Canada’s Prime Minister Justin Trudeau and Alberta Premier Rachel Notley formed an alliance Nov. 29 to achieve what many view as irreconcilable objectives - striking a balance between expanding markets for crude from the Alberta oil sands and curbing greenhouse gas emissions.
The Trudeau government led the way by approving two major pipeline projects - tripling capacity on Kinder Morgan’s Trans Mountain pipeline and doubling volumes on Enbridge’s Line 3 to Wisconsin, while rejecting Enbridge’s proposed Northern Gateway pipeline.
Notley, in return for the pipeline approvals, said her government would phase in a levy on carbon emissions in line with a federal plan to tax emissions by C$50 per metric ton over the next six years.
She saluted Trudeau for “showing some extraordinary leadership” in helping Alberta rebuild itself after the oil price collapse and destructive fire in the oil sands region this year.
British Columbia Premier Christy Clark told reporters Nov. 30 that the Trudeau government has made progress towards the five conditions her government set for a pipeline to cross the province to the Pacific Coast.
From the outset, those conditions have “been a path to ‘yes’,” and include proof of a world-class oil spill response plan, a share of revenues for British Columbia and benefits-and-access agreements with First Nation, she said.
Trudeau said Trans Mountain could not have been approved without the “leadership” of Notley and her government’s plan to raise the price on carbon while capping oil sands emissions at 100 million metric tons a year.
Protests
Even before Trudeau finished his announcement, social media was alive with talk that years of skirmishing over pipelines out of Alberta’s oil sands have given way to an all-out brawl.
Hundreds of anti-oil protesters from environmental and First Nations groups took to the streets in downtown Vancouver, which is Ground Zero of the Trans Mountain opposition.
They accused Trudeau of betraying his election promise last year to force Kinder Morgan to rewrite its Trans Mountain plan and promised a wave of court action, with some echoing federal Green Party Leader Elizabeth May who said she was ready to face a prison term to block work on the pipeline.
Increased volumes
Nominally, the federal green lights opens the way for Trans Mountain to triple its capacity to 890,000 barrels per day of crude bitumen for export to Asia, while Enbridge will restore Line 3’s volume to its original target of 760,000 bpd and open the way for another 155,000 bpd, creating combined incremental output from the oil sands of about 1 million bpd.
Northern Gateway would have added another 525,000 bpd of bitumen exports across the Pacific.
Asked by reporters if he was not concerned that legal action and civil disobedience could delay the work on Trans Mountain beyond its economic thresh-hold, Trudeau conceded he was under no illusion that the C$6.8 billion venture will be “bitterly disputed.”
But he was adamant that so long as Kinder Morgan met the 157 environmental and safety conditions imposed by the Canadian government “this project will get built.”
Permits will be sought
Kinder Morgan Canada President Ian Anderson described the approval as a “defining moment for our project and Canada’s energy industry” after years of presenting the “very best scientific, technical and economic information,” including estimates that the expansion would generate C$46.7 billion in taxes and royalties for governments and allow oil sands producers to capture an additional C$73.5 billion in revenues.
He said Trans Mountain will now seek all of the necessary permits, hoping to start construction in September 2017, with an in-service date expected by late 2019.
Enbridge said only that it welcomes the decision on Line 3, while making no comment on Northern Gateway. The company, having already secured National Energy Board clearance for the Canadian section of Line 3, must now make its case for running the pipeline through northern states to Superior, Wisconsin, where it will feed crude into pipelines bounds for U.S. refineries.
Crude oil tanker issue
Rona Ambrose, interim leader of the federal Conservative Party and a defender of the jobs that would have been created by all three pipelines, plus TransCanada’s proposed 1.1 million bpd Energy East application now before the NEB, argued Trans Mountain has “very little chance of being built.”
She said Trudeau should have left Northern Gateway “on the table,” allowing the proponent to continue negotiations with First Nations.
However, because Trudeau had also promised to introduce legislation in spring 2017 to ban all crude oil tankers in the waters off northern British Columbia, Ambrose said Northern Gateway had been “killed” along with benefits and access agreements with many First Nations and 4,000 jobs.
Instead of “picking and choosing” among the Canadian pipelines, she said Trudeau should have asked U.S. president-elect Donald Trump how long it would take his incoming administration to approve TransCanada’s Keystone XL proposal to deliver 830,000 bpd to U.S. refineries without becoming entangled in Canadian domestic disputes.
Ambrose said Trudeau’s approvals of Trans Mountain and Line 3 are “only the first steps in a long, long process” that could diminish the chances of the projects ever proceeding.
