Environmentalists were giving high-fives last week over the potential demise of the proposed Northern Gateway pipeline.
Not so fast, folks.
Prime Minister Justin Trudeau hasn't nixed the pipeline per se. What he did last week was order his ministers of transportation, fisheries, natural resources and the environment to work together to develop and implement a ban on crude oil tanker traffic along B.C.'s north coast.
On the surface, that sounds like the end of Northern Gateway. There's no point in building a pipeline from Northern Alberta to Kitimat if impossible to move the crude by ship to Asian markets. The door may have been slammed in Enbridge's face yet it still remains ajar.
The potential savior of Northern Gateway is one of several refinery proposals.
Two years ago, B.C. newspaper magnate David Black pitched the idea of building a refinery near Kitimat to convert oil sands crude into fuel products for shipping to world markets. Instead of shipping the raw energy resources - and the jobs to refine them - abroad, the idea was to keep the jobs and the economic activity in Canada. Instead of a few dozen jobs from the pipeline, B.C. in general and the northwest in particular would gain a few thousand direct and indirect jobs from a massive, multi-billion dollar refinery. Two other refinery proponents are now pitching their own refinery plans, hoping to entice both investor and government support.
Two major criticisms of Northern Gateway are off the table with a Kitimat refinery in place. First, the economic benefit for the region and its residents is now enormous and ongoing, instead of just during construction of the pipeline. Second, the environmental hazard of transporting fuel aboard tankers through the Douglas Channel is significantly less than the threat posed by a major spill of toxic, unprocessed crude.
"Two thirds of British Columbians are in favour of a safe pipeline if there's a refinery attached," Black said in an exclusive interview with the Citizen in late 2013. "Because it takes away the threat at sea, it creates a lot of jobs and investment and quality of life for B.C."
Politically, a refinery goes a long way to meeting the "economic benefits" condition Premier Christy Clark demanded as one of her conditions for B.C. to support Northern Gateway. The first condition has already tentatively been met with the National Energy Board's approval for the pipeline, along with 209 recommendations. Clark also insisted upon a world-class land and marine spill response capacity. While still necessary with a refinery, dealing with a fuel spill, even a major one, is nowhere near as difficult or as costly as handling spilled crude. This condition moves from difficult to doable with a refinery in operation.
Another of Clark's conditions was adequate consultations with B.C. First Nations. The promise of ongoing high-pay employment and significantly reduced risk of serious damage to ocean waterways could be enough to sway coastal First Nations into supporting the project. The challenge would be to garner support from Interior First Nations, who would see the pipeline run through their traditional territory, but not enjoy the economic benefit of the refinery.
Trudeau wasn't the only one who left himself some wriggle room on Northern Gateway. Clark's condition was for consultation, not permission, of area First Nations and that corresponds with the recent Supreme Court rulings on resource development and extraction on traditional territories.
Yet it's not the government or First Nations or environmentalists or concerned area residents that pose the biggest threat to either the pipeline or the refinery, it's the market itself. Along with the collapse in prices on the world oil market, Alberta is already in the process of building its own refinery, the North West Redwater Sturgeon project. The first new refinery in Canada in 30 years, the $8.5-billion facility is scheduled to be fully operational in 2017. Refineries are major gambles from a business standpoint, which is why the only reason Redwater went ahead was with guarantees from the Alberta government. A Kitimat refinery would cost at least $10 billion. Combine that with the continuously rising estimates from Enbridge to build Northern Gateway. In the end, there could be $20 billion or more on the table, with no guarantees on making a timely and decent return on that investment.
Northern Gateway isn't done, but the path to completion remains uncertain at best.