Canada's pipeline squeeze Joe Oliver's biggest challenge1/2/2013
As the front man for the federal government’s resource development plan, Natural Resources Minister Joe Oliver enjoyed some key victories in the past year, but the continental battle over proposed pipelines rages on and the economic health of the Canadian oil industry is far from assured.
In the months ahead, Mr. Oliver will need to reassure Canadians that Ottawa’s overhaul of environmental assessment legislation will not undermine the safety of proposed pipelines, and that the sector’s success is a national priority, even as oil companies push ahead with controversial plans to extend their access across British Columbia and deep into Eastern Canada.
Mr. Oliver expressed a sense of vindication with the recent release of three reports illustrating the economic risks confronting Canada’s oil industry with its lack of access to key markets. Fears about a major Canadian industry hobbled by lagging infrastructure is what prompted the federal government’s effort to speed the process for pipeline approval.
The minister launched 2012 with an attack on “radical” environmental groups whose no-holds-barred opposition to new pipeline development threatened to undermine the value of Canada’s most strategic resource. Now, as a new year begins, Alberta heavy oil is selling at a near-record discount to international crudes, and analysts are warning that, without rapid construction of pipelines, the industry faces disaster.
The reports – two from Canadian banks and one from the International Energy Agency – “all basically said the same thing, which is what we’ve been saying for a long time,” Mr. Oliver said in a telephone interview.
The main point is “that the U.S. is going to be energy self-sufficient within the next 20 years or so and, at the minimum, we aren’t going to be able to rely on them for growth,” he said.
“There is inadequate capacity on the pipeline, and it’s getting pretty stark. None of this is news to us but it is external confirmation of what we knew and it may even be coming a little faster.”
Mr. Oliver cited as a signature achievement in 2012 the passage of Bill C-38, the budget implementation bill that made major changes to Ottawa’s environmental approval process for pipelines and major resource projects – in fact, almost all development that was previously screened by federal departments or agencies.
Natural Resources Canada had a small role in the legislation – primarily the parts that dealt with the National Energy Board and the new provision that leaves the federal cabinet rather than the quasi-judicial agency with the final word on pipeline reviews.
Since the legislation was unveiled in the budget of last March, Mr. Oliver has crisscrossed the country promoting the Conservative government’s “responsible resource development” agenda and insisting it will not result in undue environmental risks despite the dire warnings of critics.
Mr. Oliver acknowledges that more work needs to be done, including efforts to strengthen pipeline and maritime safety rules, and conducting research into spill response to ensure Canada is ready for a worst-case scenario, should British Columbia become a gateway for oil sands exports.
Despite strong opposition in British Columbia – including fierce resistance from first nations communities – Mr. Oliver remains cautiously optimistic that a pipeline will be built through the province.
“We have to convince people that we genuinely care about the environment,” he said. “We’re not going to push something through if it isn’t safe for the environment. And we’re doing everything we can to make sure that everything is done with the best of science backing it up.”
Mr. Oliver makes no apologies for open letters he issued last January in which he attacked what he described as “radical” environmental groups that received foreign financing to oppose resource development in Canada. But his own grasp of the facts can be a little shaky when he justifies the federal government’s aggressiveness, which included directions to Canada Revenue Agency to crack down on charities that engage in political activities.
In the interview, he suggested that U.S. financing of environmental groups opposed to resource development totalled “three quarters of a billion dollars” over an unspecified time period. But his office later clarified that he was quoting B.C. researcher Vivian Krause, who has estimated that such financing since the early 1990s has totalled $400-million, although her figure fails distinguish between money spent on charitable activities and that spent on political advocacy.
Even as Ottawa supports pipeline construction in Canada, it will continue to lobby for U.S. approval of TransCanada Corp.’s Keystone XL pipeline, which would provide much-needed pipeline capacity out of Alberta.
“I think [the pipeline] is really in the U.S. national interest in terms of national security, jobs and economic growth,” he said. “It really is an overwhelming case.”
(Globe and Mail)