Despite Liberal win, B.C.’s stand on pipelines still unanswered
Western Canada’s landlocked oil and gas producers have kept a wary eye on a British Columbia election campaign rife with debate about pipelines and fracking. And while many will prefer the surprising Liberal victory Tuesday night than an NDP government, the election result still leaves a number of unanswered questions about the relationship between the province and the industry.
Christy Clark took the campaign stance that her incumbent Liberal party was a shrewd steward of the economy while NDP policies would “kill” the natural-gas sector vital to the production of liquefied natural gas. “I say yes to growing our economy. Adrian Dix says no,” was Ms. Clark’s refrain regarding the NDP leader.
But the Liberal win is still a relative wildcard for the energy industry. While Ms. Clark – whose party has already formed government for a dozen years – didn’t absolutely rule out pipeline projects as Mr. Dix did, she did pick up on her province’s anti-pipeline sentiment. She has set what she says is five immovable conditions in order for heavy oil to be transported across the province – including a focus on First Nations consultation and treaty rights, world-leading marine oil-spill prevention, and that B.C. receive “its fair share of the fiscal and economic benefits” of any project.
“From an oil-producing perspective, there is more room to manoeuvre with the Clark government than a Dix government,” Robert Roach of the Canada West Foundation think tank said late Tuesday.
“But it’s not a green light.”
At stake is the B.C. government’s position on Enbridge Inc.’s proposed Northern Gateway pipeline between Bruderheim, Alta., and Kitimat, B.C., and Kinder Morgan Inc.’s plans to twin its Trans Mountain pipeline, which runs from just outside of Edmonton to Burnaby, B.C. – which will increase capacity to 890,000 barrels per day from the current 300,000. Both projects are lifelines for neighbouring Alberta’s oil industry.
“This means Kinder Morgan and Enbridge’s Northern Gateway are both open questions,” said Vancouver-based energy consultant Barb Justason of Justason Market Intelligence Inc. “The Liberal position is a whole bunch of conditions to be met.”
Mr. Dix’s position on pipeline proposals was more categorical. He opposed the Northern Gateway project and, two weeks ago, made the surprise announcement that he opposed the Trans Mountain expansion.
The NDP had also said any government he led would order a science-based review of fracking, the practice that forces natural gas or oil out of a reservoir by injecting sand, water and chemicals into the ground under high pressure.
Although LNG export projects costing billions of dollars to construct are still years away, Ms. Clark is an unabashed supporter of the industry’s prospects, saying B.C. could benefit from a provincial windfall in line with what oil has done for Alberta.
“The pipelines that are of most interest to British Columbians are liquefied natural gas,” she said earlier this month. “That’s something we can do and we don’t need the federal government and we don’t need Alberta.”
Gerry Goobie, a Calgary-based energy consultant for Gas Processing Management Inc., said the industry has watched the B.C. election with hope for government policy that is stable and certain.
“It’s very difficult to make investment decisions when you hear rhetoric about imposing new taxes and things of that nature, or opposing this development or that development,” Mr. Goobie said.
“Companies don’t like to make decisions with a lot of uncertainty hanging over them, particularly for money of that magnitude.”
With oil sands production projected to double in less than a decade, there are concerns the output could outstrip transport capacity. Ottawa and the Alberta government have both been pushing for additional pipelines, including projects to and through the United States such as the Keystone XL, along with those that would cross B.C. to the West Coast and onwards to foreign markets.
Alison Redford, who has had a number of “frosty” talks with Ms. Clark, has said she will work with whatever party forms the next government. But the Alberta premier has argued access to foreign markets for Canada’s oil and gas is a national issue, and the need for interprovincial co-operation on the issue “is more urgent than ever.”
Canadian Association of Petroleum Producers vice-president Janet Annesley said in an e-mail Tuesday the oil and gas industry “will work constructively with the government elected to continue delivering energy and economic benefits to B.C. while protecting the B.C. environment.”
However, the Dogwood Initiative Campaign noted late Tuesday that the B.C. Liberal government has yet to file its final position with the joint review panel examining Enbridge’s pipeline and tanker proposal.
“We are hopeful the next government will stand up for B.C. and say no to Enbridge, in line with the wishes of the B.C. public,” the environmental group’s director Eric Swanson said in a news release. “The majority of British Columbians oppose the expansion of oil tanker traffic on B.C.’s coast and will continue to pressure their politicians to stand up for our coast.”
RBC Dominion Securities’ Mark Chandler said in a research note Wednesday that the Liberals’ victory “is likely to bolster expectations on a more significant energy-infrastructure in the province to help expand Pacific export markets.”
In a separate note, Robert Kwan of RBC Dominion said a Liberal government is likely to be seen as more supportive of the “entire LNG chain.”
But getting the oil pipelines through might be an “uphill battle.
“While the NDP winning would have resulted in outright opposition to Northern Gateway and the Trans Mountain expansion, the Liberals’ commentary has not been particularly supportive,” said Mr. Kwan.
“Even if the Liberals end up supporting one, or both, of the oil pipes, we note that there are still numerous issues that could pose a significant impediment to either project proceeding.”
Some members of the B.C. business community saw the Liberal win as a clear endorsement of economic development in the resource-rich province.
“This was the most important provincial election in recent memory and a very clear victory for Canada. This demonstrates that environmental alarmists, Hollywood elitists and left wing policies are out of place,” said Cary Pinkowski, chief executive of Astur Gold Corp..
“British Columbia citizens understand that pipelines are there to protect our national security interests. Canada and B.C. should work together for a mutual economic solution and build these pipelines without delay.”
Frank Rizzardo, president of infrastructure construction and maintenance group Emcom Services Inc., said the electorate has opted for a government favouring a “strong economy, jobs and a lean government.
“B.C. has a history of being a leader in Canada through resource development and cost effective power development. Businesses throughout B.C. will be looking at how they can participate in the future economic activity that will eliminate the capital debt for our grandchildren.”
Keith Schaefer, editor-publisher of Oil and Gas Investments Bulletin, said in an email: “I think the energy industry should be happy – especially the natural gas industry, and the whole LNG [liquid natural gas] complex. There should be a clear path for large-scale LNG exports in a few years. There will be hurdles and protests, but I think the natural gas execs in Canada have to be the happiest with this election.”
He added there is still some reluctance among voters to go full-speed ahead with the controversial pipeline projects.
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