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Breaking an impasse Canada’s provincial, territorial leaders set aside feuds, agree on vague national energy strategy, get overshadowed by crude spill GARY PARK For Petroleum News
Canada’s 13 provincial and territorial leaders overcame a perennial struggle and a sharp-tongued spat between Alberta and Saskatchewan on July 17 when they signed off on the framework for a Canadian Energy Strategy, only to find themselves blindsided by one of the largest oil pipeline ruptures on record in Alberta.
And that came on the heels of a report by the Alberta Energy Regulator that the number of pipeline “incidents” in the province rose by 15 percent last year to 1.6 per 1,000 kilometers of line, undermining the government agency’s goal of reducing line breaks and spills.
In the public eye, especially among environmentalists and First Nations, there is no issue that stirs greater resentment than the prospect of a spill from any existing or proposed pipeline, even though newly elected Alberta Premier Rachel Notley is emphatic that pipelines are a safer transportation mode than rail.
Spill from new line Compounding the public worries, the spill of an estimated 31,500 barrels of water, oil and sand from the Nexen Long Lake oil sands project in northeastern Alberta involved a pipeline that is only a year old and was supposed to contain all of the latest monitoring and fail-safe technologies. For now, shipments of about 9,100 barrels per day of heavy crude have been shut down for an indefinite period.
The “root cause” of the spill has yet to be determined, said Ron Bailey, the senior vice president of Canadian operations at Nexen (now wholly owned by China National Offshore Oil Corp.).
He told reporters Nexen is “deeply concerned with this. This is a modern pipeline. We have pipeline integrity, some very good equipment. Our investigation is looking through exactly why that wasn’t alerting us earlier.”
Coincides with signing Whatever emerges from investigations by the AER and Nexen, the timing could scarcely have been more dismal, coinciding with the signing off on the Canadian Energy Strategy by Canada’s 10 provincial and three territorial premiers, who were faced with the difficult job of finding a balance between economic growth and environmental protection.
But the leaders refused to be diverted by the Nexen incident from their goal of establishing a foundation for their governments to work on energy priorities.
A communiqué pledged them to develop and transport energy and to promote research and technology to enhance the energy sector and encourage a transition to a lower carbon industry.
Questions on value of strategy However, some observers are less than enthused about the content of the CES agreement.
Above all, they point out that the development of oil, natural gas and coal is under the jurisdiction of provinces and territories that own the resources and that have the exclusive power to impose taxes and regulate development.
Once the activity crosses provincial boundaries it becomes a federal matter.
What that does is raise questions about the value of the CES deal, given that premiers and their governments have little or no power to interfere with the sovereignty of their peers.
Even so, for five years the governments have engaged in negotiating what they call a “flexible, living document” that allows them to “collaborate on common energy-related interests according to their unique strengths, challenges and priorities.”
What may sound like a new age of harmony among those who wish to develop their natural resources and those who want to leave them in the ground actually amounts to very little.
Gulf between premiers The gulf was evident in the brittle exchange between Notley and Saskatchewan Premier Brad Wall.
Wall noted that the draft CES agreement made 37 references to “low carbon, post carbon and climate change,” while oil was mentioned only three times.
He said it was vital to move domestic oil across Canada to maximize the value of the resource for Canada, to create more value-added opportunities and to replace foreign oil.
“We are importing foreign oil from Venezuela and sometimes from the Middle East and that makes no sense on any planet at any given time, in any dimension,” Wall said.
He was especially angered that Notley said in a recent statement that Quebec was right to want meaningful action on climate change before endorsing TransCanada’s planned Energy East pipeline from Western Canada to refineries and possible export terminals in Eastern and Atlantic Canada.
Wall said that amounted to handing veto powers to provinces that did not approve of Notley’s energy policies.
“That’s ridiculous,” Notley replied. “That’s simply ridiculous.”
She insisted her objective is to develop a “thoughtful and mature and collaborative relationship with my colleagues,” and accused Wall of “showboating.”
To that Wall’s office issued a statement quoting him as saying that “if standing up for your industry and your province is showboating, take me to the bridge.”
Ontario, Quebec concerns Ontario Premier Kathleen Wynne said she understood the economic benefits to her province and Canada of the oil and gas industry.
“At the same time, we have to recognize that we have a responsibility, an economic and moral responsibility, to deal with the effects of climate change.”
Quebec Premier Philippe Couillard argued it was “absolutely necessary in a Canadian Energy Strategy to find reference to climate change.”
In the end, several days of bickering were set aside, but the end result was an absence of concrete commitments, even to the extent of policy coordination on climate change, leaving the provinces to continue pursuing their different approaches and different targets for reducing greenhouse gas reductions.
The closest they came to something substantive was to agree on an action plan - one of 50 - to work together on developing an option “for an integrated pan-Canadian and North American approach to greenhouse gas reductions.”
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