Canada sells its crude at a discount to North American regional hubs because of a lack of refinery capacity and a limited ability to reach global markets beyond the United States. The spread hit $50 per barrel in 2018 and currently sits between $12 and $15 per barrel. The Fraser Institute has calculated that “in 2018, after accounting for quality differences and transportation costs, the depressed prices for Canadian heavy crude oil resulted in CA$20.6 billion in foregone revenues for the Canadian energy industry.” In addition, 99% of Canadian oil exports currently flow to the United States, which is simultaneously increasing its own production and becoming more protectionist under President Trump.
Pipeline capacity to tidewater is essential to accessing global prices and diversifying Canada’s energy trade. This has been difficult to achieve. Alberta and Saskatchewan, Canada’s major oil producers, are landlocked. Oil must flow through BC to the West coast or through Manitoba, Ontario, Quebec and New Brunswick to the East coast. Both routes have proven to be problematic due to local resistance, especially in BC and Quebec. Adding to the issue is that many Westerners feel that Quebec and the Maritime provinces will continue to develop and export their resources and not be bound to the recently passed tanker moratorium legislation that impedes Western Canadian oil and gas producers.
The Northwest Territories is another region facing similar concerns. Their government estimates that it holds more than one-third of Canada’s light crude and natural gas, and the Territory’s economy depends on its ability to get that oil and gas to market. But like Alberta and Saskatchewan, they are landlocked. The Territory cannot get access to foreign markets.
According to Natural Resources Canada, the N.W.T. has about 16 trillion cubic feet of natural gas and 1.2 million barrels of oil that hasn’t been exploited to its full potential. In 2016, the federal government imposed a moratorium on offshore drilling in the Beaufort Sea. Then in 2017, Imperial Oil abandoned a $16-billion project to build a natural gas pipeline from the Beaufort to northern Alberta.
In British Columbia, where the economy is built on resource development and its pristine environment, the debate on oil and gas development and export has recently moved from two entrenched sides to over 60% of British Columbians approving of TMX and an equal number looking for relief from the years-long debate on the future of resource development. Gas and home heating prices have soared over the past 12 months while the BC government has implemented legislation and litigation tactics meant to obstructs Alberta’s oil and gas sector and oil companies, while also demanding more product to be supplied to the Metro Vancouver region.
Siting linear energy infrastructure is always difficult. Exacerbating the pipeline issue is the trilemma between immediate economic gains, energy security and the need to shift to a lower-carbon economic model. Oil pipelines that will be in operation for decades seem to run counter to Canada’s commitment to reduce emissions by 2030 and by 80% by mid-century. However, oil is a boon to the Canadian economy and a signature contribution to the world’s voracious appetite for energy. Why not seek maximum value from today’s energy production?
In the context of Election 2019 the complexity of this file, compounded by the emotion shown by representatives on both sides of the debate (“this is a threat to national unity” vs. “pipelines equal immediate climate disaster”), supply shortages to Canada’s ever-growing appetite for energy products, and government’s choosing to enact climate change policy through increased tax measures means that this will not be easy ground to tread for any party.
The Liberal Government rejected Enbridge’s Northern Gateway project in 2016. TransCanada walked away from Energy East in 2017, after spending $1 billion on its development. Currently there are only two pipeline projects at the centre of this issue: the now-government-owned Trans Mountain Pipeline (TMX) and the Eagle Spirit Pipeline.
The Eagle Spirit Pipeline is one component in the proposed Eagle Spirit Resource Corridor, a large-scale project proposed by Eagle Spirit Energy, a company owned by an Indigenous led consortium that includes 35 hereditary and elected Chiefs from across Western Canada.
The Project is a resource corridor spanning from Fort McMurray, Alberta to the port near Prince Rupert, British Columbia. The Project plan calls for a multi-use corridor for partially upgraded oil, natural gas pipelines and other resource transportation facilities.
TMX will run from Strathcona, AB, near Edmonton, to Burnaby, BC. It will expand the existing pipeline from 300,000 barrels per day to 890,000 barrels per day. The National Energy Board has 156 conditions that need to be met, and the project still has some opponents. The deadline for appeals was July 8, 2019.
