Welcome to Economic Insights, a twice-weekly newsletter focusing on major projects and the Canadian economy at large.

Stories we are following:

• QUÉBEC, SASKATCHEWAN, and NEWFOUNDLAND AND LABRADOR remain the final holdouts as OTTAWA nears its goal of “one project, one review” agreements across the country. While most provinces have signed on to streamline impact assessments, jurisdictional friction persists in some parts. 

• The OIL AND GAS sector is at a strategic crossroads. Surging short term prices are padding balance sheets, but they might also be complicating an already difficult long-term risk-benefit math. 

Three more to go

OTTAWA is narrowing the gap on its ambitious goal to sign project assessment deals with all willing provinces and territories, but the final three provinces are proving to be the toughest nuts to crack: QUEBEC, SASKATCHEWAN, and NEWFOUNDLAND and LABRADOR.

• Closing the loop: NOVA SCOTIA recently joined ALBERTA, B.C., ONTARIO, NEW BRUNSWICK, PEI and MANITOBA in signing cooperation agreements with Ottawa. The goal? Eliminate duplication and move closer to ‘one project, one review.’
• The holdouts: SASKATCHEWAN tells iPolitics it remains focused on its status as a “carbon tax-free jurisdiction,” without specifying how entering into a cooperation agreement would infringe on its industrial competitiveness.

• • Jurisdictional tension: Sources suggest one of the sticking points for QUEBEC is who gets the final say in permitting. 

• No word: NEWFOUNDLAND has been quiet on this issue so far, but any future deals likely involve offshore oil interests.

A great energy gamble

As the IRAN-ISRAEL conflict keeps energy markets on edge, a deeper debate on whether short-term disruptions could change long-term outlooks is happening inside the boardrooms of CANADA’s energy giants. 

• • A dilemma: A strong immediate cash flow can be a double edged sword. It provides capital for new projects, but could also warp long-term risk benefit calculations. 

• Peak oil: CANADA’s oil patch has, in recent years, favored returns to investors instead of investment in major projects, a move some have interpreted as a belief long-term demand for oil will plateau and decline.

• Holding off: Many companies are waiting for clearer tea leaves before pulling the trigger and making final investment decisions in projects like BAY DU NORD, KSI LISIMS and LNG CANADA PHASE 2.

• Record: Prices for crude oil have hit record highs this month, with the U.S. administration preparing for extreme scenarios.

“The current situation is not indicative of future prices, and ultimately you only want to invest if the price is right,” WERNER ANTWEILER, energy economist at the University of British Columbia, tells iPolitics.

By the numbers 

$14 billion: The estimated cost of the BAY DU NORD project in NL.

7: Number of provinces that have signed a cooperation agreement with OTTAWA on project assessment.

$200: The “extreme scenario” price per barrel for crude oil that the U.S. is reportedly stress-testing as conflict in the Middle East threatens global supply chains.

Major projects watch

— Prime Minister MARK CARNEY called Premier DOUG FORD’s vision for Billy Bishop Airport an ‘interesting’ but stopped short of endorsing Ontario’s plan to expand the island airport and use Bill 5, as per Globe and Mail reporting.

— The federal CONSERVATIVES announced Wednesday they oppose ALTO’s proposed high speed train project between Toronto and Quebec City. They cite, among other things, concerns about construction costs and future demand for the service. They reiterate BLOC QUÉBÉCOIS concerns that some properties could be unjustifiably expropriated in the name of the project. 

— The companies behind the COASTAL GAS LINK pipeline and the massive LNG CANADA facility in Kitimat, B.C., have signed agreements that bring both of their second phases closer to reality.

— NORTHWEST TERRITORIES Premier R.J. SIMPSON tells Bloomberg OTTAWA’s focus on Arctic security and natural resources is great timing as key industries in the territory wind down their operations.

Headlines