On April 16, 2018, the Government of Alberta introduced Bill 12: Preserving Canada’s Economic Prosperity Act (Bill 12 or the Act). Bill 12 proposes to give the Alberta Minister of Energy (Minister) sweeping powers to control the export of natural gas, crude oil, and refined fuels from Alberta using export licences.

Under the proposed Act, the Minister may issue an order designating that a person or a class of persons are required to obtain a licence to export any quantity of natural gas, crude oil (excluding crude bitumen), or refined fuels (including gasoline, diesel and jet fuel) from the province. While the Act would empower the Minister to impose export licences, the government has indicated that it will only take action if it deems it necessary. When determining whether to require licences, the Minister must determine whether it is in the public interest of Alberta, having regard to the following factors:

  • whether adequate pipeline capacity exists to maximize the return on crude oil and diluted bitumen produced in Alberta;
  • whether adequate supplies and reserves of natural gas, crude oil and refined fuels will be available for Alberta’s present and future needs; and
  • any other matters considered relevant by the Minister.

Companies that are required to obtain an export licence must apply to the Minister, who may only issue a licence if it is in the public interest as set out in the factors above. The contents of applications will be set by regulations, which will be made by the Minister at a later time.

In issuing, amending or renewing a licence under the Act, the Minister has broad discretion to impose any terms and conditions, including:

  • the point at which the licensee may export from Alberta any quantity of natural gas, crude oil or refined fuels;
  • the method by which natural gas, crude oil or refined fuels may be exported from Alberta;
  • the maximum quantities of natural gas, crude oil or refined fuels that may be exported from Alberta during the interval or intervals set out in the licence;
  • the maximum daily quantities of natural gas, crude oil or refined fuels that may be exported from Alberta;
  • the conditions under which the export from Alberta of natural gas, crude oil or refined fuels by the licensee may be diverted, reduced or interrupted; or
  • the period for which the licence is operative.

The Minister is also empowered to suspend, revoke or amend a licence under this Act if he or she determines that it is in the public interest of Alberta to do so.

A person who fails to comply with the Act or with the terms of a licence is guilty of an offence and may be liable to a fine of not more than $10,000,000 per day (where the person is a corporation), or $1,000,000 (where the person is an individual) for each day or part of a day the offence occurs. Notably, officers, directors, and agents of a corporation who directed, authorized, assented, or participated in the commission of an offence can be held liable for fines regardless of whether the corporation itself has been prosecuted for or convicted of the offence.

Additionally, if a person fails to comply with the Act, the terms of their licence, or the direction of the Minister, the Minister may also make an order directing an operator of a provincially-regulated pipeline, railway, or commercial vehicle to cease transporting the natural gas, crude oil or refined fuels. The Act provides that the person would remain liable for the payment to the operator that would have been payable in the absence of the order.

The removal of natural gas from the province is already governed by the Gas Resources Preservation Act (GRPA), which allows Alberta to control the amounts of gas leaving the province through the issuance of gas removal permits. The proposed Act includes transitional provisions that may deem existing gas removal permits to be licenses under the Act and that allow for regulations to transition matters under the GRPA to the proposed Act.

The Bill passed first reading on April 16, 2018. Given the general support expressed by the official opposition, the Bill appears unlikely to be held up in the Legislature; however, given recent statements and rhetoric from the Government of British Columbia, if enacted, and limits are placed on exports, the legislation may be challenged by British Columbia with regard to, for instance, whether it conforms with section 92A(2) of the Constitution Act, 1867, and its potential or “intent” to discriminate against British Columbia.