B.C. agrees Alberta royalties are off the table in oil pipeline talks
Published Tuesday, November 5, 2013 6:07AM EST
Last Updated Tuesday, November 5, 2013 10:38PM EST
VANCOUVER -- British Columbia has agreed it will keep its hands out of Alberta's pockets where oil pipeline royalties are concerned with an agreement that removes the prospect of the neighbouring province holding B.C.'s natural gas hostage, but gives British Columbia little else.
With hopes of a trillion-dollar liquefied natural gas industry in her province's not-too-distant future, British Columbia Premier Christy Clark announced a deal Tuesday with Alberta's Alison Redford that takes the prospect of a greater share of the neighbouring government's revenues from heavy oil pipelines off the negotiating table.
After more than a year of frosty relations and on-again, off-again meetings, the two premiers announced it is not for the two provinces to negotiate the benefits that B.C. has set out as a condition for approving pipeline projects from Alberta.
Clark announced she will sign on to Redford's national energy strategy and that she has agreed none of Alberta's royalties from oil pipelines will be going into B.C. coffers.
"There are lots of different forms that economic benefits can take, and I've said that right from the very beginning. But when it comes to royalties, British Columbia has an interest in ensuring that provinces protect their royalties because we also receive really substantial royalties from our natural gas industry," she said.
"We're creating a liquefied natural gas industry that is going to be worth a trillion dollars over 30 years. A large part of that will be royalties so we want to protect our royalties and we recognize that Alberta wants to protect theirs."
In return, the two leaders announced "Alberta agrees that B.C. has a right to negotiate with industry on appropriate economic benefits."
Clark suggested a proposed oil refinery project, pipeline tolls and even federal revenues are still on the table for B.C. to get the "fair share" of economic benefits which were among five conditions for approval of any pipeline -- a condition that sparked the war of words between the two leaders.
Earlier, Clark had previously ruled out going directly to the oil and gas industry to ask for money, telling reporters last October that "the people who have the most vital interest in having it go ahead are the ones that are going to have to decide to move it forward."
In fact, Enbridge said last year that it offered to meet with Clark to discuss the benefits of the pipeline, but she declined the offer.
Redford said the agreement is not about "gotcha politics."
"This is about putting in place economic models that are going to work for Canada, for each of our economies and allow for product to move," she said at a news conference Tuesday that was on, then off, then on again, with Redford in Vancouver to deliver the keynote address at an oil and gas forum.
In her speech to the Vancouver Board of Trade conference, Redford noted that 42 per cent of the three billion cubic feet of natural gas that B.C. is already producing passes through Alberta on a daily basis.
"B.C. is Alberta's gateway to Asia, and our second-largest provincial export market, while Alberta is B.C.'s entry point to the North-American heartland and, by far, its biggest provincial export destination," she told about 300.
"Our provinces share economic destinies."
When Clark outlined her demands last year, the request for financial compensation drew an immediate rebuke from Redford, who accused B.C. of attempting to reach into Alberta's pockets. Clark famously described a meeting between the two leaders as "frosty."
But Tuesday's framework for negotiations makes it clear that money will not be part of the talks between the provinces. Instead, B.C. has agreed to take demands for financial compensation directly to the oil and gas industry when projects such as Enbridge's Northern Gateway pipeline are proposed
Clark had previously refused to sign onto Redford's push for a national energy strategy because of the dispute. On Tuesday, Clark agreed to endorse the national plan.
Redford suggested their announcement brings the provinces closer to an ultimate agreement on pipelines that would deliver Alberta oil products to the B.C. coast for export.
The 1,200-kilometre Northern Gateway pipeline proposed through British Columbia would deliver 525,000 barrels of Alberta oil to a tanker terminal in Kitimat, on the north coast of B.C.
A federal review panel must issue a report by the end of the year on the project, which faces opposition from First Nations and environmental groups. The British Columbia government also officially opposed the Northern Gateway pipeline -- as proposed -- at the recent federal review.
In addition to the Northern Gateway, Kinder Morgan has proposed a massive expansion of its existing Trans Mountain pipeline from Alberta to the Vancouver area.
Kinder Morgan president Ian Anderson declined requests for comment on Tuesday, leaving the Vancouver Board of Trade conference on energy immediately after Redford finished her own speech.
Ben West, of ForestEthics, one of the most vocal opponents of Northern Gateway and other pipeline expansions, said Clark has "flip-flopped" on her position.
"There isn't a mandate for pipelines in B.C.," he said.
Art Sterritt, of the Coastal First Nations, said the agreement is meaningless.
"Eighty per cent of British Columbians still oppose Enbridge's proposed project. This agreement does nothing to change that."