The Northern Gateway Pipeline project is a political hot potato for Alberta mayors Stuart Houston and Greg Krischke, one they admit carries environmental risks to the land and people of B.C.
But the huge economic benefits to the Canadian economy of running a crude oil pipeline to Kitimat to tap into Asian markets has them convinced. It has to happen.
"We're not going to say it's a done deal, we'll let the joint review panel and the federal government decide that, but we're going to say it's vitally important to the interests of this country and vitally important to this global economy and where we are as a country," said Houston, the mayor of Spruce Grove, Alta. "This is a turning point for Canada right now as an energy-producing nation. Alberta and British Columbia are going to drive the economy right now and we need to figure out how to get over that hurdle."
Houston and Krischke, the mayor of Leduc, spent Thursday in Prince George meeting with local government officials and community leaders as representatives of the Capital Region Board and its Pipeline Linkages Strategy Committee, which represents an Edmonton-area population of 1.2 million people.
"We think the pipeline is good for B.C. and we think it's great for Canada," said Krischke. "But we certainly are cognizant of the fact it has to be done right. It's the same in our own community, if we think our citizens are going to be at risk, you have to minimize that risk or what's the sense in doing it."
Capable of transporting 525,000 barrels per day of raw crude to waiting tankers in Kitimat and returning 193,000 barrels per day of condensate used to thin the oil for easier transport, the $6.5 billion pipeline will not be built unless it receives a recommendation from the joint review panel and is approved by the National Energy Board. That decision won't be made until late next year.
Houston knows British Columbians want to know how the pipeline will benefit the province, and his answer covers a more broad perspective -- how the oil industry will benefit Canada by stimulating the economy of the provinces.
"In the next 25 years, Alberta will purchase $117 billion in goods and services from other provinces and B.C. will generate $28 billion and 25 per cent of the total jobs created," Houston said. "Fifty-two per cent of the total jobs created will be in Ontario. It will create manufacturing jobs for trucks, pumps and motor parts, everything that's required for the oil industry, so the real benefit is the prosperity for not only B.C. and Alberta but the whole country."
New technology has enabled the United States to step up its oil production to the point where it expects to be energy self-sufficient by 2035. That would create a huge problem for Canada's oil producers, which now ship 99 per cent of their exports to the U.S. By 2016, Alberta will have reached its capacity for shipping oilsands crude to the U.S. New customers have to be found, which is why Northern Gateway is needed.
Last month, Enbridge Inc., the parent company of Northern Gateway, announced the pipelines carrying crude to U.S. markets are essentially full, with no increased capacity expected to be added until late next year. Because of the bottleneck that exists at pipeline terminals in Oklahoma, U.S. buyers are now paying $27 per barrel less for Alberta oil as compared to the price of international crude.
The Canadian Energy Pipeline Association estimates a $15-per-barrel discount decreases energy company revenues by $16.4 billion a year, and results in a $2.46 billion loss to governments. With a $27-per-barrel discount, the losses are nearly double that.
"That's $66 million per day we're losing," said Krischke. "We'd gain $13.60 per barrel if we could ship to Asia.
"We're at a critical point in Alberta and this country for infrastructure development for pipelines. We need a pipeline to get oil to world markets because we're being held hostage by the United States right now. We should be doing something towards Eastern Canada, because there are refiners there, and they are shipping oil up from the U.S. That shouldn't have to happen. Why aren't we using our own oil there?"
Krischke supports David Black's proposal to build a refinery in Kitimat to lesson the risk of shipping crude in tankers through the Douglas Channel to the open ocean that passes through areas of coastline that are sensitive to an environmental disaster in the event of a spill.
"Any value-added that we can do, we should do, just think of what it would do for the economy of Kitimat," said Krischke.
"There has to be a recognition that the environment is sacred and we have to do the things that will ease the angst over the environmental concerns. For every aboriginal nation along the route there are opportunities for economic generation. Their concern, rightly so, is they come from the land and they want to protect the land."
The joint review panel hearings resumed Thursday in Prince George and neither Houston nor Krischke are involved, but they are well aware the pipeline is not popular with many B.C. residents. With time, as both sides become more educated about the potential impacts of the project, they're hoping some of the naysayers will change their minds.
"We applaud the people of British Columbia for their tough questions and the regulatory requirement to make sure the environment is safeguarded, because it's created an increase in safety for the pipeline people," Houston said. "They are investing an extra $500 million in to improving safety, going deeper under the waterways, putting flow controls on both sides of waterways, increasing monitoring, increasing thickness of the pipe that goes under waterways to make a safer pipeline."
The two mayors also met Thursday with Burns Lake mayor Luke Strombold. They will be in Terrace and Kitimat Friday to hold similar meetings with pipeline stakeholders.
