Alberta Premier says pipeline prospects improving

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Alberta Premier Alison Redford says that heading into 2014, she sees encouraging political signs in relation to approval of the Keystone XL pipeline in the United States, and North Americans are realizing that pipelines are a better means of shipping crude than rail.

In a year-end interview at her Calgary office, the Premier cited a broader recognition of the safety and environmental risks of rail, which has become the key transport alternative as Alberta oil sands and U.S. light oil production ramps up and pipelines are delayed.

Perhaps more than any other issues, pipeline approvals and market access have become her raison d'être as Premier. Since shortly after she took office in late 2011, Ms. Redford has made five trips to Washington to lobby for energy projects, including the controversial Keystone XL project that would take more landlocked Alberta bitumen to U.S. Gulf Coast markets and refineries – where producers believe it will command higher prices.

Environmentalists who oppose the pipeline say allowing TransCanada Corp. to build it would open the door to more oil sands production – and consequently increased greenhouse gases. They say the generally higher costs of rail means that form of transport will only ever be a supplement to pipelines, and a reliance on rail could reduce the attractiveness of development in the oil sands.

The Premier said her province's crude can go on tracks, but it is not the best way.

"Rail was built to track rivers and to go through dense urban centres. That's problematic if you're increasing capacity," Ms. Redford said, noting concerns about rail from British Columbia to Quebec, the site of the Lac-Mégantic derailment and explosion that killed 47 people last July.

She also pointed to a draft environmental impact statement from the U.S. State Department on the Keystone proposal that concluded the project alone would not have a major effect on development in the oil sands. It said oil sands producers would get their product to market by rail or other means.

But Ms. Redford said transporting oil by rail is more energy intensive than by pipeline.

"What you saw in that report was a very clear indication that if you're concerned about greenhouse gases, that Keystone should be approved. Because if it's not approved, then you end up with a product on rail – which has a greater environmental impact."

She is not the first Western premier to raise concerns about rail. After a derailment in Saskatchewan in September, Premier Brad Wall also said, "we need pipelines. We need them and we need to be unequivocal that pipelines are still certainly the best way."

Ms. Redford also believes the U.S. midterm elections could work in Alberta's favour. Political watchers and TransCanada executives have said the contentious midterm elections for the U.S. Congress could lead to politicking that could further slow the regulatory process. Many of U.S. President Barack Obama's environmentally minded supporters, who he needs to vote for Democratic candidates, oppose the project.

But Ms. Redford said some Democrats realize its economic importance, and have taken to heart her often-repeated message that Canada is a secure energy supplier for the U.S.

"These are jurisdictions where they have refineries, and they want the jobs from Keystone," she said. "There's a real appreciation for the fact that what we've been saying actually does matter."

However, Alberta Official Opposition Leader Danielle Smith takes the point of view of others, who say the U.S. midterm elections will only make the case for Keystone more complicated.

"I think we've lost another window for a decision to be made," said Ms. Smith, who leads Alberta's Wildrose Party.