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Tough talk turns legal; Alberta to restrict refined products into BC
Gary Park for Petroleum News
Offering a summation of the turmoil enveloping Canada’s energy sector, one analyst wryly observed that while “everybody seems to be suing everybody else” that has at least been taking place “within the bounds of law and within the bounds of some measure of civility.”
For anybody searching for positives in a flurry of actual and threatened litigation over federally imposed carbon taxes, offshore tanker bans, changes to federal regulatory project approvals and the ability of provinces to ship their petroleum products to other domestic or offshore markets that assessment was as much as anyone could hope to extract.
The flare-ups gathered intensity in the immediate aftermath of Jason Kenney’s swearing in as Alberta premier on April 30 as he delivered on his major election campaign promises, starting with his proclamation of Bill-12, a law that gives Alberta the right to reduce or halt shipments of petroleum products into British Columbia.
It’s viewed as a potential retaliation against B.C. for stalling the proposed Trans Mountain pipeline expansion by issuing only 300 of 1,200 permits needed for the project.
BC fuel from Alberta Currently, up to 80% of B.C.’s fuel comes from Alberta, with only 10% delivered by ship or barge from the U.S. Pacific Northwest, a source that is steadily being strained by demand in Washington state. Other refined products are imported from a variety of countries.
The B.C. government of Premier John Horgan promptly countered Kenney’s action by announcing it will test Alberta’s constitutional right to impose limits on allowable daily volumes of petroleum products (including gasoline) that can be shipped from Alberta, the method of shipment and point of export, and the length of time a licenses is in effect.
B.C. Attorney General David Eby said his government’s “materials are all prepared” to file an immediate legal challenge.
He is confident a court will face a straightforward decision because a provision in the Canada’s Constitution prevents provinces from restricting the flow of refined products between provinces, ignoring B.C.’s own claims that it can prevent the flow of Alberta crude to tanker terminals in Vancouver.
Alberta’s previous New Democratic Party government passed Bill-12 a year ago, but did not proclaim it into law, preferring instead to keep the measure in reserve.
Kenney, in a newspaper column published in Calgary, Edmonton and Vancouver, insisted Alberta now has the power to get “full value for our resources should circumstances require.”
“The impetus for (Bill-12) is to alleviate the resource backlog that has been exacerbated by delaying TMX (the Trans Mountain expansion).”
He wrote that his government “wants to cooperate with B.C. and other provinces whenever we can. But we will never be afraid to stand up for Alberta when we must ... we are showing that we are serious about protecting Canada’s vital economic interests.”
‘Bluster’ Andrew Weaver, leader of the B.C. Green Party, whose three elected representatives in the B.C. legislature keep Horgan in power, accused Kenney of “bluster.” saying any move to turn off the taps would affect deliveries to Washington state refineries.
He said any “turn off the taps” move by Kenney would also affect shipments to Washington state refineries, putting Alberta in conflict with the North American Free Trade Agreement and with oil companies who have signed refined product contracts.
B.C. Liberal leader Andrew Wilkinson wrote an open letter to Prime Minister Justin Trudeau, Horgan and Kenney urging them to meet with Indigenous leaders and resolve their differences on the energy issue and “hammer out a plan for a path forward” within 60 days.
He said Kenney’s “posturing” and Horgan’s “divisive rhetoric” could significantly increase gasoline prices at the pumps from current levels of almost C$1.80 per liter in some B.C. municipalities.
‘New Sheriff in Town’ While those battle lines were being established, Kenney started spreading his “New Sheriff in Town” message, starting with an appearance before a Senate committee on Bill C-69, which proposes sweeping changes to environmental assessments of major resource projects, but dubbed by the industry as a “no pipelines bill,” while Canada’s Environment Minister Catherine McKenna said the legislation is aimed at a “one project, one review” approach that will accelerate the processing of applications for C$500 billion worth of projects over the next decade.
However, Kenney said Bill C-69 and Bill C-48, that would ban oil tankers off the northern coast of B.C., are a “full frontal attack” on Alberta’s economic lifeline by singling his province out for special attention, and are a “blatant violation of the (Canadian) Constitution,” which gives provinces ownership and control over the development of their resources.
He said the latest polls show that 50% of Albertans are unhappy with how they have been treated by the federal government and are open to discussing the grounds for separation from the rest of Canada.
Emissions also an issue The Kenney government has indicated it also intends to remove a legislated cap of 100 million metric tons a year of greenhouse gas emissions from oil sands mining operations (the current level is estimated at 70 million metric tons and few in the industry believe the GHG output would ever reach 100 million metric tons).
Draft regulations by the Canadian government would exempt “in situ” oil sands projects (those powered mostly by natural gas-generated steam) from federal environmental assessments if Alberta retained its proposed GHG cap on oil sands mines.
That inflamed Alberta’s new Energy Minister Sonya Savage, who told reporters: “You can’t exempt (from regulation) something you don’t have the right to regulate in the first place. That’s preposterous.”
Kenney also had his first meeting since being elected with Trudeau, in what gave every appearance of being a chilly encounter, though the two leaders said they were looking for points of agreement.
The best they could manage was affirmation of the need to grow national employment.
“We both share a basic goal - the creation of jobs and higher incomes for Canadians,” said Kenney, while Trudeau said, “we agree on the need to create jobs in Alberta and across the country.”
Those were tame asides to the conflict that is rapidly shaping up around them.
- GARY PARK
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