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Alberta premier chases all options Ready to see pipeline resolution with BC, but not to share oil sands royalties, not prepared to wait; sales pitch to New Brunswick Gary Park For Petroleum News
Alberta Premier Alison Redford has expressed hope that she can patch up differences with her British Columbia counterpart Christy Clark, but not to the extent of supporting tolls on pipelines from the oil sands to the Pacific Coast.
British Columbia Environment Minister Terry Lake told reporters during an Alberta visit earlier in June that if Enbridge’s Northern Gateway was to proceed, his government might consider putting a toll on Alberta bitumen crossing British Columbia to increase its revenue share of the project.
“Certainly we would want to make sure there’s a toll that looks after environmental protection, to pay for the regulatory regime and have a spill response fund in place,” he said.
However, talk of a border tax on oil moving from Alberta to British Columbia could trigger threats of a retaliatory tax on natural gas moving eastward from British Columbia.
Redford, without indicating whether she is open to compromise with British Columbia, has never shifted from her hard-line stance that sharing Alberta’s oil sands royalties is “just a non-starter.”
Redford: ‘good discussions’ Redford said she and Clark have had “some very good discussions with respect to Gateway” since the British Columbia election May 14, is certain she can deal in a straight-up manner with Clark and anticipates meeting later in June to discuss energy issues.
She is also anxious to ensure that the oil and gas industry can have “confidence in a long-term regulatory framework where politics won’t be played. Otherwise that just shakes investor confidence.”
Until then, any talk of tolls is “very speculative. I think that at this point getting into specific proposals or counter proposals is not where we need to be.”
Even so, she understands Clark’s desire to build economic development across British Columbia.
“It is fundamental for B.C. and Alberta to work together to ensure that we continue to be the economic engine of Canada,” she said.
Redford also noted that Enbridge and the British Columbia government plan to hold their own negotiations.
Enbridge remains confident After many weeks of saying nothing publicly during the B.C. election campaign and a heated public debate over Northern Gateway, Enbridge Chief Executive Officer Al Monaco told reporters after a National Energy Board pipeline safety forum that he remains “confident (Northern Gateway) will go, but I’m not taking it for granted. We have a lot of work to do.”
He gave priority to meeting with the British Columbia government and resolving its doubts over the pipeline because of unanswered environmental questions.
“I think the British Columbia position is pretty much what they’ve stated, which is they want to see more information,” Monaco said.
He said Enbridge shares the concerns of the Clark government around certain issues.
“We’re hopeful that eventually we’ll be able to sit down with them” and provide more information on safety plans by the time regulators hear final arguments later in June, Monaco said, adding that a lot of issues can’t be resolved until “detailed design” work starts.
Redford has also made it clear she is not counting exclusively on an agreement with the British Columbia government that would open the door to Northern Gateway and Kinder Morgan’s Trans Mountain expansion — combined projects to provide access to tidewater for an additional 1.1 million barrels per day of oil sands crude.
Talking to New Brunswick With uncertainty hanging over pipelines from Alberta to the British Columbia coast and the U.S. Gulf Coast, Redford travelled to New Brunswick on June 7 to tour the 300,000 bpd Irving Oil refinery in Saint John and speak to the provincial legislature about the merits of TransCanada’s Energy East project which could see Canadian crude shipped to the Irving facility.
To a standing ovation from the New Brunswick legislature, Redford said there is no reason why Canada cannot handle both economic and environmental issues and build pipelines that benefit all Canadians.
“It’s not an either/or conversation,” she said. “We’ve always done a very good job in Canada of being able to balance (environmental and economic) interests and I think we can continue to do that.”
New Brunswick Premier David Alward said the TransCanada proposal to move 500,000-850,000 bpd from Western Canada to Eastern and Atlantic Canada is gaining support from other premiers because it “makes economic sense for Canada. Where there are pipelines there are opportunities for growth and prosperity.”
Redford said the energy industry is “fully on-side” with a west-to-east pipeline and Canadian Prime Minister Stephen Harper met with the industry in Calgary two months ago to enlist support for the proposal.
Questions on path to peace Not everyone is certain that Alberta and British Columbia will find an easy path to peace.
Robert Johnston, director of global energy for the Eurasia Group, said in a research note that Clark’s determination to get “value-added investment and job creation on the back of oil sands pipelines” sets the stage for tough negotiations.
He said Alberta’s refinery industry and trade unions want spending on upgraders and refineries to occur in the Edmonton area, “a prospect that would do little to appease Clark.”
But Johnston doubts that the 500,000 bpd refinery proposed for Kitimat by newspaper publisher David Black would provide the answer if it has to compete for construction and materials with LNG projects.
He suggested the current Kitimat plan is “likely too large as its output would exceed the needs of local markets to compete in Asia-Pacific export markets, where complex refineries in China and India are already out-competing incumbents in markets like Japan and Australia.”
Johnston also said that a British Columbia refinery would likely need backing from the British Columbia, Alberta and Canadian governments, along with an Asian investor.
He said that could involve the use of government pension funds, although those funds are “independent and would have to have a clear investment motive in any given project,” while Chinese financial support would be challenged by China’s state-owned domestic refining and upgrading plants “where they can manage costs more effectively.”
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