The National Energy Board recommended the approval of the pipeline in May 2016. The Liberals approved the project later that year and construction got underway. In May 2018, Kinder Morgan Canada sold the project to the Government of Canada after months of delays and a failure to reach agreement with major stakeholders, including the BC Government. In August 2018, the Federal Court of Appeals overturned the Trudeau Government’s approval of the project citing a flawed review by the NEB. On February 22, 2019, the NEB again recommended that Government approve the pipeline, which the Government did on June 18th.
Despite work over the past year to address the Court of Appeal’s concerns, including renewed consultation with impacted Indigenous Communities, there remains considerable opposition to the project. It must be noted, that there is also considerable support. It is a polarizing project just as pipelines are a polarizing issue.
Sitting in the middle are many Canadians who understand the economic arguments for pipelines, including getting full value for Canada’s resources and the need to diversify trade, but who also believe that climate change is a pressing concern that must be urgently addressed. Striking the right balance will be the challenge for each of the political parties.
As owners of TMX the Liberals have a clear interest in getting at least one new oil pipeline built. What is less clear is whether they will enable additional lines to be built if they receive a second mandate. Many pipeline advocates believe that the Liberal legislation crafted over the past four years will hinder the prospect.
The Conservatives are ardent in their support for all energy development and infrastructure including pipelines and if elected would “cancel the Trudeau carbon tax, repeal the No-More-Pipelines Bill C-69 and Oil-Export-Ban Bill C-48, establish clear timelines for approvals, eliminate foreign interference in the approvals process, and invoke federal jurisdiction when necessary.”
NDP – NDP Leader Jagmeet Singh has been clear in his opposition to TMX and any new oil pipeline capacity. He has been cagier about his support for new LNG pipelines, including the Coastal GasLink in BC.
NDP Leader Jagmeet Singh has been clear in his opposition to TMX and any new oil pipeline capacity. He has been cagier about his support for new LNG pipelines, including the Coastal GasLink in BC.
The Green Party is, unsurprisingly, crystal clear in its opposition to pipelines for energy export. They instead favour – in the short term - refining oil in Canada for domestic consumption. Over the mid-term the vision is to take aggressive climate action, “rejecting pipelines of bitumen for export, removing fossil fuels from electricity production, investing in critical infrastructure for an improved east-west electricity grid, ramping up renewable energy, energy efficiency, underpinned by a carbon-fee-and-dividend pricing scheme to transition Canada to a smart, postcarbon, prosperous economy, infrastructure.”
Mr. Scheer announced on September 28th that Conservatives would create a national energy corridor to carry oil, gas, and hydroelectricity from coast to coast.
On September 26th GPC leader Elizabeth May said that should Canadians elect a minority government, her party would not prop up any government that supports pipelines.
On September 24th, Liberal candidate for Ottawa Centre and Minister of Environment and Climate Change for the Trudeau Liberal Government currently running for re-election announced a number of environment related commitments if a Liberal Government were re-elected. The measures include:
- Commit Canada to achieving net-zero emissions by 2050, joining 65 other countries and the European Union that made the pledge
- Set legally-binding, five-year milestones, based on the advice of the experts and consultations with Canadians, to reach net-zero emissions by 2050;
- Appoint a group of scientists, economists, and experts to recommend the best path to get to net-zero;
- Exceed Canada’s 2030 emissions goal; and
- Ensure energy workers and communities can shape their own futures by introducing a Just Transition Act, giving workers access to the training, support, and new opportunities needed to succeed in the future economy.
The Liberal Party press release reads that “these commitments build on the Liberals’ climate record that already includes over 50 measures to cut pollution and protect our environment.” Items highlighted on the release include:
- Banning harmful single-use plastics and microbeads;
- Phasing out coal power by 2030 and investing in renewables like wind and solar;
- Putting a price on carbon pollution so it’s no longer free to pollute anywhere in Canada, while putting more money back into Canadians’ pockets;
- Building 1,200 public transit projects across the country;
- Making zero-emission vehicles more accessible and affordable; and
- Investing in energy efficiency to help families and businesses save money.
