The British Columbia government has been widely reported as delivering an emphatic, unyielding “No” to Enbridge’s Northern Gateway project.
But the question is what that “No” really means.
Enbridge, the Canadian government and the Alberta government aren’t ready to accept British Columbia’s stance as its final word.
Even British Columbia has indicated it’s partly bluffing.
Environment Minister Terry Lake indicated to reporters that his government’s final submission to regulators, coming after British Columbia adopted a mostly neutral stance through 18 months of public hearings, leaves the door open to solutions.
“Until the National Energy Board is able to ... deliver a final verdict, we don’t want to conclude that this is absolutely a ‘No’,” he said.
In almost the same breath, he said “We are not satisfied, at this point in time, that the project makes sense. But from what we’ve seen to date, it doesn’t meet our test.”
‘High bar’ for project
Lake said his government has not sounded the death knell for Northern Gateway, but it has set a “high bar” for Enbridge to clear.
That “test” includes five conditions British Columbia says must be met to gain its support for the C$6 billion plan to export 525,000 barrels per day of crude bitumen from the oil sands to Asia and California and import 193,000 bpd of condensate.
The province made its submission on the last days of hearings to a Joint Review Panel, JRP, of the National Energy Board and the Canadian Environmental Assessment Agency that is expected to issue its recommendation to the Canadian government in December.
And the federal government wields the most clout in deciding whether energy projects that cross inter-provincial borders and involve export permits meet the national interest and what environmental conditions it should attach.
Those rulings are beyond British Columbia’s control, unless it chooses to start a legal fight.
However, the province could run serious interference on Northern Gateway by delaying indefinitely, or imposing uneconomic orders on matters such as waterway crossings for the pipelines, or the construction of a tanker port at Kitimat.
Canada’s response delayed
Canada’s Natural Resources Minister Joe Oliver said his government will delay its response until the JRP issues recommendations based on an “independent, comprehensive, science-based evaluation” of Northern Gateway.
“We have been clear: resource development will not proceed unless it is safe for Canadians and safe for the environment. That is why, for our part, we are moving forward with our plans to further enhance marine and pipeline safety and to engage with First Nations on West Coast energy infrastructure,” he said.
Oliver also emphasized that diversifying Canada’s energy export markets remains a “critical priority” for the government.
British Columbia’s conditions for Northern Gateway and any subsequent application by Kinder Morgan to triple capacity to 890,000 bpd on its Trans Mountain system requires “successful” completion of the environmental review, “world-leading” marine and land spill response systems, consultation and accommodation of First Nations’ interests and a “fair share” of the economic benefits for British Columbia from Northern Gateway.
British Columbia Premier Christy Clark, while insisting those conditions are not open to bargaining, has also opened the door since her resounding election victory on May 14 to holding talks with Alberta Premier Alison Redford and Saskatchewan Premier Brad Wall.
Oil spill issues
The strongest aspect of the province’s submission was its claim that Enbridge has failed to adequately explain how it would prevent or deal with a major oil spill on land or in coastal waters.
Lake said 199 draft potential conditions issued by the NEB in April are “simply insufficient” to deal with any spills.
He said more research needs to be done to answer British Columbia’s concerns over whether the heavy crude would float or sink in coastal waters “because obviously that makes a difference in terms of any potential spill and how it would be dealt with.”
Lake said British Columbia’s questions about the project “route, spill response capacity and financial structure to handle any incidents ... were not satisfactorily answered” during the hearings.
He said the JRP must “determine if it is appropriate to grant a certificate for the project as currently proposed on the basis of a promise (by Enbridge) to do more study and planning after the certificate is granted.”
“We do not believe that a certificate should be granted before these important questions are answered,” Lake said.
Alberta Environment Minister Diana McQueen said Alberta and British Columbia share a commitment to economic growth, job creation and environmental protection.
She expressed a hope that the two provinces can now work together on the issues, suggesting that more environmental assurances from Enbridge could help bridge the existing gap.
Going ‘above and beyond’
Lake said British Columbia’s questions about the project “route, spill response capacity and financial structure to handle any incidents ... were not satisfactorily answered” during the hearings.
He said the JRP must “determine if it is appropriate to grant a certificate for the project as currently proposed on the basis of a promise (by Enbridge) to do more study and planning after the certificate is granted.
“We not believe that a certificate should be granted before these important questions are answered,” Lake said.
The NEB and Canadian government make the final approval decision on Northern Gateway application because the pipeline crosses a provincial border and requires an export permit.
Northern Gateway President John Carruthers told the JRP hearing on May 30 that Enbridge is prepared to go “above and beyond” what conditions regulators might attach to the project.
Carruthers said Enbridge is “fully aligned” with the “legitimate” environmental concerns raised by British Columbians and conditions the province’s re-elected Liberal government has made conditional to winning its support.
He said Enbridge is open to further discussion and negotiations on benefits for British Columbia and believes “there needs to be a very good dialogue between the various governments.”
No veto power
Michal Moore, an economics professor at the University of Calgary and former energy regulator, said that although British Columbia does not have veto power over a federally regulated project, its opinions will carry much weight in the JRP’s deliberations.
Moore said that given British Columbia’s lack of direct control over the project, its submission is “meant to be a place marker. ... It’s the moral equivalent of throwing down a gauntlet.”
Colin Kinsley, chairman of the Northern Gateway Alliance, a coalition of project supporters, said he was extremely disappointed with British Columbia’s position and questioned the timing of the announcement.
“I can’t imagine anybody saying that when the most rigorous, open review process of an industrial project in this country has been going on for over three years, and is in its concluding stages,” he said.
