With B.C.'s attack on Alberta oil, the war of mutual destruction begins - Macleans.ca

With B.C.’s attack on Alberta oil, the war of mutual destruction begins

And this time, oil-by-rail gets tarred alongside pipelines


Rachel Notley (left) and John Horgan. (Jason Franson/CP and Darryl Dyck/CP)

If there’s one thing B.C. environmentalists aren’t well known for, it’s providing investor tips. But when the B.C. government announced this week plans to bar increases to diluted bitumen (oil sands crude) shipments while it launches a new panel study of spill research, the group Stand.earth advised Kinder Morgan investors to call their brokers because this will delay or permanently thwart the company’s federally approved Trans Mountain pipeline expansion. John Horgan’s NDP government had promised to use “every tool in the toolbox” to stop the $7.4-billion project, and Horgan seems to believe he’s found a particularly pointy one—though potential Alberta-B.C. trade war may ensue. (Eco-groups will supplement with what tools of persuasion they have as well; just don’t rely on them for wisdom on bond yields.)

B.C.’s oil-safety proposal may have given another category of investors cause to gulp as well. While all the activism and heated government rhetoric has concerned pipelines, B.C. Environment Minister George Heyman has made clear his proposed moratorium on added bitumen transportation would apply to rail shipments, too. After all, in the decade of the anti-oil sands proxy war known as the pipeline debate, the truly realized hazard in Canada was train transport, as Lac-Megantic, Que., learned with tragic consequences. Finally, with this contentious move, the environmental left has seen action upon that reality.

READ MORE: The NDP’s great pipeline divide

On one level, the rail-by-oil manoeuvre is pragmatic. In its bid to block flows of diluted bitumen, the Horgan government is relying on a B.C. Environmental Management Act provision to regulate transport of harmful substances, and the province may be on shaky legal ground if it restricts one transportation mode and not another. This also poses a sort of double jeopardy for Alberta’s energy sector, whose industrial and political leaders have long maintained that any oil sands supply bottlenecks created by insufficient pipeline capacity would be offset by higher rail traffic. By capping oil-by-rail traffic in the province while the proposed panel goes over the spill science, the B.C. New Democrats squeeze off pipelines and companies’ backup shipping plan. And even though these are merely proposed restrictions for now—it’s hard to test the constitutionality of a press release, one environmental law academic noted—they could well become a second front in the ongoing battle against transporting bitumen across rivers, alongside lakes and toward oceans. At the very least, there’s intellectual consistency in cracking down on the more historically spill-prone mode, as well as pipelines.

All of which threatens to leave Alberta’s most precious resource—sorry, children of Alberta—landlocked yet again. The gap between what markets pay for light Texas crude and Alberta’s heavy blend has risen to $30 US per barrel from $10 last year, largely because of the pipeline capacity crunch.

RELATED: Pipeline support puts Notley at odds with B.C. NDP

Alberta Premier Rachel Notley has blasted the B.C. plan as an “unconstitutional attack on jobs,” though she’s merely hinted at what her own “tools in the toolbox” ploy will be. She mused about legal challenges and economic measures, particularly on electricity trade. Here’s what that could entail: calling off talks to buy more B.C. hydro supply to offset the shuttering of Alberta’s coal plants. This would hamper the Horgan government’s revenue, while depriving Alberta of a reliable, low-cost power source that would help tame price hikes.

In most trade wars, everyone loses. At British Columbia’s end, a cancelled pipeline means thousands of construction jobs would be lost. Jason Kenney, Alberta’s opposition leader, has pitched curtailing refined oil shipments to B.C. in retaliation, which would hurt Vancouver drivers and Edmonton-area refineries alike. In embittered Alberta, there are even grumblings about blocking B.C. wines as turnabout, an idea surely initiated by Albertans for Punishing Themselves.

On the pipeline, the B.C. NDP is trying to fulfil an election promise made last year. The Alberta NDP is trying to ensure there’s a project worth boasting about during its election next year. And both wait to see what, if any actions the federal Liberals take over an oil sands pipeline they’ve championed and a coast they’ve vowed to protect, along with electorates in two provinces with profoundly different priorities.



With B.C.’s attack on Alberta oil, the war of mutual destruction begins

  1. One minor correction on the story. There is a shortage of refining capacity in North America right now so the refiners in Edmonton will not be badly hurt by this. There are numerous other markets that will gladly accept the refined fuels currently traveling to BC. The refiners in Edmonton may get a slightly lower price for their refined product (due to transportation costs) but the relative hit on lower mainland drivers would be enough to flip back those lower mainland ridings (mostly in Surrey who were ironically tempted by the reduction in tolls that made driving cheaper) that jumped to the NDP in the last election and put a more friendly government back in power in Victoria.

  2. Simply shutting off the jet fuel through the existing KM to YVR for a few months would create utter chaos for the Vancouver area. The Edmonton refiners wouldn’t even notice the difference in overall output.

