In less than two weeks Alberta is expected to deliver to the federal government a solid proposal for a pipeline to the northwest coast of B.C. But so far there is no private sector partner willing to come forward to pay for it.
This is definitely a fly in the ointment of a proposal that Alberta Premier Danielle Smith has been flogging for years. She finally got some encouragement from the federal government in a Memorandum of Understanding (MOU) signed by Prime Minister Mark Carney and herself in November.
In the MOU it was agreed that “an Indigenous co-owned Alberta bitumen pipeline to Asian markets is a project of national interest.” That signals it could be built. There was also a commitment by both governments to support the construction of the world’s largest carbon capture utilization and storage (CCUS) project, otherwise known as the Pathways Project. But as Carney’s puts it: No pipeline without the carbon capture project.
Not a solid agreement
It’s just an MOU, not a solid agreement and in the meantime a lot has happened that might put that pipeline and CCUS project in jeopardy
For one thing, the government of B.C. and the coastal First Nations have stood firm in their opposition to oil tankers plying the tricky waters off the northwest coast. One wonders how that affects the promise of an Indigenous co-owned pipeline. A route that goes from Alberta to northwest B.C. is home to several First Nations. Will they be amenable to the pipeline or will it spur antipathy between Indigenous groups in B.C. and Alberta? Or will they stick together?
This is particularly pertinent since Alberta First Nations have stepped into the separatist debate avowing that separation would infringe on their treaty rights. And so far, two Court of King’s Bench judges agree with them, citing the government’s duty to consult First Nations before a referendum.
The last decision caused the separatists’ question for the referendum to be thrown out and replaced by a newly worded one since the first one was deemed unconstitutional. Smith is appealing the decision and says she needs a clearer definition of the duty to consult First Nations. That further inflames First Nations who are already angry.
And then there is the oil industry, which is having second thoughts about the oil pipeline proposal. Last week, Jon McKenzie, CEO of Cenovus, one of oilsands companies behind the Pathways Project, told the Global Energy Show in Calgary that under the current regulatory regime the pipeline is “unfinanceable” by the private sector.
Criticizing both the recent agreement between Alberta and the federal government on the industrial carbon price and the earlier agreement to build a bitumen pipeline and the $30 billion Pathways Project, McKenzie said the deal fails to address regulatory barriers to the industry’s capital spending.
“Neither the Pathways project nor the West Coast pipeline really make any sense” without that fundamental capital investment, he said.
Whether McKenzie was angling for more government money to be thrown at the project or a reduction in the already low industrial carbon price isn’t clear. But it is clear in this rush to build an oil pipeline he was speaking for the oilsands industry.
Trouble for Smith and Carney
And either way it spells trouble for Smith and Carney. Canadians in general are opposed to more government money being spent on the pipeline and carbon capture and storage projects. Environmentalists, as well, have roundly criticized the agreed upon low industrial carbon price.
It’s all very complicated and involves two MOUs between Alberta and the federal government, First Nations treaty rights and the separatist referendum.
And there’s one more complication. Carney has three months to respond to Smith’s proposal and that happens to be just three weeks before the separation referendum. If he turns it down could that increase the separatist vote? If he agrees could that increase the pro-Canada vote? What if he just delays and leaves everyone hanging?
That seems like a lot to pack into the months leading up to the referendum. A lot to sort out in a relatively short time.
