February 24, 2016

Dear Premier Notley,

CC: Mr. Brian Michael Jean
I am writing to pledge my support for the future of Albertas oil and gas industry. As we all are aware, oil
and gas investment and development have been instrumental in making Alberta and Canada a prosperous
place to live and work. Albertas energy sector has provided us with a comparatively high standard of
living, good health care, quality education and a bright future provided that it is fostered appropriately and
permitted to continue growing.
As the co-founder and Chief Executive of Torq Energy Logistics Ltd, headquartered in Calgary, that
offers oil producers and refiners energy transportation and logistics solutions, I have witnessed the
gruesome impacts of the current economic environment from the front lines. To put this in context, at its
peak in 2014, Torq employed more than 400 people across Alberta and Saskatchewan. Unfortunately
Torq has been not immune to the current conditions and we have had to right size our workforce by 50%
over the past eighteen months.
At Torq, we consider our business as a large family or team. We attempt to make decisions for the
business that are in the best interests of the team, or at very least, in the best interest of the overwhelming
majority of our team. With that spirit in mind, we at Torq undertook the approach to delay further
personnel cuts as long as we possibly could by instead reducing wages and salaries across the board.
Obviously we have reduced the lowest wages by the lowest proportion (7.5%) and higher wages of
management a higher proportion (12.5%). In fact, the COO (co-founder) and I, have reduced our salaries
to $1.00 per annum so as to reduce our burden on the business. These mandatory wage reductions have
had extreme impacts on my colleagues and their families which haunt my sleep and every waking
moment.
In contrast to our story at Torq, Albertans watched you attempt to increase the pay of a select few of your
highest paid personnel, while many provincial stakeholders face dire economic circumstances. Be sure
Premier Notley, there is a distinct difference between being elected as a leader and exemplifying the
characteristics of one. While I acknowledge that our current economic tribulations are largely the result of
an international act of economic warfare by OPEC, I and many other of your constituents feel that our
leaders, both provincially and federally, are not acting to improve our own cause and publically
supporting the best interests of Albertans.
While I continue to bear the guilt of disappointing my colleagues, most of them understand that we are
trying to preserve their, and their families best interest and they express a preference of less over none.
But it continues to get evermore difficult to explain to them why global demand for energy continues to
grow rapidly but despite our superfluity of oil and gas reserves, Albertas global market share is actually
shrinking. Its also difficult to explain to them why we spent $3 million of tax payer money in effort to
increase energy royalties in a time when we should be considering a temporary royalty holiday to help
stimulate industry activity. Nevertheless, these are complex questions with many layers that are all
interrelated. To be sure, there is no one solution that works in isolation. All initiatives must be considered
compliments to each other and should be acted upon jointly.
On the topic of market access, quite frankly our federal and provincial governments both past and present
have failed us and continue to do so, yourself included. An increasing number of hurdles continue to be
put in the way of getting our energy economically out of the ground and to a competitive market. We

currently have major private sector infrastructure projects that pose exponentially more economic gain to
Alberta than any amount of infrastructure stimulus the Trudeau government is offering this province and
yet those projects seem to get little publicized supportive action from your government. Rather, by hiring
out of province, anti-oil activists into your cabinet, your government projects a perceived message of
opposition to the very industry that accounts for the largest proportion of our provincial economy.
Furthermore, by travelling to Paris and issuing disdainful remarks reflecting your shame of Albertas
energy industry rather than offering supportive commentary and action to the world, you are sending a
clear and distinct message to your constituents, intended or not. These remarks are extremely hurtful to
the very families that contribute to your personal income. Why would the leader of any organization not
publically support its own people and economy, or at very least stay silent on their perceived
performance, unless dissention was the intent?
I am not qualified to determine if your message to Albertans is purposeful and reflective of your actual
position or not, but rightly or wrongly, too much talk and not enough action is the impression the
Alberta public has of its government and it is possible that this is correlated to your most recent approval
ratings within this province. In extreme conditions such as these the people of this province and its energy
sector need a leader that is publically defending them from external baseless, anecdotal rhetoric, taking
action to improve economics, publically supporting market access projects and representing her
constituents best interests.
Albertans expect that when our federal government requests cooperation from Alberta on any initiative,
carbon pricing for example, your response would be a non-threatening, direct, quid pro quo approach.
Instead, Justin Trudeau recently outlined new political conditions that further delay decisions on energy
infrastructure projects that could secure new markets for our energy and serve the best interest of
Albertans yet we have not heard any objection from your government. The people of Alberta are looking
for you to publically defend our best interests. Like it or not, our future is a negotiation, one we beg you
more assertively engage in. While our refining sector continues to import foreign crude oil from
jurisdictions that exercise unacceptable environmental and sadistic human rights practices, we have seen
no tangible action from your government to advance the market access interests of Albertans.
You recently were quoted saying, I think we all understand we are all part of Confederation and we all
benefit from each others participating in it and there are opportunities for us to work together in a way
that enhances the economic prosperity of all Canadians. Assuming the we you were referencing in that
quote appears to be Canadians in general and the it being Energy East Pipeline; with due respect
Premier Notley, your thinking is simply erroneous. 82 municipalities in Quebec, ironically the province
which benefits most from our energy sectors contribution to federal equalization payment, have
publically condemned the project. We dont all understand, this is clear. We are counting on you to
educate those that dont.
On the issue of your proposed carbon tax; this initiative strikes particularly close to home for the Torq
family. The (un)intended consequences of your carbon taxes are wide spread. In a time when, as an
industry, the race is on to be the lowest cost source of production, your government is proposing a carbon
tax which you did not expressly include as part of you campaign platform. Nevertheless, Albertas energy
industry has made great strides to reduce its cost structure over the past 18 months. Those cost
improvements are focused on making our industry more competitive in the global marketplace. Without
full industry consultation, your proposed carbon tax has the great potential to reverse the competitive
benefits our energy sector has recently created. Though the details arent yet clear about your proposal, it
is clear that you are targeting fuel consumption in this province which poses a significant threat to
Albertas transportation sector and inadvertently provides further incentive for resource development in
other jurisdictions with which we share borders.

