The kid gloves are coming off in the heavyweight pipeline showdown between Alberta and British Columbia, with Alberta Premier Rachel Notley resorting to bare knuckles.
In opening a new session of the Alberta legislature, her government warned it might shut off shipments of gasoline (44,000 barrels per day), diesel (47,000 bpd) and marketable natural gas (2.4 billion cubic feet per day) into B.C.
Under pressure to disclose what steps it would take if B.C. prolongs its “illegal” obstruction of a C$7.4 billion expansion of Kinder Morgan’s Trans Mountain bitumen pipeline to 890,000 bpd from 300,000 bpd, Notley reminded B.C. that in 1980 Alberta passed legislation to restrict the volumes of oil and natural gas leaving the province.
In a speech to open the legislative session, Alberta Lt. Gov. Lois Mitchell said “we affirm that we will do whatever it takes. (In 1980) when workers in our energy industry were attacked and when the resources we own were threatened (then Premier Peter Lougheed) took bold action.”
That amounted to a 15 percent reduction of oil flows to Eastern Canadian refineries to force the Canadian government (of Prime Minister Pierre Trudeau, the father of current national leader Justin Trudeau) to retreat from its National Energy Program, which cost thousands of jobs and caused a pull-out from Canada by major U.S.-based companies.
“Every option is on the table,” said Mitchell. “We will not hesitate to invoke legislation similar to that of the 1980s if it becomes necessary owing to extreme and illegal action on the part of the B.C. government to stop the Trans Mountain pipeline.”
Notley told reporters that her government’s “focus is on getting people’s attention. We’re not interested in creating a crisis in any way.”
Loss could boost price
Petroleum analyst Dan McTeague said a loss of petroleum products could immediately raise the price of gasoline to C$2 a liter (the equivalent of C$7.56 for a gallon of fuel in the U.S.).
He said there is no other regional fuel market that could make up the shortfall in B.C.
B.C. Environment Minister George Heyman, the spear carrier for his government in the Trans Mountain fight, expressed some skepticism that Notley would deliver on her threat and suggested Alberta should look for a legal remedy instead.
“I see no reason to believe Alberta would take unfair or unlawful action against British Columbia,” just because B.C. is “proposing some regulations that are well within our jurisdiction,” he told reporters.
“We’re determined to defend our environment, our economy and our coastline,” he said. “B.C. has tried to be adults in the room and we would expect to settle that dispute ... in the courts, where it belongs.”
More standards proposed
Meanwhile, B.C. Premier John Horgan has introduced another set of proposals that raise the standards on pipeline companies to prevent oil spills.
By April 30, those operators must submit plans for spill management and then spend three years testing various spill simulations - far beyond the economic timeline Kinder Morgan has said it must meet to complete the expansion of Trans Mountain.
“The provincial government has a responsibility to ensure there is a regulatory framework in place that protects its coastal resources,” the Horgan plan said.
That raises a little-discussed issue about who actually owns the ocean along the B.C. coastline, with most observers under the impression that those waters are federally controlled.
But that belief was challenged in a 1984 Supreme Court of Canada ruling that the B.C. mainland and Vancouver Island embraced the seabeds of the Strait of Georgia, Juan de Fuca, Johnstone and Queen Charlotte under legal documents involving the 1886 amalgamation of the Colonies of Vancouver Island and British Columbia with the rest of Canada.
Legal experts say it’s an obvious argument that if B.C. owns the seabed land it should also have authority over the use of that water, which is the question B.C. has placed before the courts.
Federal diplomacy
Otherwise, the Canadian government is engaged in attempted diplomacy to keep the peace, involving cabinet ministers and federal officials in negotiating with both Alberta and B.C.
While keeping tight-lipped about progress, Finance Minister Bill Morneau hinted at the mounting frustration when he told B.C. business leaders on March 6 that the dispute is “one of those things that happen in a democracy. But we have to deal with it.”
He said the Trudeau administration has “said clearly that we believe the Kinder Morgan pipeline makes sense in order to reach the objective (of fetching world market prices for Canadian crude).”
Morneau also said a planned overhaul of the federal environmental review process for major resource projects is aimed at achieving better decisions and reducing the fall-out from approvals.
He said that starts with both sides acknowledging there will be interveners and if opponents feel they are more likely to have their voices heard industry proponents stand a better chance of gaining certainty out of the regulatory process.
“It doesn’t make sense to continue on the path that we’ve been (following) for the last decade, which wasn’t actually getting us to project certainty,” Morneau said.
Political opposition
But not every political leader is interested in accommodating opponents, least of all Jason Kenney, leader of Alberta’s United Conservative Party, who is strongly placed in the polls to topple Notley in the 2019 provincial election.
Kenney said that if he becomes Alberta’s next premier there will be “serious consequences” for B.C. if it blocks the Trans Mountain expansion, including a ban on Alberta crude shipments to B.C. and a toll on B.C. natural gas shipments through Alberta.
“If B.C. is unwilling to help us export Canadian energy, then I would ask: ‘Why should the (Horgan government) benefit from resource shipments from Alberta?’” he told reporters in Vancouver on March 5.
By way of further stirring the brew, Kenney suggested that Russia might be helping finance the Trans Mountain opposition to prevent any other foreign oil from competing for buyers in Asian markets.