On Monday September 16th, Elizabeth May unveiled the Green Party Election Platform 2019. A Green Government would implement a number of measures regarding pipelines including: no new pipelines, or coal, oil or gas drilling or mining, including offshore wells, would be approved. Existing oil and gas operations will continue on a declining basis, with bitumen production phased out between 2030 and 2035. As well as to cancel the Trans Mountain pipeline (and its $10-13 billion cost) as well as other subsidies to fossil fuel industries, totaling an additional several billion dollars a year. This money will be redirected to the Canadian Grid Strategy and renewable energy transition.
Additionally, Ms. May proposes to collaborate with provinces, territories, Indigenous Peoples and the public to develop a Pan-Canadian Energy Strategy that gets us to a carbon-free energy system by 2050, phases out bitumen production for fuels by 2030-35, prioritizes Canadian jobs and supply, reduces energy demand across all sectors by 50 per cent, and ensures energy security for Canadians throughout this transition.
On Monday, Suncor Energy Inc, Canada’s second-largest oil sands producer, announced its commitment to a $1.4-billion installation of two cogeneration units at its Oil Sands Base Plant, claiming that the move will cut their greenhouse gas emissions by 25 per cent.
The move will see natural fuelled cogeneration units replace coke-fired boilers, allowing steam generation for Suncor’s bitumen extraction and upgrading operations and yielding 800 megawatts of power for Alberta’s electricity grid.
The Base Plant in northern Alberta has a synthetic crude output of 357,000 barrels per day from its two upgraders, and is Suncor’s largest oil sands project.
“We’re trying to reduce the greenhouse gas emissions in every barrel we produce and this is a big step forward,” Suncor Chief Executive Mark Little told Reuters in a phone interview.
According to Angus Reid polling, majorities say both climate action, oil & gas growth should be top priorities for next government. Division remains over federal carbon tax, but most want to do more to meet 2030 emission reduction goal.
With both issues top of mind among persuadable voters, attention is turning to party platforms and expectations for the next government.
A new study from the non-profit Angus Reid Institute finds seven-in-ten Canadians (69%) say climate change should be a top priority for whichever party forms government after the October vote, including four-in-ten Conservative Party supporters. At the same time, six-in-ten (58%) say that oil and gas development should be a top priority alongside climate action.
Construction on the Trans Mountain pipeline expansion project will be underway during the federal election, and while the start of work may steal steam from certain Conservative attacks, observers say it’s overall likely bad news for Liberal fortunes in seat-rich British Columbia.
“From the Liberals’ perspective, it’s a big problem. I really, for the life of me, don’t understand why they’re moving forward” with construction during the campaign, said Innovative Research’s Greg Lyle.
On the plus side, shovels in the ground on the project takes “some of the heat out of the anger that they’ve been receiving” from pipeline supporters in Alberta, and would serve as a positive signal to foreign markets about investing in Canada and as a counter to related Conservative attacks, said Mr. Lyle.
But those 34 federal Alberta ridings—three of which are currently held by Liberals—are nonetheless “unlikely” to vote Liberal this October, he said. By comparison, B.C., and the Greater Vancouver Area in particular, are potential growth areas for the party, but if the protests widely expected at construction sites—in particular in the hotbed of pipeline activity and opposition that is Burnaby—lead to arrests and attract news coverage, it could tip crucial centre-left swing voters in B.C. to instead vote NDP or Green, said Mr. Lyle. To a lesser degree, it could also lend ammunition to the Bloc Québécois in Quebec.
‘The Alberta economy needs to be a ballot question for you’: Conservative MP Michelle Rempel’s message to Canada. Ms. Rempel, who is running for re-election in Calgary Nose Hill, is working to bring the concerns of her community and Alberta to the forefront of the election campaign this fall.
Alberta has been dealing with an economic downturn amid collapsing oil prices in recent years, a situation Ms. Rempel says the Trudeau government has exacerbated through its energy policies. She is concerned about growing separatist sentiment in the province as Albertans who once worked in the oil and gas sector struggle to make ends meet.
