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British Columbia Western newsletter: Experts pour cold water on Alberta premier’s pitch for new refineries

Good morning, it’s Alberta bureau chief James Keller.

There’s an idea that inevitably comes up in any debate about one of Canada’s many raw exports. Are timber prices low? Then make lumber or chairs, instead. Why not make bread instead of wheat? And when it comes to oil – especially when prices are low – why aren’t we refining it in Canada instead of shipping it away?

Refineries haven’t made sense to Alberta’s oil sector in a long time. They’re incredibly expensive, take years to plan and build, and the global demand is in raw crude, not refined fuels such as gasoline and diesel. A newly built refinery in Alberta – the first in nearly 35 years – required help from the province and is now struggling. But that hasn’t stopped the Alberta government and others from repeating the same argument that the best answer to persistently low oil prices is to upgrade or refine the oil at home.

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Alberta Premier Rachel Notley turned up the volume this past week, inviting oil companies to submit proposals over the next couple of months. Ms. Notley says the project must make sense for Alberta and she’s not making any specific promises of public assistance. But without the ability to get new pipelines built, she says refining capacity is among a series of measures her government is pursuing, including constraints on production set to take effect in the new year and a proposal to increase shipping oil by rail.

But the industry has been skeptical of any new refining proposal, and energy experts tell Justin Giovannetti that low oil prices and Ms. Notley’s plea are unlikely to make much of a difference.

There are a few reasons. Refineries can be built quicker and cheaper in places such as Asia, and it makes sense to make the finished product closer to where it will be used, in part to ensure the refined fuel matches local demands. As well, even refined fuel would need pipelines to get to market.

We’ll know by February whether the province is able to overcome those obstacles and convince an oil company to pursue a refinery project. Perhaps more consequential will be the spring election campaign, when the state of the oil industry will be among the most important issues. The United Conservative Party under Leader Jason Kenney has been skeptical of Ms. Notley’s refinery plan, dismissing it as little more than a publicity stunt, and Mr. Kenney will be presenting his own plan to revive the industry.

This is the weekly Western Canada newsletter written by B.C. Editor Wendy Cox and Alberta Bureau Chief James Keller. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here. This is a new project and we’ll be experimenting as we go, so let us know what you think.

Around the West:

HUAWEI: The pizzas, which Meng Wanzhou had delivered to the horde of reporters waiting outside her Vancouver house hoping for a brief comment the day after she was released from jail, were a rare gentle gesture in an international story that has gripped the governments of Canada and China since the beginning of the month. Ms. Meng, a senior executive at China’s premier technology company Huawei and the daughter of its founder, was granted bail earlier this week after a contentious court hearing. She had been held in jail since her arrest at Vancouver’s airport on Dec. 1. Border guards were acting on a request from the United States, which wanted her extradited on accusations she lied about the ties between the huge Chinese technology company founded by her father and a company doing business in Iran, contrary to sanctions.

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But while the Crown argued Ms. Meng was likely to flee Canada in part because of an apparent record of her avoidance of the United States, B.C. Supreme Court Justice William Ehrcke accepted the $10-million in bail and the assurances of her legal team that she will wear an ankle bracelet and will submit to being under surveillance 24/7 wherever she goes in Vancouver, Richmond and North Vancouver. Said Justice Ehrcke in a sentence heavy with meaning: “Residents of countries other than the United States − including Ms. Meng − may have myriad good reasons in choosing not to travel to the United States during the past two years,” he said.

The sentiment was bolstered when President Donald Trump suggested in an interview with Reuters that he could intervene in the case against Ms. Meng if it would help the United States come to a trade pact with China. That effectively undermined Canada’s argument that Ms. Meng’s arrest was law, not politics. President Trump’s comments weren’t appreciated by the Canadians and in fact, could offer Ms. Meng’s lawyers an argument that her prosecution has become politicized, violating her rights.

With two Canadians detained in apparent retaliation in China, B.C.'s trade minister cancelled his portion of a coming trade mission to China, though forestry executives continued on. As Ms. Meng gets on with life confined to the Lower Mainland and a comfortable house in the city’s Dunbar neighbourhood, the international consequences of her case won’t quell soon: The United States has not yet filed its formal extradition request and has until the beginning of February to do so.

ENERGY: Alberta’s decision to force companies to cut back their crude-oil production continue to roil the industry. On Friday, Suncor Energy warned of “unintended consequences,” including increased safety hazards for employees. The company suggested cutting back production during the coldest months of the year could increase risks to safety and reliability. But the company also projected its production will grow by 10 per cent in 2019.

CHILD PROTECTION: B.C.’s children’s commissioner rarely issues a report that inspires comfort in the province’s child-welfare system. But earlier this week, Jennifer Charlesworth outlined in a scathing report a disturbing lack of diligence by social workers to ensure “Charlie” was safe and protected. She detailed the case of a 12-year-old Indigenous boy with autism who was taken into foster care in 2016 after being found naked, starving and screaming. He had been the subject of eight separate reports to authorities, but no social worker had ever met with him, reported Lisa Steacy. Katrine Conroy, the Minister of Children and Family Development, called the situation “inexcusable,” but Mary Ellen Turpel-Lafond, B.C.’s former children’s commissioner, said she had been warning about government social workers failing to visit vulnerable children in three reports dating to 2011.

TRANSIT: Regional transit officials shed some light on Surrey Mayor Doug McCallum’s move to cancel plans that had already been approved and funded to build a 16-kilometre network of light rail connecting his city in favour of a plan for SkyTrain this week. As Ian Bailey reports, a study compiled by staff, TransLink concluded the $1.6-billion committed for the light-rail plan would simply not cover the route between Surrey and Langley that Mr. McCallum has proposed. Other mayors called on him to compromise. But at a contentious meeting Thursday, Lower Mainland mayors grudgingly voted to move ahead with a business case for Mr. McCallum’s project, despite the concerns about whether it makes sense when the line has only half the funding required. The vote means the mayors will move ahead with spending $20-million and 15 months to explore the design and constructions issues for the line, Frances Bula reports.

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Gary Mason on the rush to pile on Alberta: “You don’t kick a person when they’re down and you don’t send letters that effectively taunt someone you know is already angry. And the anger in Alberta right now is real – something I don’t think the rest of the country fully comprehends.”

Doug Saunders on the Huawei arrest: “All three countries involved – China, the United States and Canada – are at risk of betraying the values they proclaim in the service of a dark politics of revenge and abduction.”

Konrad Yakabuski on the Quebec premier’s attack on Alberta: “So while his comments on Alberta’s ‘dirty’ oil might be seen as hypocritical, they should also be interpreted as an attempt to score brownie points with Quebec’s media-savvy environmental movement.”

Preston Manning on building pipelines: “The immediate requirements are for corridors to the Pacific to access Asian markets and corridors to the Atlantic to replace oil imports from Saudi Arabia and Venezuela with Canadian oil. As more resource development moves further northward, corridors to the Arctic will also be required.”

Roy Fox on Bill C-69 and First Nations: “We are on record as very strongly opposing Bill C-69 in its current form. And we are greatly concerned that it spells reductions in earnings, profits and royalties from our lands.”

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Mark Jaccard on carbon pricing: “If we were honest, we would explain that decarbonization can be achieved entirely with regulations. These will cost more, but not a great deal more if policy-makers use flexible regulations, or “flex-regs,” that allow companies and individuals to determine their cheapest way to decarbonize.”

Adrienne Tanner on carbon-monoxide detectors: “So why on earth has B.C.’s provincial government not followed Ontario’s lead and mandated CO detectors in all buildings? Surely, we shouldn’t wait for another family to die.”

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