Trial balloon or realistic alternative?

The Northern Gateway controversy will ramp up once again...

The Northern Gateway controversy will ramp up once again next week as the latest round of Joint Review Panel hearings on the project get under way in Kitamaat Village on Tuesday and Wednesday.

And we can be sure that the overwhelming majority of the more than 4,000 submissions the JRP will hear/read during the course of its hearings will be opposed to the pipeline.

Since Enbridge first proposed this pipeline I have, of necessity, read a huge amount of material on the project, both for and against.

That has included a fascinating column written by Derek Burney and Eddie Goldenberg which appeared in the Globe and Mail last month.

Burney was Brian Mulroney’s chief of staff from 1987 to 1989, Canada’s ambassador to the United States from 1989 to 1993, and is currently a director of TransCanada Pipelines Ltd.

Goldenberg was senior policy adviser and later chief of staff to Jean Chrétien from 1993 to 2003.

Both now work for law firms.

Noting prime minister Stephen Harper has said Canada should not be a “captive supplier” of energy to the US, they add, “in light of global demand growth, it’s also in Canada’s national interest for Ottawa to act decisively to enable our oil and gas industry to diversify its customer base.”

And the fast-growing markets in Asia are obvious targets.

But they warn that those Asian countries are not going to wait forever to secure long-term supplies of oil.

In other words, if Canada can’t do that, they’ll go elsewhere.

While the duo suggest the Northern Gateway project or expansion of the existing TransCanada line to the Lower Mainland are the most obvious solutions, they add, “It would…be prudent for industry and government to consider options to a West Coast route.”

Now when they say industry, they don’t mean Enbridge, they mean the companies that actually produce the crude.

It’s like a market gardener in the Fraser Valley (the crude oil companies) which wants to get its produce (bitumen) to a Kitimat supermarket (China, India, et al).

To do that it has to hire a trucking company (Enbridge).

But if the trucking company can’t get its trucks on the road, the produce producer is going to have to find an alternative market and delivery company.

So Burney and Goldenberg suggest that if the crude cannot go West to the BC coast, it could go East.

There would be two major benefits from that change of direction.

First, Eastern Canada – with the obvious exception of Newfoundland – still relies on importing oil from “politically uncertain” Middle East countries.

Second, “moving product from West to East can be done relatively simply with few regulatory hurdles. It requires reversing certain existing pipelines (and) in the longer term, it may mean constructing a new pipeline from Montreal to Atlantic Canadian ports.

While shipping out of Montreal or other East Coast ports to Asia via the Panama Canal would obviously be a longer route, “the ability for Asian customers to negotiate guaranteed long-term supply contracts would far outweigh the additional marginal cost of transportation,” they contend.

Therefore, “industry and government should now work together on an urgent basis to take the steps necessary to enable flows of Alberta oil from west to east.”

So, as we asked earlier, is this a real alternative? Look at it from a crude producer’s point of view.

The JRP process is going to grind on for another two years by their current schedule.

And even if the JRP approves Northern Gateway – or it doesn’t and the federal government overrules it – the issue will be headed straight to the courts where it will be tied up for who knows how many years more.

Meantime the opportunity for the crude producers to make more money goes begging.

If reversing the flow is as easy as Burney and Goldenberg suggest, the decision looks like a no-brainer.

 

Malcolm Baxter

 

 

 

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