Frustration with Prime Minister Justin Trudeau’s government is on full display at Ms. Rempel’s campaign office, with signs reading “Trudeau must go" on the walls. Alberta has lost nearly a quarter of its oil and gas jobs since commodity prices crashed in 2014, according to a Petroleum Labour Market Information report. Ms. Rempel accused the Trudeau government of leading a “hostile attack” on the province’s energy sector, citing its failure to get a pipeline built.
Liberals say that while they have tightened environmental-assessment rules and introduced carbon pricing to reduce greenhouse-gas emissions – two measures that are not popular in the oil patch – they have tried to support oil and gas workers. Last year, the government purchased Kinder Morgan’s Trans Mountain pipeline expansion project for $4.5-billion but construction was stalled when the Federal Court of Appeal quashed the federal permit last August and will start up again only this fall.
Natural Resources Minister Amarjeet Sohi, who represents the riding of Edmonton Mill Woods, defended the Trudeau government’s efforts to boost the province’s economy, pointing to the Trans Mountain purchase.
“If the Prime Minister doesn’t care about Alberta, why would he go to the lengths to invest those kinds of resources and protect a project that people like Michelle Rempel and other Conservatives feel that we don’t support?” Mr. Sohi said.
A non-profit environmentalist group is publicly endorsing 25 individual candidates, representing all four major national parties, in the upcoming 2019 election who it believes will put the “environment first,” regardless of party platforms.
The list of candidates endorsed by GreenPAC features seven candidates each from the NDP and Liberals, six from the Green Party and four from the Conservatives, as well as one independent: former health minister Jane Philpott.
“We don’t look at party platforms or campaign promises. We look for individuals that have a proven track record of leading on issues like waste, land protection, energy production and climate change,” GreenPAC’s executive director Sabrina Bowman explained in a prepared statement.
GreenPAC says it will support the endorsed candidates by encouraging environmentally-oriented Canadians to “donate to or volunteer for their campaigns.” In the 2015 federal election, GreenPAC endorsed 18 candidates, of which 14 were elected. For the 2019 pool, eight candidates are running in B.C. ridings, seven in Ontario and four in Quebec, three in Manitoba and three in the Atlantic Provinces, including two in Prince Edward Island.
Among the notable names: Environment Minister Catherine McKenna (Ottawa Centre, Ont.), Science and Sport Minister Kirsty Duncan (Etobicoke North, Ont.), Treasury Board President Joyce Murray (Vancouver Quadra, B.C.), Green Party Leader Elizabeth May (Saanich —Gulf Islands, B.C.), former Conservative leadership hopeful Michael Chong (Wellington —Halton Hills, Ont.) and Grassy Narrows Chief and NDP candidate Rudy Turtle (Kenora, Ont.). Also included on the list is Quebec Liberal candidate Steven Guilbeault, a high-profile environmentalist who co-founded Equiterre and has been outspoken in his opposition to pipeline projects, including the Trans Mountain expansion.
On July 8th, 2019, Eagle Spirit Energy announced it had filed a request for National Energy Board (“NEB”) guidance regarding new Project Description requirements. After seven years of consultations, planning and project development, ESE has proceeded with the preparation and filing of a complete Project Description with the NEB this year.
ESE have publicly rejected the Liberal government’s legislation C-48 and C-69, saying that Justin Trudeau’s promise to consult First Nations and Indigenous peoples was broken and intend to seek an exemption from that legislation.
An Indigenous-led group named Project Reconciliation plans to offer to buy a majority stake in the Trans Mountain oil pipeline from the federal government. Project Reconciliation hopes to buy 51% of the pipeline this year for $2.3 billion and roughly half the expansion project for $4.6 billion. It would finance the deal through bank loans underwritten by commitments from oil shippers. The federal government would retain 49%.
Iron Coalition, another Indigenous-led group, is seeking to buy between half and 100% of the pipeline once it is built in 2022. The Alberta-based group is discussing options with banks and plans to direct future profits to Indigenous groups in the province that join.
TMX is preparing for construction expected to begin in September 2019. Pipeline has been transported from Saskatchewan to Alberta, and Trans Mountain is now hiring contractors, with the goal of hiring as many local and Indigenous workers as possible.