The dust-up this week between Mayor Gregor Robertson of Vancouver and Naheed Nenshi of Calgary over a pipeline illustrates a major problem for our country. Canada has an immense stock of natural wealth in the Alberta oil sands. The world is going to burn oil from somewhere. The problem is getting ours to market. In this area the "forces of no" have been exceptionally diligent and adept in closing off all sane choices through clever intellectual scaremongering.
The toughest nut to crack has been finding a way for the oil to reach the Pacific Ocean. The route known as Energy East – which pipes oil to the East Coast – is very good and should be built, not least to displace Saudi crude with the ethical Canadian sort. But it does not get around the need for a Pacific outlet to the major and growing markets.
Our country is in a slump now, a dramatic demonstration of the importance of the energy sector. The Americans continue their catbird position as our sole customer, and so we have to leave a lot of money on the table. We are price takers. A Pacific outlet would change that at once.
The current idea is a tripling of the capacity of the 60-year old Kinder Morgan pipeline. By any standard, that level of activity pays a lot of taxes, medicare and pensions. The radical enviros say, "Leave it in the ground," but most of us would prefer the care and pensions – as long as the transportation can be done safely. There's the rub; there's the radical leverage.
Ottawa has to say yes or no to Kinder Morgan by next December. What to do?
Here's the political problem: The pipeline ends up in Burnaby, B.C., near the head of Burrard Inlet. Large tankers have to transit two tidal narrows to get from there to the open sea. The people of Greater Vancouver have been pretty well convinced that extra traffic is a terrible risk. They have been much influenced by two mayors, dour Derek Corrigan of Burnaby and the handsome Mr. Robertson of Vancouver.
The current Liberal government has 15 local MPs that they would rather keep. The New Democrats are ferociously opposed. Local aboriginal groups take the same view. Feelings are high. How will Prime Minister Justin Trudeau finesse this one?
Well, here's how. The CN railway has a line directly from Alberta oil country to the ports of Prince Rupert and Kitimat in northwestern B.C. The petroleum stuff called bitumen can be shipped in rail cars to the coast. Unheated, bitumen is rather like peanut butter. It is safe in case of derailment.
When the bitumen arrives at the coast, the cars are heated and the substance pumped into a refinery and converted into gasoline and diesel. These products are then put into tankers and sent out to sea. Tanker accidents? The contents evaporate, unlike messy crude. No fun, but no disaster either.
The rail line exists. The tank cars exist. What about the refinery?
There are two respectable proposals in play. They are "Kitimat Clean" and "Pacific Future Energy Corp." Both have respected proponents and good aboriginal relations.
For refined products, the market exists. Refineries do not directly depend upon the price of crude oil. They make their money as a midstream player, upgrading the crude for a fee. Both proposals claim they have a sound business case. Both deserve government support, not just for the energy sales but for the 3,000 continuing good jobs in refining plus an almost certain doubling to 6,000 from a later petrochemical plant.
B.C. Premier Christy Clark has her "five conditions" and this meets them. But the decision maker here is Mr. Trudeau in any case. This northwest route solves his Pacific problem. (Kinder, whose CEO, Ian Anderson, has been a world-class advocate of his project, might be able later to retool its proposal to follow an existing pipeline right-of-way to the Vancouver Airport and bypass the Burrard Inlet worry.)
Other downstream winners could be the numerous aboriginal groups along the Northern Gateway route who might very well come together to build that pipeline to replace rail. It is an economic project and Ottawa could usefully put a lot of its aboriginal compensation money right there.
Pacific access problem solved: win/win/win.
Eds Note: An earlier version incorrectly identified Pacific Future Energy Corp. as Pacific Energy Futures.