OTTAWA — Forget about carbon dioxide emissions -- the rising levels of angst emanating from Alberta's oil and gas industry is expected to skyrocket after the Conservative government's unveiling of reduction targets.

The announcement, to be made jointly by Prime Minister Stephen Harper and Environment Minister John Baird on Thursday near Toronto, is being prepared with all of the gravitas of a budget including pre-release technical briefings for the media, and provincial and industry reps behind closed doors.

Jim Prentice, Alberta's senior minister in cabinet, will be dispatched to convene a meeting with top oil executives in Calgary in an exercise in damage control that is unlikely to immediately smooth feathers, according to one industry heavyweight.

"There's going to be quite a furor when this gets released,'' the oil-patch insider said. "Politically this is where (the Conservatives) want to be.''

Industry and Alberta sources say a certain gloom has descended on the oil and gas industry over what the government is planning. They say that a number of factors taken together are creating a "perfect storm'' for their operations, including:

• A review of royalty rates applied to gas revenues undertaken by the provincial government. It is expected the public panel will suggest an increase.
• The Conservative government's decision to ban income trusts, which was an increasingly preferred cost-saving corporate structure for the oil and gas industry.
• The expected elimination of the accelerated capital cost allowance for the oil sands.
• The Alberta government's own greenhouse gas emissions targets.

Baird might have predicted financial ruin under the opposition's proposed emissions reduction plan, but the economic impact of the Conservative plan is already being calculated before it's been made public and there are dark mutterings about a slowdown in the Alberta economy and a decrease in competitiveness.

"You add all these things together and you do mess up the price per barrel and the return on investment,'' said one industry source. "Our concern is there hasn't been much thought given to the cumulative effect.''

David MacInnis, president of the Canadian Energy Pipeline Association, says the industry will be relieved just to have some certainty over what the federal expectations will be. But there is still a sentiment that industries are bearing the main responsibility for reducing Canada's emissions, while politicians let consumers off the hook.

"This uptick in the oil and gas industry has been the goose that laid the golden egg for the Canadian economy as a whole,'' said MacInnis. "To see that slowed or killed, there's significant concern out here.''

A draft copy of the government's emissions reductions plan, dated April 13, suggests companies will face targets based on the intensity of their industrial output. The idea is for Canada's emissions to decline as early as 2010 and no later than 2012. Industry will have a series of options for meeting the targets, including contributing money to a fund for future deployment of cleaner technologies and participating in a domestic carbon trading market.

What oil companies are most concerned about in the plan was left blank in the draft document: the cost per tonne of emissions. That figure will be the barometer of success or failure within the industry as they make their calculations on the impact on the cost per barrel.

To date, the reaction has not been strong enough, says analyst Ian Doig. Doig, who publishes a digest on the oil industry, says corporate executives should be much more vocal about their interests than they have been in recent years.

"We're seeing an industry now really with no leadership in Western Canada, nobody seems to be speaking up for this industry and when they do, nobody wants to say anything of substance,'' said Doig. "It's really an industry predicated on soft love.''