Energy East, Alberta's Jim Prentice goes pipeline wooing

Saskatchewan Premier Brad Wall has a theory why Canada's pipeline projects are becoming something of an endangered species.

Late last month, while preparing to talk to reporters about a recent trip to India, Wall said "later." He had something else on his mind. Boy, did he.

"No pipelines are being built, no pipelines are being approved because the goal posts keep changing, and this argument apparently can't be made to the satisfaction of those who simply … aren't comfortable with the development of oil, period."

Do the people Wall was talking about include the premiers of Quebec and Ontario?

Alberta Premier Jim Prentice doesn't think so. Gearing up to meet Quebec's Philippe Couillard on Tuesday and then Ontario's Kathleen Wynne on Wednesday, Prentice says "I start from the position that these are two premiers with whom we can do business."

They are also the two premiers who have put sudden new roadblocks in the way of Energy East, the made-in-Canada proposal that would give Western oil producers their long coveted access to a deep-water port, in this case on the Bay of Fundy.

Ontario Premier Kathleen Wynne listens to her Quebec counterpart, Philippe Couillard in August in Quebec City. The two premiers have been working together on conditions for the proposed Energy East pipeline from Alberta to N.B. (The Canadian Press)

Energy East would convert an existing natural gas pipeline to oil, and expand the line further into Quebec and New Brunswick.

At a cost of $12 billion dollars, the 4,600 kilometres of pipe would transport 1.1 million barrels of oil a day from Alberta and Saskatchewan.

As one Calgary business writer describes them, "pipelines are the midwives of the energy sector."

Hence the reason they are so much on Brad Wall's mind. And others.

The sales pitch

In his attempt to win over his counterparts in Quebec and Ontario, Jim Prentice has some compelling numbers to share, courtesy of consultants Deloitte.

Deloitte pegs Energy East's contribution to GDP at $35 billion dollars over the life of the project; $6 billion of that to Quebec and $13 billion to Ontario, along with another $10 billion in tax revenues for everyone en route.

Environmental groups dispute those numbers, arguing most of the oil would likely be headed offshore (N.B.'s giant Irving refinery is geared for export), and that the economic benefits would go right along with it.

Assuming there are economic benefits to be had, though, some of those revenues would accrue to municipalities.

And Ian Brodie, former chief of staff to Stephen Harper, says the voices of mayors and Chambers of Commerce along the route, are what's currently missing from the discussion.

The Energy East pipeline route. The proposed terminal in Quebec is near a beluga whale calving site. (CBC)

Without more pipelines, those same municipalities will see more Western oil transported through their communities by rail — at least when the price recovers.

And those rail cars pose a much greater risk, and take a much greater environmental toll, than a pipeline, argues the head of the school of public policy at the University of Calgary, Jack Mintz.

What do Quebec and Ontario want?

I asked Mintz if the case for pipelines is so persuasive, why is it such a tough sell?

As he sees it, the conditions being put forward by Quebec and Ontario, particularly the one calling for measuring the pipeline's impact on greenhouse gas emissions, is all about appealing to populations increasingly suspicious of the oil industry and pipelines in general.

He believes Couillard and Wynne really want the pipeline and the economic bounty that comes with it, but that they are looking for leverage — a quid pro quo.

They'll support the pipeline if the federal government makes more effort to achieve measurable and ambitious targets in reducing GHGs, something they could hold up as a political win.

It is a ploy that might work, Mintz says, but it comes with considerable risk.

One is that the premiers of Ontario and Quebec might do such a good job being environmental champions that they could find themselves with populations that won't support the pipeline no matter what conditions are imposed or met — the law of unintended consequences.

At this point, remember, polling in Quebec shows roughly two-thirds are already opposed to Energy East

A trust issue?

The oil industry recently surpassed the transportation sector as the largest emitter of GHGs in Canada.

With the price of oil tanking, that could change again. But as Saskatchewan's Wall argues, both sectors are huge emitters, though only one is vilified for it.

"If you want to get serious about GHGs in Canada, we'd all stop driving cars," he said, pointing out, "this is an industry that is only in Ontario.

"There's perhaps a trust issue here, I also think a comfort issue," Wall went on. "I think certain interests in Central Canada aren't comfortable with the fact that we're an energy power. That oil … is helping to provide quality of life in this country, programs … like equalization."

Zing!

Oil, of course, could soon be providing a lot less in the way of equalization and standard of living. Hubris can come back to haunt us all.

For two decades now Alberta has led the nation in employment growth — by a substantial margin. Alberta's average annual growth was 2.50 per cent, which was much faster than the province in second place, Ontario, at 1.44 per cent.

The final destination: the Irving Oil refinery in Saint John, N.B., is the largest refinery in Canada and the source of nearly one in three tanks of gasoline imported to the East Coast of the U.S. (REUTERS)

If the price of oil continues to languish and the momentum behind reducing our carbon footprint strengthens — and along with it, the opposition to pipelines — the next 20 years could look quite different.

In recent weeks, we've heard from many premiers on pipelines. Much of it in public. The private conversations are no doubt infinitely more interesting.

What we know about Jim Prentice is that he has stated unequivocally that his number one priority is getting pipelines built. And that Energy East is the pipeline he's most determined to see built.

Perhaps he knows something the rest of us don't.

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