Just as the proposed Trans Mountain pipeline expansion seemed to be within striking distance of winning a regulatory permit, the British Columbia government formally requested its rejection Monday in a submission to the National Energy Board (NEB).
The takeaway: Alberta’s – and Canada’s – oil market diversification strategy is unraveling.
The other takeaway: The climate change policy implemented by Alberta’s NDP government to secure pipeline approvals, with much encouragement from Justin Trudeau’s federal Liberal government, is looking more and more like a lot of pain for zero gain.
Of the four major export pipeline projects proposed to open new markets for Canadian oil production, the TMX expansion should have been the easiest to pull off because it twins a pipeline that has been safely transporting oil from Alberta to the B.C. coast for 60 years.
But in its final argument to the NEB, which is in the last days of a two-year review, B.C. threw the book at the project, claiming: “the company has not provided enough information around its proposed spill prevention and response for the province to determine if it would use a world leading spills regime.”
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This after a review that, according to TMX proponent Kinder Morgan, was one of the most comprehensive in the board’s history and involved the filing of a 16,000-page application, answering 17,000 questions, participation of more than 400 intervenors and of 1,250 commenters, not to mention more than $300 million in costs.
Mary Polak, B.C.’s environment minister, didn’t seem to be too concerned Monday that the hard line would scare away investment.
“Companies around the world … know and have known for a long time that British Columbia has very high environmental standards,” she said to reporters.
“These five conditions we have had in place since 2012 reflect that. They are no surprise. Kinder Morgan has made it clear that they are supportive of the five conditions and that they wish to meet them. We have not seen evidence of that in the NEB hearing, but the fact is that we don’t … trade the idea of jobs and the environment.”
With U.S. West Texas Intermediate (WTI) crude futures falling US$1.75 to settle at US$31.41 a barrel, the lowest since December 2003, and Canada bleeding energy jobs and investment, it’s an overconfident view for a province that hasn’t yet secured a single liquefied natural gas project, also required to meet B.C.’s world leading environmental standards, despite more than 20 proposed in the past five years.
The $6.8 billion Trans Mountain project involves twinning its existing 1,150-kilometre pipeline from the Alberta oilsands to its terminal in Burnaby to increase pipeline capacity to 890,000 barrels a day from 300,000. The NEB is expected to recommend in May whether the project is in the national interest, and the federal cabinet is due to rule this summer.
B.C.’s five conditions for heavy oil pipelines, announced in 2012, are: that they successfully complete the NEB process; that they have “world-leading” marine oil spill response, prevention and recovery; that they have “world-leading” practices for land oil spill prevention, response and recovery systems; that they meet legal requirements on Aboriginal and treaty rights; that B.C. receives its “fair share” of the fiscal and economic benefits.
Polak said the conditions don’t close the door on pipelines through B.C., but at this time TMX hasn’t met them.
Still, they raise questions about whether they are actually attainable, or why Canada has a federal process to approve cross-border pipelines when B.C. effectively claims it has final say.
B.C. pulled the same stunt on Northern Gateway, using the same argument to oppose the project at the NEB. Its stand energized environmental and aboriginal opponents. Eager to win votes, the federal Liberal government formalized a tanker ban in November and Northern Gateway is now adrift.
Similarly, it’s unlikely Ottawa will take the political heat for the TMX expansion if B.C. isn’t willing to support it. Polak said Ottawa supports B.C.’s conditions.
In a statement, Trans Mountain said it has been working closely with the B.C. government and that it’s confident it will be able to satisfy the conditions once the regulatory process is complete.
But it adds: “The conditions related to world-leading marine oil spill response, recovery and prevention, addressing Aboriginal treaty rights and B.C. receiving its ‘fair share’ are all conditions that require multiple parties to come to the table and work together.”
Since B.C.’s conditions were announced, there have been multiple meetings between B.C. and Alberta to discuss benefit sharing, a new national energy strategy that promised lots of inter-provincial cooperation, initiatives by the previous Conservative government to improve oil spill prevention and response as well as initiatives to resolve aboriginal concerns and increase their benefits, yet B.C.’s palm remains wide open.