Pipeline politics have hit the front page in B.C. as well as next door in Alberta. Last week, Premier Christy Clark set out her terms for government approval of the proposed Enbridge Northern Gateway project and threw in a ringer which included increased revenues to B.C; this condition the result of increased risk to the B.C. land and marine environment. The accident-prone record of Enbridge pipelines has only added to British Columbian's fears.
Based on government analysis, if the Enbridge line is built, B.C. will take on 100 per cent of the environmental risk yet only realize $6.7 billion or about eight per cent of the revenue. According to Clark, that's not enough money. According to recent polls, an increasing number of British Columbians agree with Clark's new-found position.
Alberta Premier Alison Redford disagrees, saying Alberta will not give up any royalties on Alberta oil no matter how or where it's shipped. From a political perspective, both premiers are right. But what about the larger question of the Canadian economy and a national energy policy that benefits all of us?
To answer that question in part, it's informative to go back a decade and look the benefits of inter-provincial and industry cooperation.
When Gordon Campbell formed government in 2001, he declared B.C. open for business. This claim was backed up by a number of measures, including lower income taxes which quickly benefited a majority of British Columbians.
Campbell also took a close look at the B.C. oil patch. The previous NDP government had not been kind to the petroleum industry and B.C. was seen as an unfriendly host to oil and gas producers as well as being a poor place to invest.
Almas Kassam, a spokesperson for Calgary-based Canadian oil giant Encana said, "We found the environment in B.C. was not conducive to investment relative to other regions; there was no existing infrastructure, it was a higher cost area and the regulations were too restrictive."
In response to the industry concern, Gordon Campbell put together a working group of senior B.C. government and Alberta industry advisors with the aim of making B.C. a competitive player in the oil and gas business.
The group made significant changes to the royalty and regulatory regime in B.C. Their report was titled the Oil and Gas Development Strategy and as it came into play the results were remarkable. In less than a year, drilling activity in B.C. increased significantly. Gas well authorizations went from 240 in December, 2002 to 420 in December, 2003. By 2006, natural gas royalties had more than doubled, producing $2.3 billion in provincial revenue.
The resultant increase in royalty revenues through industry and inter-provincial cooperation showed what can happen when all parties recognize a common problem and the necessity of reaching a mutually agreeable accommodation.
Fast forward to today and we see a similar situation. A government imposing what the industry and our provincial neighbours see as a serious impediment to moving forward. This time though the political scene is considerably different. In 2001, Gordon Campbell had 77 seats in the 79-seat B.C. Legislative Assembly. In contrast, Premier Christy Clark is in the political fight of her life. She's down in the polls, she trails in all measured categories of competence, plus Clark has to go to the electorate in 10 months.
As noted, the only thing going Clark's way is her strong position on more revenue from the Enbridge pipeline. And in terms of the bigger picture, the B.C. concern over Enbridge and better inter-provincial relations is an issue that must resolved.
First, it is not in the best interests of either Alberta Premier Alison Redford or Prime Minister Stephen Harper to see an NDP government elected in British Columbia. NDP Premier-in-waiting Adrian Dix is opposed to the Enbridge pipeline and literally all other resource development. Remember the reason for Campbell's oil and gas strategy group was to change the stifling regulations of the former NDP government. Canada is still a federation and any impediment to resource revenue impacts on all Canadians. As a sidebar comment, most of B.C.'s petroleum exports go through pipelines in Alberta and there is no surcharge on those shipments.
Second, although the Enbridge issue is totally caught up in the currently super-charged B.C. political scene, all parties must recognize the real issue of pipeline risk and local fears. It is common in the oil and gas business for producers to put bonding in place to ensure immediate financial response to an accident. B.C. should set out those conditions.
Third, Christy Clark says she won't take part in any discussions about a national energy policy until her demands for more revenue are met. This is probably a sound political position to take, but short sighted if she wants to take part in improving revenues or establishing better construction and operational guidelines.
Finally, no matter how excited the politicians, the environmentalists or other assorted protesters become, from a national and provincial perspective we still willingly enjoy substantial annual revenues from the petroleum industry. No one complained when billions of dollars began to flow to the B.C. treasury from increased gas sales; the beneficial result of government and industry cooperation.
It's time for all parties to show the same willingness to get together. We don't need protests, we don't need bickering and we certainly don't need to lose offshore sales. Rather, as Gordon Campbell and the petroleum industry showed us ten years ago, we don't need problems, we need solutions.
