Rachel Notley’s tough talk on pipelines evokes the Peter Lougheed Era of energy policy confrontation

Posted on May 17, 2017, 2:03 am
7 mins

PHOTOS: Alberta Premier Rachel Notley at yesterday’s news conference in Edmonton. (Photo: Chris Schwarz, Government of Alberta) Below: Earth scientist David Hughes (Post Carbon Institute photo), B.C. Premier Christy Clark (B.C. Government photo), and B.C. NDP Leader John Horgan.

Using language that, intentionally or not, evoked the Peter Lougheed Era of Tory energy policy confrontation with other jurisdictions, NDP Premier Rachel Notley yesterday warned British Columbia’s next government – whatever it turns out to be once the ballot recounting over the Rockies is finally done – not to dare trying to stop expansion of Kinder Morgan’s Trans Mountain Pipeline to B.C.’s southwest coast.

“I fundamentally disagree with the view that one province or even one region can hold hostage the economy of another province,” Premier Notley said bluntly at a news conference in Edmonton called to announce Alberta has been granted intervenor status in the 16 legal challenges next October to the expansion of the line, which is deeply unpopular in B.C.

Anyway, she told reporters, the Trans Mountain Pipeline has been approved in the national interest by the Liberal government of Prime Minister Justin Trudeau in Ottawa, and thus there is not much B.C. politicians can do to stop it.

In saying these things the forceful way she did, Premier Notley hit the tone most Albertans expect of their premier in a situation like this. Indeed, this seems to be one of those moments, quite rare of late, in which Alberta New Democrats and the province’s still-disunited conservatives are all singing from the same hymnbook.

But you could also argue that B.C. Premier Christy Clark, NDP Leader John Horgan and Green Party Leader Andrew Weaver – all of whose parties will have seats in the B.C. Legislature, whether Ms. Clark or Mr. Horgan gets to be the premier when the dust from last week’s election has finally settled – are also all trying to meet the expectations of B.C. voters, who seem to feel no province should have the right to hold hostage the environment of another, or the planet.

And there’s plenty the government of a jurisdiction through which a pipeline like Kinder Morgan’s must pass could do to slow a project in hopes the economic justification for the controversial expansion would cool the ardour of investors before much work was done.

As a general principle, of course, Ms. Notley is right. No federation – be it a dominion like ours or a republic like the one next door – can survive for long if the economic interests of one region overwhelm those of others.

She argues for the economic benefits of the pipeline thusly:

“New pipelines mean a brighter future for our oil and gas industry, with jobs and opportunities for tens of thousands of working families and billions of dollars in new investment. We believe that a strong economy and a clean environment go hand-in-hand. We’ll continue to show this by fighting for Alberta’s interests in court to get oil flowing to new markets and a better return for Albertans on every barrel.”

But the Sixty-Four Billion Dollar Question, as it were, is whether in current circumstances the Kinder Morgan pipeline expansion actually still makes sense, never mind the widespread Albertan belief in the economic benefits pipelines deliver. Because, despite the near universal faith in Alberta that getting our oilsands bitumen to “tidewater” will result in it fetching a higher price, the evidence for this belief is disputed.

For example, earth scientist David Hughes told the Canadian Centre for Policy Alternatives Corporate Mapping Project conference in Victoria last week that the vaunted tidewater and Asian market price premiums are largely mythical.

With overcapacity in refining facilities on the U.S. Gulf Coast, and the Keystone XL Pipeline approved by the Trump Administration, he argued, reduced transportation costs mean the price advantage for Alberta bitumen actually belongs to Texas.

“There is no ‘Asia premium’ as alleged by the Alberta and federal governments,” Mr. Hughes stated. “Exports to Asia could lose $2 to $4.80 US per barrel compared to U.S. exports based on transport tolls.”

Furthermore, he argued, “the tidewater price premium that existed in 2011 to 2015 has been eliminated due to the elimination of pipeline bottlenecks.”

So even without agreements to reduce carbon emissions to slow climate change, this undermines the economic justification for more pipelines. “With the existing emissions cap there’s enough pipeline capacity to meet any production scenario,” Mr. Hughes asserted. “Trans Mountain and Energy East are complete overkill. They’re not needed at all.”

Naturally, we can expect the Alberta and federal governments to argue differently, but the existence of such analyses will not make the political problem in British Columbia go away.

Also yesterday, Ms. Notley also assailed the idea, floated by an expert panel obviously sympathetic to the inclinations of the Ottawa mandarinate, that it makes sense to move the headquarters of the National Energy Board back to the nation’s capital.

“If someone were to propose that you move the Atlantic Opportunities Marketing Agency from Atlantic Canada to Winnipeg, people would say that’s dumb,” the premier said. “Let me just say, moving the NEB to Eastern Canada is dumb. We are absolutely opposed to that and it shouldn’t happen.”

