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Waste is pumped into a tailings pond in the Alberta oil sands in September, 2010. (Nathan VanderKlippe/The Globe and Mail)
Waste is pumped into a tailings pond in the Alberta oil sands in September, 2010. (Nathan VanderKlippe/The Globe and Mail)

GARY MASON

Oil politics is a slippery slope for Canadians Add to ...

In recent years, relations between Ottawa and the provinces have been relatively peaceful – give or take the odd explosion from the now-retired Danny Williams.

But there may be acrimony on the horizon, battles that not only could pit the federal government against provinces but provinces against some of their provincial counterparts. And perhaps not surprisingly, money is at the root of it.

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The federal Conservatives served notice in the recent budget that they intend to take a more activist role in energy policy. They introduced changes to streamline the environmental review process that will allow decisions to be reached much more quickly. And cabinet now has the power to overrule the National Energy Board on major projects that are considered to be in the national interest.

The new rules are not retroactive, which means they will not impact the current NEB hearings into the controversial Northern Gateway pipeline. Both Ottawa and Alberta desperately hope the pipeline is approved, because of the billions in oil royalties it represents. The B.C. NDP, meantime, is vehemently opposed to the project. The New Democrats currently hold a huge lead in public opinion polls and could well form the government here in a year’s time.

If they do, and the pipeline proposal gets a stamp of approval from the NEB, get ready for a truly ugly clash that will see Ottawa and Alberta on one side and B.C. on the other. And that may be just the beginning of the animosity.

Kinder Morgan has announced plans to expand its Trans Mountain pipeline that runs from Alberta to the Port of Vancouver.

The $5-billion proposal would triple capacity and dramatically increase oil tanker traffic in Vancouver harbour. Resistance to the plan in B.C. is already mounting. The B.C. NDP is refusing to take an official position until it sees final plans from Kinder Morgan, but it’s hard to imagine the party giving its approval to a proposal that is so vociferously opposed by its core supporters.

That project, when and if it gets to the review stage, will fall under the new federal guidelines. That means that regardless of what the NEB decides, the federal cabinet could unilaterally rule that the project is going ahead in the “national interest.”

Given the vast sums of money Ottawa and Alberta are likely to reap from the project, it’s not difficult to imagine such a decision being taken regardless of whatever public and political opposition may exist to it inside British Columbia.

B.C. Environment Minister Terry Lake also concedes this could happen. But he thinks history has proven that defying a province’s wishes is not always an easy thing to do. On that point, he recalls the ultimately successful crusade Newfoundland premier Danny Williams waged with Ottawa over access to resource riches off the Atlantic coast.

It was a winning battle that made Mr. Williams one of the most popular politicians in Newfoundland history. Wars with Ottawa aren’t always a bad thing. Wars between provinces are more unusual. And on that front, the congenial relationship that B.C. enjoys with Alberta could be severely strained in the coming years.

Mr. Lake’s government continues to send out strong signals that Alberta is going to have to write a big cheque in order to mitigate the environmental risks B.C. would be assuming with any of these pipeline proposals.

Mr. Lake says the public discourse around the Enbridge proposal is growing inside the province. British Columbians, he says, can see how Alberta and the federal government are going to benefit from the project but can’t see what’s in it for British Columbians beyond a few construction jobs. “In terms of taxes and royalties and things like that, from what we know the benefits to British Columbians certainly aren’t as great as they are to Alberta,” says Mr. Lake.

Mr. Lake says the oil sands are an accident of geography. So, he says, is the B.C. coast, which Alberta wants to use to ship its crude. “We both have assets that are needed,” he says, “so there should be an equitable or a fair discussion about benefits in any of these types of projects.”

Oil politics in Canada are just heating up. The rancour and discord they will ignite could alter federal-provincial dynamics for years to come.

Follow on Twitter: @garymasonglobe

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