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Calgary-Ottawa energy impasse: Talks ahead?

The ice is breaking up at last. Or so it would appear as initial moves are being made to get the long-stalled intergovernmental issue of Canadian energy, if not resolved, at least talked about again.

Alberta Energy Minister Merv Leitch some days ago wrote to his federal counterpart, Marc Lalonde, suggesting they meet early next month in Winnipeg, Manitoba.

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Mr. Leitch was actually supposed to make the unconditional offer of renewed talks public, before a convention of American and Canadian drilling contractors here. But as luck would have it, his emissary entrusted with the personal letter could not find Mr. Lalonde in Ottawa -- a city busily entertaining US President Ronald Reagan. Mr. Leitch, though still maintaining that Alberta saw no point in resuming negotiations because the "other guy [Lalonde] was not interested in a fair deal," was telling Ottawa, in effect, that the war of nerves played since last fall had gone on long enough.

Winnipeg holds good memories for both parties. It was in this windy prairie capital that the same two parties settled yet another equally bitter energy dispute in 1974, and in so doing saved the giant Syncrude Oil Sands plant. The exact date of the meeting will be announced soon.

But Alberta, while taking credit for getting the warring sides to talk peace again, warned already that in doing so the province "is not getting weak-kneed, we have not lost our nerves. We are certainly not surrendering." This senior civil servant, who asked to remain anonymous, added that the main aim of Alberta politicians in suggesting new talks was to "take the heat off" the government at home.

Alberta has been skillfully playing the role of the underdog, claiming to be both the innocent and injured party in the domestic energy conflict. It has suffered most, even from the retaliatory measures it invoked to uphold its resources' rights and principles. For example, the recently enacted first phase of three equal-volume crude oil production cuts --180,000 barrels per day, or 15 percent of total conventional output when completed next September -- is supposedly hurting Alberta and producers more than the intended victim, the federal government.

Alberta politicians have been hearing some tough talk from their constituents as of late. They blamed both Alberta and Ottawa with equal vehemence for the sudden decline in their business fortunes.

Interestingly, a private opinion poll published recently showed Alberta Premier Peter Lougheed with only a slight margin ahead of federal Prime Minister Pierre Trudeau as far as public support for the respective side in this energy tug of war was concerned. Mr. Lougheed assumed all along that he had overwhelming support from both industry and the 2 million Albertans. They, after all, are supposed to be the owners of natural wealth within provincial boundaries.

The surprising findings of the poll are likely to be exploited by Mr. Lalonde in Winnipeg. Meanwhile, the petroleum industry began to show its displeasure with the political games some months ago as one by one companies studied the new federal energy and fiscal policies for possible loopholes.

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Several companies, contrary to industry statements and provincial claims, actually found it possible to function under the new regime profitably. That is , if the company in question had a majority Canadian ownership and control -- a factor favored by new federal rules for the petroleum industry.

Sensing that support for its staunch -- some would say stubborn -- energy stance was eroding on both the public and industry fronts, Premier Lougheed and Mr. Leitch must have felt, it is assumed, that discretion was still the better part of valor. Hence the sudden flurry of activity on the domestic "diplomatic" front.

Mr. Leitch's letter was made public 24 hours after he threw yet another bucket of cold water on speculation that negotiations on oil pricing and wellhead revenue sharing might be picked up again. It's now known that by the time the Leitch letter got to Mr. Lalonde and the latter had been able to formulate a response in the affirmative, during the fast-paced Reagan visit, Mr. Leitch had already spoken.

Alberta and Ottawa are practically evenly matched in this confrontation, although the federal government does possess superior legislative powers it has yet to invoke.

Alberta, on the other hand, does own all the provincial resources, an indisputable right enshrined in the constitution. Alberta thus controls production levels of oil, while Ottawa sets its price and determines its disposition when it is shipped out of the province. Alberta is likely to seek relief in oil pricing now at $17.75 (Can.) per barrel, and in return the province could waive the next two scheduled reductions in production.

Any progress at the Winnipeg talks could not but help the petroleum industry, which is the ultimate, albeit unintended, loser in the Canadian energy war, 1979 -81 edition.

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