8 Comments to: Rachel Notley’s tough talk on pipelines evokes the Peter Lougheed Era of energy policy confrontation

  1. Bob Raynard

    May 17th, 2017

    I think moving the Atlantic Opportunities Marketing Agency to Winnipeg would be a great idea. Prairie oysters need a marketing boost!

    Reply
  2. jerrymacgp

    May 17th, 2017

    She has little choice, really. No Alberta politician of whatever stripe could ever hope to even be elected school board trustee (since we don’t elect dog catchers) if they were not a vocal advocate of pipelines. The issue is Alberta’s answer to motherhood & apple pie, or a chicken in every pot. There are undoubtedly members of the provincial NDP that are uncomfortable with the Notley government’s stance on this, but they are clearly reserving their objections for private conversations instead of airing them publicly, lest they jeopardize any hope of a second term for the NDP government. Whether sending dilbit to Asia via left coast ports makes any economic or business sense, as opposed to upgrading and refining it into value-added products right here in Alberta, is beside the point: it makes political sense with Alberta voters.

    Reply
    • Sam Gunsch

      May 17th, 2017

      JerryMACGP nails it: Notley has no choice but do any and all advocacy for pipelines/tarsands. Never forget the Stelmach political hit the petro-industry did to him for daring to have an independent committee recommend higher royalty rates for Albertans, the owners. To send the message about who really runs AB, they funded Danielle Smith’s WRP breakout.

      David Hughes is not alone in pointing out the BS about price gains from pipelines…
      It’s a point made for some time now by other experts outside AB, like Ross Belot, a former industry exec.

      excerpt: ‘… Premier Notley just became the latest Canadian politician to play games with pipelines. She’s telling Albertans a pipeline to tidewater can cure what ails the industry. It won’t — it can’t — because the problem a pipeline to tidewater was intended to address doesn’t exist anymore.

      http://ipolitics.ca/2016/04/11/build-a-dozen-pipelines-alberta-it-wont-help/

      excerpt: Alberta’s problem is twofold: Its oilsands have been buried by fracked American oil that is both higher-value and cheaper to produce, while longer-term they face marginalization in a world committed to weaning itself off carbon.

      So another pipeline isn’t needed; oilsands production won’t be expanding much in the foreseeable future, if it all. Alberta needs to figure out how to make the most of the infrastructure it has in place. Money spent on a pipeline right now would be money wasted. But Notley can’t say that aloud — not while also delivering the bad news on her province’s finances and fighting back against the implications of the so-called Leap Manifesto.

      Reply
      • Val

        May 17th, 2017

        how bad and useless can be DIRECT access for our oil and gas, to Asia-Pacific region with 4.5b (of total 7b) potential consumers?

        Reply
    • Farmer B

      May 17th, 2017

      Actually Jerry one of Premier Notley’s selling points for her carbon tax and climate leadership plan was to create an environment that would get Alberta oil more pipelines. So the her re-election depends on it. As for refining more oil here I think that is a great idea but the unfortunate reality is that if the returns were there it would be already occurring therefore it must not be profitable enough.

      Reply
  3. Bloozguy

    May 17th, 2017

    I fundamentally disagree that one province or one country can hold the world hostage to it’s tarsands dreams and climate change denial.

    Reply
  4. David

    May 17th, 2017

    Perhaps there are both climate change deniers and legality deniers in this debate. The Federal, not the Provincial governments regulate pipelines and the waters off the coast, so BC cannot hold Alberta hostage. Now, whether the pipeline is a good idea is a separate issue, subject to much debate. Those people in the lower mainland of BC close to the pipeline have legitimate concerns, but I would say their interest is more local than national. Given that BC is fairly split on the issue, according to most polls on the issue, I gather there are many other people elsewhere in BC who are just fine with this pipeline.

    Of course ultimately, Alberta is landlocked and has to rely on pipelines across other jurisdictions to get its product to market. However, if Alberta were to block the movement of anything from BC that it had safety concerns about, BC might quickly better understand the problem the approach of some of its residents presents. However, threats and blockades (by either province) are no way to run a country and I think most saner minds already realize that.

    Reply
  5. political ranger

    May 18th, 2017

    Yes, you’re right David, Notley has hit on the most Albaturdan characteristics in her speech; belligerence, of the kind that would make Ralph and Steve West proud, and old, outdated and disproven talking points that nonetheless support the pre-determined conclusion.
    It’s interesting, in that it clearly shows the typically provincial lack of insight and analysis, to note that she chastises another jurisdiction for interfering in her fortunes but is completely unaware that the BC gov’t, the BC citizenry and the First Nations all have the same claim to self-determination.
    Albaturdans are entitled to believe in whatever crazy fantasies of wealth they want; they can even elect politicians to represent their crazy views. This does not oblige anyone to support them tho’.

    Reply

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