Ottawa, Alberta join forces to sell B.C. on Trans Mountain pipeline

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A day after the Trans Mountain pipeline expansion was approved by Ottawa, the hard sell and political tight-roping that will be needed to get the project completed began.

As opponents vowed an unending fight against Kinder Morgan Inc.'s $6.8-billion proposal, the federal Liberals indicated they are willing to do more than approve the construction – and will actually put some political capital on the line to give the controversial expansion a hope of going ahead.

Federal politicians are also treading carefully to ensure they don't inflame tensions between oil-producing Alberta and British Columbia's Lower Mainland, where fears of a possible pipeline rupture or tanker spill – and increasing tanker traffic – have hardened opposition to the project.

Read more: Christy Clark says Ottawa close to meeting B.C. pipeline conditions

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While individual Liberal MPs continue to voice their disappointment with the approval, cabinet ministers Harjit Sajjan and Marc Garneau were dispatched to Vancouver Wednesday to speak about the merits of the project that will triple the line's capacity.

Natural Resources Minister Jim Carr was given a warm welcome in Calgary, and said now that a thorough regulatory and cabinet vetting is complete, the federal government is a full backer of the pipeline project – which it says will create billions in federal and provincial revenues.

"Until now, our resources were effectively landlocked, with existing pipelines primarily serving the United States," Mr. Carr said in a speech to the industry-heavy Calgary Chamber audience.

"We have to diversify our opportunities by expanding our markets, and the Trans Mountain expansion project will make that possible. For the first time, Canada will be fully in the global energy game."

Alberta Premier Rachel Notley will travel to British Columbia on Monday and Tuesday next week to sell her province's neighbours on her government's climate-change plan and the pipeline expansion.

"We will get this project built," she told reporters on a conference call.

And British Columbia Premier Christy Clark walked a careful line Wednesday, saying she had told Prime Minister Justin Trudeau it was important he come to B.C. himself to explain his thinking on the decision.

The B.C. Premier, who faces an election in May, 2017, and has high hopes for liquefied natural-gas pipelines and facilities that would benefit her province's economy, continued in her neutral position on the Kinder Morgan project. However, she said that "significant progress" has been made on all five of her government's conditions of supporting new or expanded heavy-oil pipelines, referring to an environmental review, First Nations participation, land- and water-spill response and economic benefits to be accrued to B.C.

On Tuesday, the Prime Minister announced his government was approving the Kinder Morgan project, subject to 157 conditions. But Mr. Trudeau delivered a decisive no on Enbridge Inc.'s long-stalled Northern Gateway venture, saying the pipeline would result in oil tankers moving through the sensitive ecosystem of the Douglas Channel and is not in the public interest.

Ottawa also approved Enbridge's $7.5-billion Line 3 pipeline, designed to nearly double capacity on an existing route to the U.S. Midwest to about 800,000 barrels a day by 2019.

In Alberta, Ms. Notley has staked her political future on her government's working partnership with the federal Liberals, and more specifically, construction of a new export pipeline in exchange for and support of a national carbon-pricing plan that would slap a $50-per-tonne levy on all greenhouse-gas emissions by 2023. On Wednesday, Ms. Notley told reporters support for the federal carbon initiative will be contingent on the expansion actually being built.

Her province is grappling with mounting debt and multibillion-dollar budget deficits due to the collapse in crude prices.

Critics say approval of pipelines means Canada will exceed its climate-change targets. However, Ms. Notley said Ottawa's greenlighting of the Trans Mountain expansion is directly linked to Alberta's plans to tax carbon, cap annual oil sands emissions at 100 million tonnes and phase out coal-fired power by 2030. She said she intends to make that point in her trip west next week.

"It's really important for me to be able to go out there and say to those people who link the pipeline to the issue of climate change and an increase in greenhouse-gas emissions that in fact our climate-change leadership plan has very effectively delinked those issues," the Alberta Premier said.

The sales pitch comes as crude prices show tentative signs of recovery, offering the hard-hit industry some relief after more than two years of severe pain. West Texas intermediate oil on Wednesday jumped more than 8 per cent to $49.44 (U.S.) a barrel after the Organization of Petroleum Exporting Countries agreed to cut output for the first time since 2008.

Ms. Notley said the new pipeline capacity would potentially increase prices received by producers, while opening new markets in Asia. But she insisted it would not result in increased production from the oil sands.

Energy-industry analysts said the prospect of added export capacity by itself is unlikely to trigger an immediate investment boom. Still, the federal decisions could help revive confidence in the shaken sector, albeit slowly.

"For energy investors, this doesn't bring an end to the ongoing saga with respect to improving market access for Western Canadian crude production, particularly with the Energy East pipeline proposal still very much up in the air," said Chris Cox, an analyst at Raymond James Ltd.

"However, it does provide much improved line of sight for better takeaway capacity to support future growth, especially out of the oil sands."

The industry has clamoured for years for wider access to international markets. Kinder Morgan Canada president Ian Anderson insisted construction could start by next September, despite looming court battles and entrenched opposition in the Lower Mainland. The company still requires environmental clearances in B.C. and will seek input in coming months to assuage local concerns, he said.

"We are fully and acutely aware that there are people who are saying they plan to oppose our project at all costs," he told reporters.

"But we've got months ahead of us to continue to reach out and talk and hopefully design a project that people can stand behind and support."

With a report from Ian Bailey in Vancouver