation with First Nations, and the Trans Mountain expansion faced heavy opposition from members of the B.C. government, environmentalists and First Nations. The National Energy Board approved the pipeline in May with a slew of stipulations – 157 to be exact.
And who could forget the circus that was the Energy East hearings? The NEB effectively quashed the meetings in Montreal in August following a violent disruption by disgruntled protesters. A conflict-of-interest controversy soon followed as it was discovered two of the NEB’s commissioners met with former Quebec premier Jean Charest while he was working for TransCanada.
The Rising Minimum Wage
Rachel Notley kept her promise: Alberta’s minimum wage was bumped to $12.20 on Oct. 1 and will increase to $15 an hour by 2018. About 300,000 Albertans make less than $15 an hour, the largest group being the 15-to-19 age range, with a 24 per cent share.
While low-wage earners applaud the hike, many small business owners say the increase could not come at a worse time. “Entrepreneurs urge the government to suspend hikes during periods of economic downturn,” says Amber Ruddy, director of provincial affairs for the Canadian Federation of Independent Business.
Enbridge and Spectra form behemoth
Enbridge’s $37-billion buyout of Spectra Energy Group diversifies it into natural gas and gives the company access to the lucrative markets of the U.S. northeast. The combined entity will have $26 billion worth of projects underway.
TransCanada Buys Columbia
In July, the Calgary-headquartered midstream company – in the public eye mostly for the Energy East brouhaha – bought Columbia Pipeline Group, based in Texas, for US$10.2 billion. The deal gives TransCanada crucial access to some of the U.S.’s shale gas deposits and a $23-billion portfolio of near-term growth projects. Then, late in September, after getting the taste for northeastern shale gas, TransCanada bid almost $850 million for the rest of Columbia Pipelines.
The Rockies’ Resurgence
The Rocky Mountains are not only a bright spot for tourists seeking to escape Alberta’s uninterrupted prairie landscape, the jagged peaks also mark a source of optimism for the province’s shaky economy. While virtually every sector is touched by the recession, the tourism industry has never looked better. International tourists are flocking to mountain towns, taking advantage of Canada’s low dollar, while residents of the province are staying within its borders, avoiding the pricey airfare out of the country. The resort communities of Banff, Lake Louise, Kananaskis, Canmore and Jasper had occupancy rates of 93 per cent, the highest since 2005, when Alberta Culture and Tourism began tracking occupancy data.
Tourism isn’t expected to slow in the upcoming months. With ski season in full swing and free admission in 2017 to celebrate Canada’s 150th anniversary, expect to bump elbows with fellow tourists on popular hiking paths for the next several months.
Softwood lumber agreement ends
The softwood lumber agreement between Canada and the U.S., which lasted nine years and gave reprieve to the forestry industry amid a history of trade disputes, ended in October 2015. The Canadian sector began to fear the barrage of legal action that the U.S. industry was sure to unleash, citing Canadian “subsidies” (low stumpage fees). There was a one-year standstill provision that blocked U.S. companies from suing Canadian foresters, but that came and went, leaving Prime Minister Justin Trudeau with the task of forming a new agreement – to which the U.S. industry is vigorously opposed.
This is a daunting situation for Alberta’s forestry companies, which never fully recovered from the collapse of the U.S. housing market. In the ensuing years, the sector diversified to compensate, but the looming threat of litigation means the industry is anxious for a new agreement.
Firstenergy Sold To GMP
FirstEnergy Capital, founded by
Murray Edwards, Brett Wilson, Rick Grafton and Jim Davidson in 1993, was bought for almost $100 million by publicly traded GMP Securities in August. GMP will finance the deal by issuing almost $60 million in stock to shareholders in privately held FirstEnergy.
Alberta is facing one of the worst recessions in recent history – that’s old news, but with a severe economic downturn comes a laundry list of negative repercussions. Low oil prices equal thousands of layoffs, meager royalty revenue and a hefty provincial deficit – nearly $11 million this year alone.
And with a deficit comes downgrades. In May, Standard and Poor’s lowered Alberta’s credit rating for the second time in five months, from AA+ to AA. Less than a month earlier, DBRS dropped the province’s rating from AAA to AA and Moody’s Investor Service cut it from AAA to AA1, citing “increased risk from deep deficits.”
Energy experts predict a slow rebound of energy prices. Analysts at Deloitte peg average oil prices at US$51 for 2017, citing increased OPEC production, hefty stockpiles and increased drilling in the U.S. for the slower-than-expected rise.
Rogers Place Opens
After more than $600 million, 30 months of construction and years of often-heated public debate, Edmonton’s newest arena, home for the Oilers, opened its doors on September 8 to a mostly festive reception. Almost as notable, however, was the fact that Oilers owner Daryl Katz made a public appearance to welcome Edmontonians to the new facility, and that he was flanked by Wayne Gretzky, who has taken on an official role with the team as vice-chair of Oilers Entertainment Group.
Rogers Place is the key to a larger revitalization effort for the city’s downtown. With that, of course, come concerns about gentrification, like displacement of homeless people and climbing rents. But the arena has given Edmontonians something to celebrate in an otherwise dreary economic year.
Alberta lost some great people in 2016. Their contributions to the province and the country will never be forgotten
Alberta lost one of its iconic business-people – the founder of ATCO and the famed Spruce Meadows equestrian venue – in January when Southern passed away at 85. He was a member of the Order of Canada, the Alberta Order of Excellence and the Canadian Sports Hall
From his career as a two-time Grey Cup winner to leading Alberta as premier from 1985 to 1992, Don Getty, who passed away in February at 82, was one of the province’s most beloved public figures.
In September, Alberta lost another great football-player-turned-politician in Norman Lim Kwong. He was the CFL’s first player of Asian heritage, a hugely influential businessperson and, finally, Alberta’s 16th lieutenant governor.
He was 86.
William Mooney was president of energy firm Canada Cities Services in 1975, when it and others partners in Syncrude decided to save the floundering oil company. Syncrude would go on to become one of the largest oil sands producers and one of Alberta’s most trusted brands, and Mooney is largely credited with its survival. He passed away in August at 87.
The father of The Canadian Encyclopedia began his publishing career in Edmonton, where he founded Edmonton’s first independent bookstore and an eponymous publishing company. An occasional politician, he went on to become an indelible face on Canada’s literary and political scenes. In August, he passed away at 84.
The inimitable author of the novel Shoeless Joe, among 26 others, left Alberta in 1967 but was born and raised in Edmonton, and would return to the province to teach at the University of Calgary from 1978-83. His depiction of life inside an Alberta First Nations reserve won him the Stephen Leacock Award for Humour in 1987. He was 81.
On October 13, the country was shocked and saddened to hear of the death of former premier Jim Prentice in a plane crash near Kelowna, B.C. Prentice was remembered with warmth and gratitude by people from across the political spectrum. He was 60.
He was 86.
After returning to work following surgery on his leg, Conservative MP Jim Hillyer died suddenly in his Ottawa office in March, at just 41 years old. Hillyer had been an MP since 2011, and his passing saw condolences flow in from citizens of all party affiliations.