Notley threat to cut off oil to others not a new tactic for Alberta

Dan Healing
The Canadian Press
March 9, 2018

Alberta Premier Rachel Notley's threat to reduce oil shipments to other provinces, the latest salvo in a recent pipeline dispute with British Columbia, carries on a provincial tradition of using its natural resources to reinforce its political positions.

The energy-rich province has used its oil and gas exports as leverage at least three times in the past to win arguments with other levels of government, oilpatch historian and author David Finch said Friday.

"Because the ... premier represents the people of Alberta as owners of the natural resource, there's always more at stake on these issues and the Alberta perspective is always different than the Ottawa perspective," he said.

Notley on Thursday said she would, if pushed, replicate the actions of former premier Peter Lougheed who in 1980-81 reduced oil flows over several months and cancelled two oilsands developments after the federal Liberals brought in the national energy program with its price controls, new taxes and revenue sharing.

Finch said ex-premier Ernest Manning "flexed his muscles" and sent a shipment of natural gas to Montana in 1951 to assert the province's right to control its exports. And then-Alberta energy minister Don Getty reduced natural gas shipments to Ontario in 1975 to protest federal policies he felt were discouraging establishing a petrochemical industry in the West.

Alberta has been locked in an inter-provincial dispute with its western neighbour over the Trans Mountain pipeline expansion. It became more heated earlier this year when B.C. said it would not allow increased oil flow until more research is completed on pipeline safety and spill response — B.C. backed down after Alberta suspended imports of B.C. wine.

The Alberta government still has the legal right to restrict exports of oil and gas by withholding "removal permits," said Bob Skinner, executive fellow with the School of Public Policy at the University of Calgary, whose career has included stints in the federal energy department, industry and academia.

However, he thinks there's a "very low chance" that Notley will actually implement export cuts because her threat echoes a previous suggestion by Opposition United Conservative Leader Jason Kenney, who could be the next premier.

"She does not have to do it because what she's done is take an arrow from the quiver of Jason Kenney, so the signal to British Columbia and Premier (John) Horgan is, 'If you think I'm a toughie, just you wait. I'm offering you a basis for negotiation. I don't think you'll get that if somebody else is here.'"

Prime Minister Justin Trudeau said Friday that the Alberta-B.C. dispute over Kinder Morgan's Trans Mountain expansion plans isn't the first time provinces have disagreed on a project, adding that it's important the federal government show leadership now.

"What I have been very clear about is that this project is in the national interest and it will get built," Trudeau said in Regina.

The Trudeau government approved the Kinder Morgan project in 2016, but the pipeline has since faced permit fights and challenges from the B.C. government. The $7.9-billion expansion would triple the amount of Alberta crude going from Edmonton to the port in Burnaby, B.C.

Any reduction in shipments through the existing Trans Mountain line would likely affect operations of the 55,000-barrel-per-day Burnaby, B.C., refinery owned by Alberta-based Parkland Fuel Corp., which bought it from Chevron in November.

"We are reaching out to both the Alberta and British Columbia governments to discuss this issue. We hope that they can resolve this issue in a way that is beneficial to Canada, and both provincial economies," said Parkland spokeswoman Annie Cuerrier on Friday.

"Any measure that restricts the supply of oil to British Columbia would be negative for both economies."

Parkland's Burnaby refinery is currently down for maintenance, which is already putting the squeeze on drivers in B.C., where gas prices spiked as high as $1.50 per litre this week.

The Canadian Association of Oilwell Drilling Contractors said in a statement Friday it supports Notley's move.

"An ongoing trade conflict with B.C. is not a desirable outcome for anyone, but tidewater access for Canadian crude products is just too important an issue to back down from," said CAODC president Mark Scholz.

Spokeswoman Chelsie Klassen said the Canadian Association of Petroleum Producers opposes trade barriers between provinces and encouraged "collaboration between governments rather than divisiveness."

Environmentalists, meanwhile, said they were disappointed with the Notley's brinkmanship.

"It feels like a betrayal, it feels like they're really going against the values of a lot of people who supported them," said Claire Edwards, 23, an Albertan who said she helped with Notley's election campaign.

She was reached in Vancouver where she plans to take part in a pipeline protest march on Saturday holding a huge banner that reads "Albertans against Kinder Morgan."

She added it seems like the oil and gas industry is in charge in Alberta no matter which party is in power.

Story: National Newswatch