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Notley threatens to turn off oil taps in dispute with B.C. over Trans Mountain pipeline

Alberta Premier Rachel Notley speaks to media before the Speech from the Throne, in Edmonton, on March 8, 2018.

JASON FRANSON/THE CANADIAN PRESS

The Alberta government will introduce legislation it says will give it the power to reduce the flow of oil shipments to British Columbia and even the rest of Canada – if necessary – in its battle to get the Trans Mountain pipeline expansion built.

The Alberta Throne Speech ratcheted up the rhetoric in the pipeline battle once again and showed that even with the ban on British Columbia wine lifted last month, the issues surrounding the Kinder Morgan Canada Ltd. project to triple the capacity of an existing pipeline are far from resolved.

In a news conference, Alberta Premier Rachel Notley did not rule out the possibility – without fully explaining why – that yet-to-be-introduced legislation could also affect Alberta oil shipments to other parts of Canada. "It all comes down to ensuring we have maximum flexibility."

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For most of this year, Alberta and B.C. have been engaged in an acrimonious interprovincial battle over the pipeline expansion. Alberta says the federally approved project is an absolute economic necessity and could be unfairly stalled by B.C. tactics – including a proposed regulation in January (subsequently put on a hold) that would halt any increase of heavy oil shipments. B.C. says it is fully within its rights to protect its coast from the spill risks of greater tanker traffic that would accompany the project.

On the first day of the spring legislature sitting, the Alberta Premier emphasized the legislation will give her government the "greatest range of tools" to react to roadblocks B.C. might throw out in the path of the $7.4-billion project. Ms. Notley said it's complicated but her government has unused legal authority to pass such a bill.

"Alberta must have the ability to respond," Ms. Notley said, without outlining what conditions would push her government to invoke the oil-supply cut.

"This is not an action that anyone wants to take. And it is one that I hope we never have to take. And it's not how Canada should work. And it's not how neighbours, frankly, should treat one other," she said.

After the Throne Speech, Prime Minister Justin Trudeau's office referred to its past statements in support of the Trans Mountain project.

In B.C., Environment Minister George Heyman told reporters that he doesn't expect Alberta will take this "unfair or unlawful action."

"We've tried to be the adults in the room here, we would expect Alberta to settle the dispute [in] an area that they thought was unlawful, in the courts, where it belongs," he said.

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With a provincial election likely one year away, the move is also an attempt by Ms. Notley to make sure her New Democratic Party still has the political upper hand in Alberta. The Throne Speech comes the same week as Alberta United Conservative Party Leader Jason Kenney travelled to British Columbia to say he is prepared to stop permits for the shipment of Alberta oil to B.C. through the existing Trans Mountain line.

Ms. Notley acknowledged Thursday the province's oil industry is "going to be a little nervous" about her move. In fact, the industry group said on Thursday it does not want Ms. Notley to make good on her threat to limit energy shipments from Alberta to its western neighbour.

"On some of the tools that she has at her disposal, we encourage her to use the ones that wouldn't be damaging to our industry," Tim McMillan, president of the Canadian Association of Petroleum Producers, said in an interview. "There's more appropriate ways to get the federal government to take on their responsibility and ensure this project gets done."

Ms. Notley, when the trade war started, said she did not favour policies such as natural-gas tolls or limits on energy shipments to B.C. because they would hurt Albertans more than their western neighbour.

The Lower Mainland already has high gas prices, and B.C. is heavily reliant on Alberta for its fuels. Right now, Alberta already ships processed or diluted bitumen, as well as refined products – such as gasoline and diesel – down the existing Trans Mountain pipeline. About 70 per cent of the refined products used in B.C. are supplied by Alberta refineries. Heading east, Ontario refineries that produce refined products get about three-quarters of their raw feedstock oil from Western Canada, while Quebec and Atlantic get lesser amounts from the West.

Jock Finlayson, executive vice-president at the Business Council of B.C, said if crude oil is no longer flowing west to the Burnaby refinery, which supplies roughly a third of Southern B.C.'s demand for gasoline, then gas prices in the province could jump significantly.

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Fuel shortages could develop and B.C. would need to increase its imports of both crude and refined petroleum from the United States and other countries, he added. "The economic impac obviously would be negative, since energy prices for B.C. businesses and consumers would be higher and there would be a scramble to find alternative fuel supply," he said on Thursday in an e-mailed statement. "If Alberta cut off supplies of refined petroleum products and not just of crude oil, the impact would be greater."

But the Alberta Throne Speech delivered by Alberta Lieutenant-Governor Lois Mitchell clearly invoked the Lougheed-era energy battle again the National Energy Program (NEP) of the 1980s.

"In the past, when workers in our energy industry were attacked and when the resources we own were threatened, Premier Peter Lougheed took bold action," said Ms. Mitchell, referring to November, 1980, legislation introduced by then-premier Lougheed to curtail the flow of Alberta oil to 85 per cent of its normal capacity.

The Alberta law was passed in reaction to Ottawa's introduction of the NEP, which the federal government designed to gain greater control over the Canadian petroleum industry – including the revenues – but which Alberta viewed as an unfair and unwarranted federal grab of the province's resource wealth. Mr. Lougheed followed through by turning down the taps, a move he said prompted Ottawa to return to the bargaining table and negotiate a new deal in September, 1981.

"We will not hesitate to invoke similar legislation if it becomes necessary owing to extreme and illegal actions on the part of the B.C. government to stop the pipeline," Ms. Mitchell said on Thursday.

Mr. Lougheed said almost four decades ago that if his oil supply cut caused any shortage of oil or hardship to Canadians, he would cancel the plan. Likewise, Ms. Notley said on Thursday her government's key focus is getting people's attention on the matter and "we're not interested in creating any kind of crisis."

Finance Minister Bill Morneau says he believes the battle between Alberta and British Columbia over the Kinder Morgan Trans Mountain pipeline expansion won't impact international investment into Canada. The Canadian Press
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