B.C. could tax raw bitumen

Premier Alison Redford has made it clear she won’t negotiate the sharing of royalties from bitumen and crude shipped in proposed pipelines through B.C.

The reason is not intransigence but a combination of constitutional issues and the scandalously low royalties Albertans receive from oilsands projects. In light of recent budget deficits, the Alberta government has no room to negotiate a share of royalties.

For B.C., a more sensible approach is to tax all raw bitumen shipped through the proposed pipelines and demand the following written agreements:

Responsibility for crude spills in Canadian waters shall jointly lie with the federal government, Alberta, crude producers, owners of diluted bitumen and crude, the pipeline company and the owner-operator of the tanker. Together they shall provide sufficient liability insurance, in the B.C. government’s opinion, to completely clean up any potential crude spill.

If diluted bitumen is to be shipped in pipelines and tankers, based on the $1-billion cost so far of cleaning up Enbridge’s 20,000-barrel diluted bitumen spill in Kalamazoo, Mich., the following liability insurance is required:

(a) for the two-million-barrel larger tankers proposed by Enbridge for its Northern Gateway pipeline, $100 billion in liability insurance;

(b) for the 600,000-barrel Aframax tankers proposed by Kinder Morgan for its Trans Mountain pipeline expansion, $30 billion in liability insurance.

If only refined products — conventional crudes, syncrude and partially upgraded bitumen — are permitted to be shipped, then required liability insurance of, say 40 per cent or less of that for diluted bitumen, should suffice.

By not taxing refined products, conventional crude, syncrude or partially upgraded bitumen, B.C. would help improve the economics of oilsands operations for all Canadians and reduce the environmental impact of pipelines and tankers shipping diluted bitumen.

Mike Priaro, Calgary