NOTLEY SEES THE VALUE OF A NEIGHBOURLY FEUD

Fighting with B.C. over pipeline lets Alberta premier score political points

Late last year the Alberta government was served with a timely reminder it need not always be at odds with B.C. on multibillion-dollar opportunities in the petroleum sector.

“Alberta should enter into discussions with the governments of British Columbia and Canada with the goal of building a liquefied natural gas facility on the West Coast,” wrote the six members of the Alberta energy diversification advisory committee.

“EDAC recommends the government recognize the value and criticality of LNG projects to achieving growth in Alberta’s petrochemical industry by taking a leadership role in moving projects forward and exploring new models of collaboration with other jurisdictions.”

This from Diversification, Not Decline, the committee’s 167-page final report delivered last fall and containing three dozen recommendations on how Alberta should adapt to “the new energy reality” in North America and the world.

The call for Premier Rachel Notley’s NDP government to work with Premier John Horgan’s B.C. NDP government on developing an LNG industry was not selfless in terms of the Alberta interest.

Rather it was seen as the key to expanding natural gas production in Alberta as well.

“Although the first LNG facility would likely be fed largely by natural gas from British Columbia,” says the report, “it is reasonable to expect that at least 50 per cent of increased supply required would come from Alberta sources.”

The committee envisioned a two-way trade between the two provinces, with natural gas and related liquids being shipped back and forth.

“The pipeline infrastructure to move natural gas from northeast British Columbia to northwestern Alberta and vice versa exists and could be expanded or reconfigured relatively easily.”

Those exchanges were expected to promote billions of dollars worth of new investment in the petrochemical industry, exploiting spinoff products such as methane, ethane and propane.

“The best-case scenario would lead to a doubling of the existing petrochemical output, but requires the build out of a West Coast LNG industry,” says the report.

“West Coast LNG would provide an essential market for methane, creating important knock-on effects for increased upstream drilling in the shared Alberta-British Columbia Montney region and for the availability of ethane for downstream energy processors.”

The report cited impressive benefits from such downstream diversification: “Capital spending of between $60 billion and $100 billion between 2020 and 2040, as many as 100,000 jobs, and value-added production of between $15 billion and $30 billion per year.”

Besides the forecasts of substantial investment and job-creation opportunities, the Alberta report duplicates other aspects of the rationale put forward by successive B.C. governments in favour of LNG.

One of those is the need to wean Canada off excessive dependence on exports to a U.S. market glutted with cheap natural gas extracted from shale deposits.

“In the span of just a decade the United States has gone from being our biggest customer to our biggest competitor,” wrote the Alberta committee on economic diversification. “Nowhere is the new energy order more evident than in natural gas production.

“American supply has grown to producing nearly 74 billion cubic feet a day, driving down spot prices from a high of over $12 per one million British Thermal Units in 2008 to under $2 in 2016,” say the Albertans in a doom and gloom version of the scenario being played out here in B.C.

“More pessimistic forecasts suggest Canadian gas exports could fall by 20 to 50 per cent by the end of the next decade.”

Likewise the Alberta report echoes the B.C. argument for natural gas as a transition fuel to help wean Asian jurisdictions and others off dependence on “dirty” alternatives.

“Natural gas can displace dirtier coal for electric power generation in countries like China, which would be a net-positive for global GHG emissions,” wrote the Alberta committee in a passage that could have been lifted word for word from a statement on LNG prospects from either Premiers Christy Clark or John Horgan.

All part of what the committee sees as “a climatechange solution” and “a winwin for the Alberta economy and the environment which is why West Coast LNG should be a political and economic imperative for the Alberta government.”

A win-win as well for B.C. presumably, as the province would stand to benefit from the multibillion-dollar investments in an LNG export terminal. Plus B.C., which has its own liquidsrich natural gas deposits, could also try to cash in on the petrochemical industry spinoffs.

But the proposal has no more chance of going anywhere than the previous B.C. Liberal government’s outreach to Alberta on electricity, suggesting they use our emissions-free hydro to wean themselves off burning coal and other fossil fuels.

That one was doomed by parochial political suspicions, the Alberta New Democrats suspecting the Liberals were just trying to underpin the rationale for developing Site C.

Despite the presence of NDP administrations in both provinces, a joint-LNG strategy has to be regarded as dead on arrival because of the mutual hostilities over development of the Trans Mountain pipeline.

Premier Horgan, for all his talk about wanting value-added investment in the petroleum sector, is not about to back away from the anti-bitumen drive that serves him well with his political base.

Even if he were inclined to tone it down, I have to think the slightest hint of cooperation with B.C. on any basis would be curtains politically for Premier Notley.

In the span of just a decade the United States has gone from being our biggest customer to our biggest competitor. ALBERTA ENERGY DIVERSIFICATION ADVISORY COMMITTEE, 2017 report