Let me explain how this is currently affecting Torq. In response to lower oil prices, producers are seeking
lower rates from all of their service providers in order to remain economic and continue to drill, produce
and employ their people. Service rate reductions are being demanded across the industry, including in
transportation and logistics. Producers are asking service providers like Torq to discount rates by more
than 35% to 50% (from 2015 rates). We understand their rationale; its a necessary process in order to
remain economic in light of current energy prices. As any other industry, the transportation industry has
both fixed and variable costs. The majority of these costs have come down but not in relative proportion
to revenues. One of the largest variable costs in the transportation sector is fuel. And while Western
Canadian crude oil prices have fallen approximately 75%, fuel prices have only come down by
approximately 30%. As a result we are seeing a disconnect between what a producer needs transportation
rates to be and the lowest price a transportation company can offer and still make a return which its
shareholders require in order to continue to support the business with investment. However, its typical
for a service provider to bridge that pricing gap by accepting very small returns in exchange for a longer
term contract, otherwise known cash flow certainty/predictability, exercising the preference of less over
none.
This is where it gets difficult for a company like Torq or any of our industry peers. With little to no detail
about your proposed carbon tax available to the public, it is very difficult to predict what our input costs
will be. Thus its very difficult to competitively price our service rates on a multi-year term basis to
ensure we can earn the business, meet even the smallest return requirements and keep our contractors
economically healthy. Hypothetically, if we signed a three year contract today with a producer that fixes
our service rates/revenue for that period but exposes our company to fuel cost upside risk of even as little
as 10% resulting from your proposed carbon tax, the result could be incurable. In that case there will be
many, many more job losses and contractor bankruptcies in the transportation sector as economics will
turn severely negative.
One might suggest that we propose a fuel surcharge or something similar to the producer in order to pass
on the additional cost to the producer. This notion is widely unacceptable to the producers. Most
producers are demanding flat transportation rates as their focus remains on reducing costs in order to
remain economically competitive. If they cannot remain economically competitive, they will shut the
production in and in that case we all lose; fewer producer jobs, fewer oilfield service jobs, less royalty
revenue, less corporate taxes, less personal income taxes, less consumer spending (less carbon tax) and so
on. It is possible the adverse side effects of your proposed carbon tax have not yet been fully
contemplated and in that case I would like to offer my assistance in helping your government formulate
constructive, value add policy for the province.
Making Albertas natural resources less competitive in the global market place by virtue of a carbon tax
may or may not be your objective, however, you have not been clear with Albertans. We are seeking near
term clarity from you on that topic. It is unfair to leave industry in the dark and not provide certainty. A
lack of information or transparency triggers paralysis and makes it impossible for industry to make
affirmative investment decisions within the Alberta energy sector. Simply put, the results of your
governments lack of transparency on this matter (and others) are the continued elimination of jobs,
reduction of employee earnings and a redirection of capital into other energy markets with more certainty.
Much concern also originates from the pace of proposed change. Albertans have the perception that you
are hurrying your agenda into action at a pace which appears to neither welcome nor provide adequate
time for full consultation with industry stakeholders. In fact, we are a mere nine months away from the
implementation of your proposed carbon tax and the citizens of Alberta have been given absolutely no
details about it. While you did publically state that there will be certain efforts made to work with
particularly vulnerable industries but that doesnt ring of transparency to industry. Many Albertans feel

that while there may be merit in some of the initiatives you have put forth, the magnitude of the changes
you are proposing are such that they require fully evolved thoughts in order to get them right. Providing
little detail and hastening such significant changes through the legislative process gives your government
the appearance as if theyre not welcoming of stakeholder input where it may contrast your agenda. This
behavior results in fractured trust between the people and state. Haste and secrecy from leadership cause
people to question whose best interests are being represented. Obviously this is not the objective of a
modern-day, libertarian leader such as yourself, right?
Regardless of your governments position on non-renewable energy consumption, global energy demands
continue to rise and where there is demand, it most certainly continues to be met with supply.
Nevertheless, your government is giving Albertans the impression that your understanding of our best
interests includes a curbing of our contributions to the global energy supply solution. To that Premier
Notley, I assert, you have misinterpreted Albertans and your mandate. Rather, Albertans wish to grow our
contributions to global energy supply as it represents our best interests and those of generations of
Albertans to come. Reducing industry cost and taking action on new market access are fundamental
initiatives to facilitating that growth interest. Those are initiatives which you have a mandate to devoutly
support, defend and fight for at any cost to your personal agenda. True leadership is the act of sacrificing
ones self interests for those which increase the prospect for betterment of the collective; I trust you agree.
Most Sincerely,
Jarrett Zielinski
Proud Albertan
President & CEO
Torq Energy Logistics Ltd.