Providing coverage of Alaska and northern Canada's oil and gas industry
July 2019

Vol. 24, No.29 Week of July 21, 2019

Trudeau’s version of logic

Canadian PM hails recruitment of anti-pipeline activist to contest Quebec seat

Gary Park

for Petroleum News

Canadian Prime Minister Justin Trudeau made a three-day stop in Alberta as part of his warm-up campaigning for an Oct. 26 election.

He started in Edmonton on July 11 with the promise of an announcement the next day on the Trans Mountain pipeline expansion, TMX.

That sent a quiver of hope through the oil patch. What did he have in mind? Word of a formal resumption of construction on TMX? The sale of a stake in the Trans Mountain system to a coalition of First Nations?

Not even close. All he wanted to do was personally tell Albertans that his government had reapproved TMX. In other words, what he had told the nation almost a month earlier on June 18.

For many Albertans that was nothing more than an insult, a sign that Trudeau holds out little hope for his governing Liberal Party can build on its Alberta toehold that included electing only four of 34 Liberal Members of Parliament in 2015.

In fact, Trudeau was apparently so unsure of himself that he held only a private reception in Calgary and avoided a likely hostile reception at the annual Calgary Stampede.

‘Star’ candidate recruited

But he did take the chance to crow about recruiting a “star” Liberal candidate in Montreal - an anti-pipeline activist Trudeau said will ensure his government (if re-elected) listens to the “voices of Canadians.”

In defending his move to open the Liberal doors to candidates who oppose a fixed policy on proceeding with TMX, a project that is owned outright by the Trudeau government, he argued that his administration “understands that Canadians have a broad range of views on a lot of different issues. That is why we have a great and diverse team that we are building.”

At the same time, he said the Trans Mountain system is vital to get Canadian crude resources to offshore markets, regardless of pipeline opposition.

“In order to get on that path we need to make sure we’re gathering together voices from all different perspectives across the country,” Trudeau said.

“The world has changed,” he said. “We’re not in a situation where a government can decide this is where we are laying down a railroad or a pipeline and it’s just going to happen. The processes we have to go through are more complicated now.”

While Albertans were left to grapple with Trudeau’s version of logic they are doggedly pushing ahead with their own efforts to rehire construction workers for TMX this summer.

Project Reconciliation offer

The biggest of those hopes is now tied to a formal offer by Project Reconciliation, representing a large slice of indigenous communities across British Columbia, Alberta and Saskatchewan, which has submitted to Trudeau’s office a formal bid to acquire 51% of the Trans Mountain pipeline system.

But Natural Resources Minister Amarjeet Sohi kept a tight lid on how the government will react to that proposal, saying it won’t jump at the first offer on the table.

He said Trans Mountain is an opportunity for the Trudeau administration to work with indigenous communities to ensure they “benefit from economic resource development.”

Delbert Wapass, executive chair of Project Reconciliation, said the “reconciliation pipeline” will deliver not just diluted bitumen from Alberta’s oil sands to the Pacific Coast, but deliver optimism and prosperity to First Nations.

“We’ve been so conditioned to administering poverty it’s time we started administering wealth,” he said.

Project Reconciliation said it would pay C$2.3 billion for a 51% share of the existing pipeline and fund 51% of TMX at a cost of C$4.6 billion, assuming Trudeau government will retain 49% to ensure the project moves forward.

New legal challenge

Not so enthusiastic is a group of British Columbia First Nations that has filed new legal challenges of the Canadian government’s latest round of consultations with indigenous communities that they insist were no better than the first and claim were tainted by the government’s desire to get TMX moving ahead.

“The federal government is in a conflict of interest as the owner, regulator and enforcer (of the project),” said Tsleil-Waututh Nation Chief Leah Gorge-Wilson, arguing the government’s decision to buy the existing Trans Mountain pipeline and the planned TMX for C$4.5 billion means it is “impossible for them to make an unbiased, open-minded decision.”

Perry Bellegarde, national chief of the Assembly of First Nations, said an indigenous stake in Trans Mountain won’t end a national debate about whether TMX should even proceed.

“Canadians are divided, provincial premiers are divided, (indigenous) chiefs are divided,” he said calling for “dialogue, discussions, debate and that the rights and titleholders (along the TMX right of way) determine the best next steps.”

Compounding the legal tangle, two British Columbia environmental groups have started a lawsuit in the Federal Court of Appeal, claiming the government failed to meet its obligations to protect endangered southern resident killer whales.

Costs rising

While litigation drags on, getting no closer to a resolution, Trans Mountain Corp., the federal government’s appointed agency for the pipeline system, said the year-long delay in construction has pushed the TMX costs above the most recent estimate of C$7.4 billion to boost capacity by 590,000 barrels per day to 890,000 bpd.

Ian Anderson, chief executive officer of the corporation, said oil could be flowing by mid-2022 if permits are granted quickly, but declined to provide the updated project budget, citing an uncertain work schedule and regulatory process.

However, he said Trans Mountain will soon apply to the National Energy Board for a license to resume work.

Regardless of the delays and squabbling, a new poll has reinforced broad Canadian support for reapproval of the TMX plans.

Conducted by Nanos, the poll showed 68% of Canadians either supported or somewhat supported the decision, while 27% were opposed, with support peaking at 84% in the three Prairie provinces to a clear 61% in British Columbia and 56% in Quebec, the two provinces where the governments are resolutely opposed to new oil pipelines.

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