NEW LAW COULD RE­STRICT FUEL TO B.C.

Al­berta’s Bill 12 lat­est salvo in pipe­line bat­tle

Regina Leader-Post - - NP - Ge­of­frey Mor­Gan in Cal­gary

Al­berta has granted sweep­ing new pow­ers to its en­ergy min­is­ter, in­clud­ing the abil­ity to cut off all ex­ports of oil, nat­u­ral gas and re­fined fu­els, as the prov­ince es­ca­lates its trade war with Bri­tish Columbia.

In­tro­duced Mon­day, Bill 12 or Pre­serv­ing Canada’s Eco­nomic Pros­per­ity Act, is aimed at the B.C. gov­ern­ment, which has ob­structed the con­struc­tion of Kinder Mor­gan Inc.’s $7.4-bil­lion Trans Moun­tain pipe­line ex­pan­sion to the West Coast. But the new pow­ers go far be­yond re­strict­ing oil flow­ing through the Trans Moun­tain sys­tem.

When in force, the law would re­quire com­pa­nies to ob­tain a li­cence from the min­is­ter to send crude oil, nat­u­ral gas or re­fined fu­els such as gaso­line out of the prov­ince in any di­rec­tion and on any form of trans­porta­tion, in­clud­ing pipe­lines, rail­way cars or trucks.

“The pow­ers in this leg­is­la­tion are not pow­ers that Al­berta wants to use, but we will do so if it means longterm ben­e­fit for the in­dus­try, for Al­berta, and for Canada,” Al­berta En­ergy Min­is­ter Marg McCuaig-Boyd said.

Cur­rently, only nat­u­ral gas pro­duc­ers need an ex­port li­cence from the Al­berta En­ergy Reg­u­la­tor to send their gas out of prov­ince, but Mon­day’s law will ex­tend that re­quire­ment to oil and re­fined fuel pro­duc­ers and give li­cense-grant­ing au­thor­ity to the en­ergy min­is­ter.

The law is broad enough that the min­is­ter can choose whether to cut off all out­go­ing petroleum prod­ucts or sin­gle out spe­cific pipe­lines or com­pa­nies by is­su­ing a re­quire­ment for those send­ing oil or gas or diesel to B.C. to ap­ply for a li­cence, which the min­is­ter could then deny.

Com­pa­nies that break the law would pay up to $10 mil­lion per day and in­di­vid­u­als ex­port­ing with­out a li­cence would be hit with fines of up to $1 mil­lion per day.

“We are con­fi­dent that it will with­stand le­gal chal­lenge,” Al­berta Premier Rachel Not­ley said of the law, while ac­knowl­edg­ing there would likely be a le­gal chal­lenge. She said Sec­tion 92 of the Con­sti­tu­tion gives prov­inces power over their nat­u­ral re­sources.

Be­fore it is chal­lenged, how­ever, the law pro­vides a key op­tion to strate­gi­cally in­flate gaso­line prices in B.C. with­out hurt­ing Al­ber­tan oil pro­duc­ers.

Not­ley said the prov­ince was con­sid­er­ing re­strict­ing ship­ments of re­fined prod­ucts through the ex­ist­ing Trans Moun­tain pipe­line, so that only di­luted bi­tu­men flowed to Burn­aby, B.C. via pipe­line. Cur­rently the pipe­line trans­ports both crude oil and re­fined fu­els. This would force gaso­line, diesel and jet fuel ship­ments to move to B.C. on rail­way cars, es­ca­lat­ing costs for B.C. driv­ers, while al­low­ing Al­ber­tan oil pro­duc­ers to ex­port their prod­uct.

Cur­rently, Al­berta ships 44,000 bar­rels of gaso­line and diesel to B.C. through the Trans Moun­tain pipe­line ev­ery day, a lit­tle more than half of the to­tal 80,000 bpd of re­fined prod­ucts shipped to B.C.

Not­ley said the gov­ern­ment met with oil com­pa­nies on Fri­day to en­sure there would be “no sur­prises” as the prov­ince seeks to pun­ish B.C. for its op­po­si­tion to the Trans Moun­tain project but min­i­mize the col­lat­eral dam­age to its own in­dus­try.

“They’re a bit ner­vous about it, but they also know that we’re at a turn­ing point,” Not­ley said of the en­ergy in­dus­try, which is keen to send more of their prod­uct to Asian mar­kets through West Coast ports as other ex­port pipe­lines are full.

Cana­dian oil pro­duc­ers have been seek­ing ac­cess to mar­kets out­side of the U.S. for years, but have seen mul­ti­ple oil ex­port pipe­line projects — such as En­bridge Inc.’s North­ern Gate­way and Tran­sCanada Corp.’s En­ergy East pipe­lines — be re­jected or can­celled.

“While re­gret­table, this leg­is­la­tion is nec­es­sary in the cir­cum­stances to con­tinue ap­ply­ing pres­sure to Bri­tish Columbia,” said Gary Leach, pres­i­dent of the Explorers and Pro­duc­ers As­so­ci­a­tion of Canada. “We’re sup­port­ive from the per­spec­tive that we need this pipe­line im­passe re­solved.”

He said he ex­pects the prov­ince will use a “deft hand” to try to min­i­mize the col­lat­eral dam­age to the lo­cal en­ergy in­dus­try.

Many in the en­ergy in­dus­try are con­cerned the Trans Moun­tain ex­pan­sion is fac­ing an un­cer­tain fate af­ter Steve Kean, CEO of Kinder Mor­gan, said last week the com­pany would sus­pend all non-es­sen­tial spend­ing on the project un­til Ot­tawa in­ter­venes to pro­vide a clear di­rec­tion on how the project will be built with­out fur­ther de­lays.

Kean also gave an end-of-May dead­line for re­solv­ing the sit­u­a­tion.

Both Not­ley and Prime Min­is­ter Justin Trudeau have an­nounced they will pro­vide Kinder Mor­gan with fi­nan­cial as­sur­ances to off­set po­ten­tial losses from B.C.’s con­tin­ued op­po­si­tion in a move that has stirred up con­tro­versy on both sides of the de­bate.

“The larger is­sue is the cri­sis in con­fi­dence that in­vestors can­not rely on the rule of law in Canada for in­vest­ment of their cap­i­tal, es­pe­cially if the gov­ern­ment must re­sort to tak­ing a fi­nan­cial po­si­tion in the project to en­sure it pro­ceeds,” Petroleum Ser­vices As­so­ci­a­tion of Canada pres­i­dent Tom Whalen said in a re­lease Mon­day.

Burn­aby Mayor Derek Cor­ri­gan, who has con­sis­tently op­posed the pipe­line, said plans for “in­vest­ing in the project with tax­payer dol­lars to mit­i­gate Kinder Mor­gan’s risk” are “en­tirely un­ac­cept­able.”

Not­ley, Trudeau and B.C. Premier John Hor­gan met in Ot­tawa on Sun­day in an at­tempt to re­solve the dis­pute with­out suc­cess.

Hor­gan said Sun­day he’s look­ing to ad­dress “gaps” in the en­vi­ron­men­tal pro­tec­tion plan for the West Coast and that he will con­tinue with his gov­ern­ment’s plan to test whether it can re­strict the im­port of di­luted bi­tu­men in a court ref­er­ence case.

JA­SON FRANSON/THE CANA­DIAN PRESS

Al­berta Premier Rachel Not­ley gets a rous­ing re­cep­tion on Mon­day from her cau­cus dur­ing a press con­fer­ence to an­nounce new leg­is­la­tion be­ing brought for­ward that would give Al­berta the power to con­trol oil and gas re­sources — and pres­sure Bri­tish...

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