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The terminus for the Coastal GasLink natural gas pipeline is seen at the LNG Canada export terminal under construction in Kitimat, British Columbia, in 2022. Photographer: Darryl Dyck/The Canadian Press/AP Images
Pipe(line) Dreams
It’s a weird year when formerly mundane events are now super-charged with significance. BT — Before Trump — the prime minister and premiers would meet and the rest of Canada would barely notice. This time was different.
Prime Minister Mark Carney asked provincial and territorial leaders to offer suggestions for big “nation-building” projects they’d like to see approved, with the goal of boosting the economy to offset the drag of Washington’s trade war. They talked for hours about it this week at a convention center in Saskatoon. Afterward, Ontario Premier Doug Ford compared Carney to Santa Claus, saying the PM would return to the North Pole, where he’s going to “sort it out and then he’s going to call us.”
Alberta Premier Danielle Smith, the federation’s chief provocateur, emerged describing the outlines of a possible “grand bargain” — a new oil pipeline, alongside large investments by Canadian energy companies into technology to reduce carbon emissions. All this comes shortly after Energy Minister Tim Hodgson went to Calgary to tell business leaders he’s in politics to Get Things Built.
The expectations for the Carney government are rising, and so are the political stakes.
Premier Smith has said the country’s national unity will be at stake if there isn’t progress on building new pipelines. Her preference is to go west, with a pipeline to northwestern BC.Photographer: Aaron M. Sprecher/Bloomberg
But Carney (read: Mr. Claus) didn’t come out of the first ministers’ meeting with a firm list of projects to endorse for rapid federal approval. So for all of the soundbites from Saskatoon, what are we actually talking about?
If the task is to get more oil to markets other than the US, there are two types of projects: large ones, and extremely large ones.
A pipeline that transports Alberta’s oil to Ontario, Quebec or even further east is one of the biggest. It would be hugely expensive, said Kent Fellows, assistant professor of economics at the University of Calgary’s School of Public Policy — the kind of project that would demand significant or total government backing as a national-security endeavor, in his view.
The government has just spent tens of billions of dollars to expand the Trans Mountain pipeline to the west coast to a maximum of about 900,000 barrels of oil per day. And the country’s first large-scale export terminal for liquefied natural gas, Kitimat, British Columbia-based LNG Canada, is getting ready to start shipping its first cargoes to Asia.
Proponents of growth in the oil and gas sector still lament the ones that got away — projects like Northern Gateway, Energy East and Keystone XL that became synonymous with the perceived economic failures of the Justin Trudeau era.
The CEOs of 14 Canadian energy companies signed an open letter to federal political leaders in March, citing public support to “urgently grow our energy sector and build energy infrastructure, including new oil and natural gas pipelines and LNG terminals.”
But at the moment, Fellows said, “there is no pipeline to approve, because no one’s proposed one.”
“It’s an open question whether the private sector would come forward,” he said. “If we fix the regulatory process, they might. It’s just no one’s talking about it right now.”
Francois Poirier, chief executive officer of TC Energy — and one of the signatories of the open letter to political leaders — speaking in Toronto in April.Photographer: Della Rollins/Bloomberg
Multiple factors complicate the business case for Smith’s preferred option, a new crude pipeline to the BC coast, Fellows said. Global oil supply appears ample, long-term demand is far from certain and the price for Canadian crude is due for some volatility. BC Premier David Eby, who wasn’t in Saskatoon, has raised objections to the idea. So, too, might Indigenous people who have constitutional rights on these matters.
If the Carney administration or a private sector company does come forth with a pipeline idea, government loan guarantees and other economic incentives might help get First Nations governments on side. But negotiations with an array of Indigenous leaders and communities will be critical to the success of any project. Moving too quickly on that front would be a mistake, Fellows said.
“Conversations about fast-tracking approvals are encouraging, but if we get this wrong and they fast-track approvals by trying to take shortcuts like we have in the past, we’re going to end up back where we started.”
Public support for a large resource project may be high at the moment, but that mood won’t last forever. During Monday’s meeting, Fellows said, social media channels were flooded with “people questioning the wisdom of talking about pipelines at a time when we have significant forest fires happening due to climate change.”
Gurpreet Lail, CEO of Enserva, a lobby group for the Canadian energy services, supply and manufacturing industry, said the companies she represents are ready to take on the work should a project materialize. “We’re hearing the right things to signal confidence, but until pen hits paper and there’s a plan to move forward, we’re just going to be cautiously optimistic,” Lail said.
There’s a good deal of cautious optimism going around in Alberta these days. But for that to continue, Carney will have to show that he can deliver something of value to the province that drives Canada’s commodities-export economy. Whether that means an oil pipeline is still very much in question.
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