New premier Prentice says Canada needs new markets for Alberta oil

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Alberta Premier Jim Prentice is warning that the country is facing profound economic repercussions unless pipelines are built to open up new trade routes.

In his first sit-down interview since being sworn in as Alberta's 16th premier on Monday, Mr. Prentice told The Globe and Mail that gaining access to new markets for Alberta energy is of critical importance, but that work must be done while battling an international image problem – one fashioned in part by Hollywood stars who have successfully branded the oil sands an environmental catastrophe.

On Wednesday, Mr. Prentice changed the diplomats in the province's two foreign offices in Asia and Washington, appointments the Premier said underscore the priority he is placing on accessing new markets for Alberta's oil and gas. One of those key posts went to federal Conservative MP Rob Merrifield, who has resigned his elected position in Ottawa to take over the province's trade office in Washington, where job one will be pushing hard on the Keystone XL pipeline file.

Mr. Prentice, a former federal environment minister, is also shaping a new climate-change strategy that will see the province shutter many of its coal plants and replace them with new investment in renewable energy sources such as wind and solar.

"Alberta will have a visionary long-term approach to climate change and we'll never again go to Copenhagen in the circumstances that I did as federal environment minister in 2009," he said, in reference to the international condemnation Canada faced at the United Nations climate-change conference for its poor record on reducing greenhouse-gas emissions.

While the Premier concedes emissions from the oil sands will continue to rise over the next several years, the province can make GHG emission inroads elsewhere, he believes. The province gets 85 per cent of its electricity from coal-fired plants – many of which were built in the 1960s and 70s.

"They're all nearing the end of their useful life," he said. "They're in their wind-down phase and can be phased out and we can achieve very significant emissions reductions just by not burning coal. Coal is the source of most of the carbon emissions in the atmosphere. Forty per cent come from burning coal."

He said he's a big believer in renewable energy, noting that Alberta already has more capacity from wind power than anywhere else in the country. He said solar energy is also developing quickly. "I think what we should be doing is making investments in those areas in the context of an overall climate plan for the province," Mr. Prentice said. "I think as people have seen in the early days since I've been Premier, this is not business as usual anymore in Alberta."

The Premier was less declarative about announcing any kind of emission-reduction targets. Those likely won't be made clear until his new climate plan is announced; the date is not known. He said the new climate-change manifesto will not be a "five-year plan. I'm talking about a 20-year plan of what we need to do."

Meantime, Mr. Prentice has been immediately confronted with the same issues that his predecessors in the job have faced: opening up new markets for Alberta oil. The province has become the Wal-Mart of the energy world, he said, a land-locked, low-cost supplier of oil that has primarily one customer – the United States.

Finding a way out of this dilemma is now his problem. Getting access to tidewater is imperative, the Premier said, either on the East Coast or the West – and preferably both. He warned of dire economic consequences if this doesn't occur.

"Sometime around 2017, 2018, 2019 at the latest, we begin to run into a circumstance where there's not enough pipeline capacity to absorb the energy that's being produced in the province, and we start to get bottlenecks that will create the so-called differentials where we no longer get even continental prices but start to get deeply discounted prices instead," the Premier said.

He said that scenario will create a serious economic problem for Alberta and should be of concern to all Canadians, as it will have a "profound effect on the national economy post-2018."

Mr. Prentice conceded that the pipeline project that has the likeliest chance of proceeding at the moment is Energy East – but even that is no sure thing. He noted, however, that there is now a "unique circumstance" in Canada where there are "similarly minded premiers [in power] who are very focused on the betterment of all of the provinces."