Divisions deepen as fight over energy spoils takes nasty turn
As premiers gather in Halifax this week, the divide between Alberta, British Columbia and Saskatchewan over the spoils of energy development is growing. B.C. is demanding its fair share of benefits from oil pipelines cutting through the province and Saskatchewan has got to be nervous that Alberta’s oil sands production is going full tilt, pushing down prices for its conventional crude because there’s not enough pipeline space to move both.
All this makes talk of a national energy strategy, championed by Alberta and expected to be one of the main topics of discussion at the Council of the Federation meeting, naïve at best, explosive at worst.
Given Canada’s bad experiences with central planning in energy, Alberta’s Premier, Alison Redford, and the strategy’s diverse cheerleaders, should have seen it coming.
The rift between Alberta and British Columbia over the proposed Northern Gateway pipeline cracked wide open this week and a quick fix is unlikely. In fact, it could be all downhill from here if the anti-Northern Gateway NDP gains power in the coming provincial election, as polls suggest.
“There is no way this pipeline is going to happen without B.C.’s approval,” Premier Christy Clark told CBC Radio from Halifax Tuesday. “So, Alberta needs to sharpen their pencils … and have a discussion about this if this pipeline is something they want to see go ahead. I am not going to step back and stop fighting for B.C.’s interests in this.”
Reflecting the views of British Columbians, Ms. Clark has demanded a bigger share of the benefits from the $6-billion project to compensate for the risk it faces if there is environmental damage. It’s a fair ask. Gaining access to the ocean means more customers and higher world prices for Alberta oil.
With her political future on the line, Ms. Clark said she’s doing what Alberta’s premier is doing: fighting for “every penny” she can get.
“I am fighting for B.C. jobs, I am fighting for revenue for our province, but I also have the added responsibility of fighting for our environment, because we are taking 100% of the risk on the marine side and the bulk of the risk on the land side.”
Alberta shot back aggressively. Premier Redford expressed disappointment with Ms. Clark’s comments, after saying B.C. would “fundamentally change confederation” by demanding increased compensation.
“That means every single time that you have an economic project or a commercial project there has to be a new negotiation of the balance sheet,” she said. “It’s not how Canada has worked, it’s not how Canada has succeeded and I’m disappointed to hear the comments.”
Meanwhile, Saskatchewan Premier Brad Wall said he doesn’t agree with revenue sharing with B.C.
He told CBC Radio that cutting B.C. a share of the royalties would set a “troubling precedent,” especially for landlocked provinces that have no ports to get their exports to foreign markets.
“This is the thin edge of a very big wedge,” Mr. Wall said.
“You can’t just say look we only want to do this in the case of bitumen. What about the rail transport of other minerals? Or perhaps … potentially dangerous chemicals that are manufactured in other parts of Canada and shipped across?”
Mr. Wall has his own issues with Alberta’s oil sands ambitions.
With pipeline space to the United States expected to be short for the next two to three years, aggressive oil sands growth is depressing prices for all Canadian crudes, cutting into his government’s revenue and industry’s ability to grow tight oil, of which Saskatchewan has lots.
As one oil industry executive put it: “Brad [Wall] is the guy getting screwed here.”
National energy strategy? It feels like the idea alone, because it is so Alberta-centric, is creating divisions rather than unity.
Growth of all types of energy has occurred in spades in Canada in response to market signals and that’s the way it needs to continue. But growth comes with more risk, more impacts on communities, more debate and more vested interests. All will have to be accommodated or growth won’t go ahead. That’s what happens in a democracy that, coincidentally, is attracting a pile of foreign energy cash because of the way it is.
Northern Gateway pipeline debate spurs deeper divisions as fight over energy spoils takes nasty turn | Energy | News | Financial Post