The Alberta-B.C. fight over the Northern Gateway pipeline is an omen of what's ahead as Canada struggles to get its oil and gas to fast-growing markets in Asia.
A report released Tuesday by the Macdonald-Laurier Institute argues that distribution is the No. 1 challenge facing Canada's resource-based economy.
"Canada must be able to get its oil and gas and other energy products to new markets quickly and efficiently," says the study by Ottawa trade consultants Laura Dawson and Stefania Bartucci.
"Our ability to raise the standard of living for people across the country depends on it. Finding environmentally responsible and efficient ways to transport energy products is a lynchpin in our future success as a global energy leader."
Ms. Dawson and Ms. Bartucci predict that provincial disputes over sharing the spoils of resource development will continue to "flare up" as the industry grows and risks spill over provincial boundaries.
And that cries out for governments to figure out a better way to resolve disputes.
"The current issues between Alberta and British Columbia will not be the last," according to the report.
The only way now to share the spoils and the risks of pipelines that cross provincial boundaries is through the federal equalization regime because royalty revenues belong to the province where the resources are located.
"The existing system of equalization payments will not be enough to address the grievances of provinces that believe that bearing a greater share of the environmental risk imposed by new pipelines and infrastructure entitles them to a greater share of financial compensation," according to the report.
The authors also urge:
- Improved access to refineries in eastern Canada and on the U.S. Gulf Coast.
- Reorienting pipeline infrastructure from the U.S. market to Asia.
- Continued streamlining of pipeline approvals, while balancing "economic efficiencies," environmental sustainability and Aboriginal rights.
- Build a skilled domestic labour pool to meet worker shortages.
- Work towards free-trade deals that create a "level playing field" in energy.