    • Great, then B.C. can stop shipments of imported goods from its port to the rest of Canada, that’ll create a fine mess for everyone in Alberta.

  3. More like Alberta’s attack on B.C.’s environment.

    Alberta best stop with the threats before we decided to block access to ports for them entirely.

    • Hahaha do it. Alberta will cut you off from the rest of Canada.

  4. I suspect this is all being carefully orchestrated. According to the Edmonton Journal:

    “B.C. Premier John Horgan, who took power last spring with backing from the province’s Green Party, has vowed to use every tool at his disposal to block the project. As a result, Notley suspected he might not play ball. Over the summer, she asked officials here to start polishing the tools in Alberta’s toolbox in preparation”

    Anyone doubt that, if Notley truly “suspected” Horgan would not “play ball” last summer, the two of them had lengthy discussions and cooked this whole thing up? i.e. Notley realizes she’s toast next provincial election and so is dedicating the rest of her term to bolstering Horgan in the eyes of his enviro-nut Greenie puppetmasters by ranting and raving and threatening to do things that will make for a good show, but have no effect on Horgan’s master plan to continue to drag things out until TransMountain cries “uncle” and cancels the whole thing. Horgan stays premier, a pipeline that Notley’s caucus fought tooth and nail against until their accidental election gets cancelled and Notley even gets a “hail mary” next election by being able to argue she fought hard for the pipeline and others are to blame for the failure to get it built.

    The “environmental law academic” is correct to note it’s hard to test the constitutionality of a press release. It’s also hard to prevent an approved pipeline project from proceeding on schedule on the basis of the same press release. I guess we’ll see if one of the “tools” Notley asked her officials to “polish” last summer is an injunction against BC taking any steps to prevent construction from commencing as scheduled.

  5. SHOW ME THE SCIENCE!! that you have a way to clean this sludge up…oh hold on …you don’t have that answer do you??? According to facts …over 70% of the bitumen spill in Kalamazoo Michigan is still on the bottom om the river, no recoverable… even after billions of dollars spent on trying to clean this crap up… So if you think for one minute BC is going to let you risk our environment over your pocket books you are sadly mistaken and that goes for you as well hair boy Turdeau!!!

    • The last time I looked, BC was a Canadian province and the waters off of its coast were Canadian waters. If Trudeau had a small fraction of the cojones that his father had, this brouhaha would be settled in a heartbeat but, sadly, the pipsqueak lacks not only the balls but also the brains and the backbone.

  6. Anything that brings attention to the global inability to clean up oil spills is a good thing. “World-class spill response” leaves 80% of conventional crude in the environment. It’s simply a lie that we can remove spilled petrochemicals from the world.

    The economic future of BC is far more dependent on fisheries, tourism and forestry than on fossil fuels. The world is also awash in cheap oil and gas, and bitumen products aren’t competitive with any of it – both Alberta and Venezuela are learning that. Pipeline expansion is uneconomical and BC is doing the responsible thing here.

  7. People – the problem is not really with pipelines themselves, it’s what happens to the oil when it reaches the coast that is the problem. The increase in tanker traffic necessary to move the increased flow of oil in a very restricted and busy seaway is an accident waiting to happen. The tankers, while double hulled, are not immuned to rupture and given the size of the ships, a leak from one of these behemoth would be huge. This begs the question. Who would ay for the cleanup? The pipeline company? Nope – the oil is no longer their concern after it’s on the ship The shipper? Nope – their ownership is hidden through limited partnerships (which limit liability) in such a myriad of shell companies that it could take years to find and sue the owners. The oil companies who sold the oil. Nope – they already sold it. The buyer? Nope – they haven’t received it yet. The province of Alberta? Not in the lifetime of anyone (or their dependents) from that province. The province of BC? Yep! if we want the pollution gone, we’ll be the ones who pay, with maybe some help from the Feds, and the cost easily could run into the billions. And what does BC get in return? A few jobs and unlimited liability.

    • The last time I looked, BC was a Canadian province and the waters off of its coast were Canadian waters. If Trudeau had a small fraction of the cojones that his father had, this brouhaha would be settled in a heartbeat but, sadly, the pipsqueak lacks not only the balls but also the brains and the backbone.

    • Rhetorical questions are nice but insubstantial. The questions one should have is a) what percentage of oil spill environmental damage is actually remediated b) what percentage of the cleanup cost is paid for by the oil companies, c) what percentage of pipelines have at least one spill? The answer is way less than 100% for the first 2 and 100% for the last one. For heavy crude, remediation is on average less than 30%; cleaning up a fraction of the spill is considered sufficient while actual repair of damage is not considered as pert of a clean-up. In every case, more than half of the costs associated with a spill come from the public purse; in every case, legal costs alone are a substantial portion of that cost. In many cases, the first step in remediation is litigation.