Alberta going for jugular

Unhappy with past passive approaches, Kenney accelerates response to attacks

Gary Park

for Petroleum News

Tired of taking a repeated beating in the court of public opinion from those it accuses of spreading “lies and defamation” about its petroleum industry, the Alberta government is girding for battle, setting up a “war room” with a budget of C$30 million.

The Calgary-based office, consisting of senior government officials and drawing on outside experts, will be launched within months.

“The goal of the war room will be to tell the truth about how the world needs more Canadian energy,” said Premier Jason Kenney.

“We will no longer accept the campaign of lies and defamation,” he declared pointing to the most recent article in National Geographic, which has targeted the oil sands as an enemy of the global environment.

The office will “have a mandate to operate much more nimbly and much more quickly, with a higher risk tolerance than is normally the case with government communications,” said Kenney.

Tim McMillan, president of the Canadian Association of Petroleum Producers, did not disagree with Kenney’s assertion that the industry has not done enough to defend itself more vigorously.

“We aren’t building (oil) pipelines and we have LNG opportunities off our (Atlantic and Pacific) coasts that have been sitting idle for close to a decade,” McMillan said, noting that a “very organized campaign” has been mounted in the United States, Europe and elsewhere “to limit investment” in Canada’s energy sector.

Long list of issues

Two more pipeline projects - Enbridge’s Line 3 and Line 5 - have been dealt damaging blows in June, while the Canadian Parliament is on the verge of passing Bill C-48, which would impose a moratorium on oil tankers operating off the northern coast of British Columbia, and Bill C-69, to overhaul the regulatory process for major resource ventures.

The Minnesota Court of Appeals ruled that the Minnesota Public Utilities Commission acted in a manner that was unsupported by “substantial evidence” last year when it approved Line 3, which is designed to replacing an aging transportation link to Superior, Wisconsin, and double capacity to 760,000 barrels per day of oil sands bitumen in the second half of 2020.

Line 3 was seen as the best bet to increase access to U.S. markets for oil sands production ahead of Keystone XL, operated by TC Energy (formerly TransCanada), and the Trans Mountain expansion by its owner, the Canadian government.

It is the biggest undertaking by Enbridge since it started shipping crude to the U.S. in 1953, with a budget of C$5.3 billion for the Canadian portion and US$2.9 billion for the U.S. section.

Line 5 issues

On June 5, Enbridge got a warning from the state of Michigan to fix a date for shutting down its old line within two years, or face legal action, even though Enbridge has set a 2024 target date for installing a new, underground line.

Enbridge immediately said it would take legal action against Michigan, infuriating Gov. Gretchen Whitmer, who said it is now “abundantly clear that Enbridge ... is only interested in protecting its bottom line,” issuing a reminder that Enbridge’s Line 6B ruptured in 2010, spilling diluted bitumen into a tributary of the Kalamazoo River.

As a follow up to what was one of the largest inland oil spills in U.S. history, Enbridge reached an agreement with the previous state government to build a C$500 million tunnel to house a replacement section of Line 5.

Guy Jarvis, Enbridge’s executive vice-president for liquids and pipelines, said the timeline set by Whitmer is one his company “cannot possibly” comply with.

Enbridge is now asking the Michigan Court of Claims to affirm that its previous agreement is valid and enforceable.

What the two Enbridge pipeline issues demonstrate is the full agenda facing Kenney’s “war room,” even though neither falls within the clear mandate of that office. But they will be a chance for the Alberta undertaking to show its teeth.