Oilpatch wary of provincial powers
Long-term concerns raised about bill targeting B.C. in Trans Mountain fight
In the wrong hands, Alberta’s new law to cut off oil shipments to British Columbia could be “very dangerous” even if the powers help in the fight over the Trans Mountain pipeline expansion in the short term, Canadian oil and gas executives said Thursday.
While Alberta’s Bill 12, called Preserving Canada’s Economic Prosperity Act, is aimed at the B.C. government for obstructing the construction of Kinder Morgan Canada Ltd.’s $7.4-billion Trans Mountain pipeline expansion, fears are growing in the oilpatch over the sweeping powers contained within the law.
“It has a lot of power to it. In the wrong hands, that could be a very dangerous piece of legislation,” Canadian Energy Pipelines Association CEO Chris Bloomer said of the Alberta government’s new law that would allow it to cut off oil, natural gas and refined fuel shipments to B.C. and elsewhere.
“All of these interventions could create unintended consequences down the road,” Bloomer told a Senate of Canada meeting in Ottawa to study challenges to domestic exporters of oil and gas.
Bloomer’s group represents Canadian pipeline operators, including Kinder Morgan Canada, which announced Wednesday that Alberta’s and the federal government’s efforts to provide financial assurance for the project solved only half of the problem currently facing the Trans Mountain project.
“Most of the project and most of the investment is in British Columbia,” Kinder Morgan Inc. CEO Steve Kean said on an earnings call Wednesday, adding the financial assurances did not solve the operational problems of building the project in a hostile jurisdiction.
Prime Minister Justin Trudeau has said legislation is coming to provide a clear path forward for Kinder Morgan, and Alberta Premier Rachel Notley has introduced Bill 12 to ramp up pressure on B.C.
Alberta’s new law would require companies to obtain a licence from the province’s energy minister to send crude oil, natural gas or refined products like gasoline out of the province on any form of transportation.
Alberta escalated its threats to use the law on Wednesday after B.C. lawmakers said they would file a legal case to test its powers to block the pipeline by the end of the month.
“This is just continued game playing by the B.C. government and it’s these kinds of roadblocks that make us more determined than ever. That’s why we’ve introduced Bill 12 and we’ll be passing it into law to use it,” Alberta Energy Minister Marg McCuaig-Boyd said.
She did not immediately respond Thursday to a request for comment on the energy industry ’s long-term concerns about the bill, but had previously said she hoped she would never need to use the powers contained in the law.
Canadian Association of Petroleum Producers president and CEO Tim McMillan, who also attended the Senate meeting, echoed Bloomer’s concerns over Alberta’s Bill 12.
“We support the Alberta government’s efforts to raise the pressure here,” McMillan said, however, he cautioned that “when the premier introduced (Bill 12), she said she hopes that we never have to execute on this. We would share that hope.”
Canada’s largest integrated energy producer Suncor Energy Inc., which has committed to shipping its oilsands barrels on the expanded Trans Mountain pipeline, is also concerned that Alberta’s law to throttle back oil shipments to B.C. could affect its customers.
“We also appreciate the support that this legislation indicates but we have many, many customers in British Columbia, so we hope the legislation would never be called upon,” Suncor vice-president, investor relations Steve Douglas said.
Bloomer, McMilland and Douglas were in Ottawa on Thursday to discuss problems facing Canadian energy exports, including the Trans Mountain pipeline fight, the escalating trade war and why Trans-Canada Corp.’s Energy East pipeline was cancelled.
“We are where we are in many respects because the government has not been able to articulate a vision for our energy resources. They’ve been able to articulate a vision for climate change, for Indigenous reconciliation and so on,” he said, adding that a similar vision was needed for oil and gas products.
“We have to go back to basic principles and have that conversation. We’re shooting in the dark because we don’t know what the target is,” he said.
Sen. Ghislain Maltais responded that the energy industry has not done itself any favours by failing to communicate its value to the population, and this has led to opposition to pipelines in both B.C. and Quebec.
“You said the government doesn’t have a strategy — you need to have a strategy. Leave your offices and go across Canada and you’ll see you have long-term capital,” Maltais said.
“In Quebec, 50 per cent of the population supports you. I hope you don’t make the mistake as what took place with Energy East. Go out and meet Quebeckers (and other Canadians) and explain to them what you want to do,” he said.