Kinder surprise sets the stage for showdown
B.C.-Alberta truce is over and worst-case scenarios are where the smart money is
The balky truce between B.C. and Alberta came to a crashing halt on the weekend, and full-scale hostilities will escalate shortly.
There was a faint chance that the Trans Mountain pipeline battle would calm down slightly while a couple of legal cases proceeded. One of them is a request B.C. is putting together for a jurisdictional ruling. That manoeuvre in late February is what brought Alberta’s boycott of B.C. wine to an end.
That boycott in turn was prompted by B.C.’s announcement that it would consider “regulatory restrictions” on any increase in the movement of heavy oil through B.C. while further studies were done. B.C. put that on hold while it asked the court for a ruling on whether it has the power, so Alberta retreated on wine.
But the chance of de-escalation was always weak. Now it’s dead. Anyone betting on outcomes of the next stages of this argument is advised to back the worst-case scenarios from here on in.
Kinder Morgan pulled the trigger Sunday on a move to isolate B.C. nationally and make the province a pariah in the international business world, unless the NDP government changes its stance on the pipeline. Announcing a major political power play 48 hours after a national tragedy is a remarkably graceless move, but that didn’t stop the Houston-based backer of the pipeline from throwing down.
It’s suspending most of the work on the twinning of the existing Trans Mountain pipeline and specifically blamed the NDP government for the virtual shutdown.
“Under current circumstances, specifically including the continued actions in opposition to the project by the province of B.C, it will not commit additional shareholder resources.”
May 31 is the new drop-dead date. If the corporation doesn’t have clarity on how to build the previously approved diluted-bitumen pipeline through B.C. by then, it could walk away.
The B.C. environmental campaign concentrated on rattling those shareholders, so the news was hailed as a big win. But it represents a much bigger loss in Alberta, and ratcheted Premier Rachel Notley’s determination to new heights on Monday.
In Edmonton, two major moves are in the works. Legislation will be introduced by next week giving the province power to “adjust production levels” and regulate what products go into existing pipelines. That power could be used to impose “serious consequences” on B.C., she said. It could drive gas prices on the coast to heights never before seen.
And if B.C. protesters are scaring off Kinder Morgan investors, Notley is considering taking their place. The Alberta government could take a public position in the company with a view to driving the project more directly.
“They may think they can mess with Texas, but they can’t mess with Alberta,” Notley said. If Alberta becomes an investor in the project, she warned, “we will be a significantly more determined investor than B.C. has dealt with to this point.”
She accused Premier John Horgan of thinking he can “harass” investors and the company, and said British Columbians should be worried about what the fight does to the investment climate. Other unspecified moves are on the table. Notley said there are several strategies to ensure the pipeline is built. Alberta and the federal government are in close contact and she said Prime Minister Justin Trudeau is committed to seeing it built.
All of which leaves Horgan facing increasing pressure, and a particular constraint in how he deals with it. He was crystal clear during the election campaign that the NDP would use “every tool in the toolbox” to kill the pipeline if elected. But the rhetoric changed when he took power, because B.C. is involved in the Federal Court of Appeal case challenging the approvals. (Opponents are batting 0 for 14 there so far.)
Flatly restating his political goal now that he owns the toolbox could void a lot of arguments about the rule of law the new government is supposed to be following.
He had a low-key response to the Kinder surprise on the weekend. He tried to stay nonchalant Monday, telling the house there’s no constitutional crisis, it’s just about some upset Texas shareholders.
It’s about a lot more than that, and he knows it.