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On pipelines, is Harper about to pull an ‘Obama’?

Prime Minister Stephen Harper takes part in a bilateral meeting at the Nuclear Security Summit in The Hague, Netherlands on Tuesday, March 25, 2014.

Sean Kilpatrick/THE CANADIAN PRESS

Is Prime Minster Stephen Harper prepared to "pull an Obama" and punt on the Northern Gateway decision in the face of implacable opposition?

The Prime Minister has been openly critical – verging on scornful – over U.S. President Barack Obama's agonizingly slow process for deciding whether to approve TransCanada Corp.'s proposed Keystone XL pipeline which would carry oil sands bitumen to U.S. Gulf Coast refineries. Mr. Harper famously called approval of the KXL project a "no brainer."

Now Mr. Harper is facing his own pipeline test, though clearly he's not hobbled by the kind of misgivings Mr. Obama has about whether the project would contribute to greenhouse gas emissions from the oil sands.

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Under his own rules passed in a controversial omnibus budget bill two years ago, the Prime Minister faces a strict deadline for a decision on Enbridge Inc.'s Northern Gateway – six months after the National Energy Board recommended approval of the project subject to 209 conditions. Set your calendar for June 19.

But there's a always a loophole, it seems. The government can delay a decision if the company requests more time.

It's not hard to imagine Mr. Harper sending a signal to Enbridge that it would be in the interest of both the company and the government if there was more time to win support from key constituencies, including First Nations, local residents and B.C. Premier Christy Clark.

Sources in Ottawa suggest that the government would only delay if there was clear evidence that more time would yield better results. Otherwise, armed with the National Energy Board's recommendation, Mr. Harper would have to face down the opposition to approve the line, a move that would prompt court challenges and political backlash in a key electoral battleground.

With an election not expected until the fall of 2015, it would be untenable to delay in order to push the decision beyond the vote – as Mr. Obama was accused of doing on Keystone XL in 2012, and as pipeline supporters fear he will do again facing congressional elections this fall.

Mr. Harper has shown in the past that he is not immune to political pressure when deciding whether to approve major economic deals.

China's CNOOC Ltd. was forced to request two extensions of Investment Canada deadlines while Ottawa mulled its controversial takeover of Nexen Inc. Amid considerable opposition to the deal, The federal government only approved it in tandem with an announcement on stricter rules for state-owned enterprises looking to make acquisitions in Canada.

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This weekend's plebiscite in Kitimat – in which 58.4 per cent of voters said "no" – clearly illustrates the uphill battle faced by Enbridge in winning public support for the pipeline project, which would include super tankers navigating the narrow Douglas Channel to the remote port city. But Enbridge acknowledged it has "work to do."

Meanwhile, former federal environment minister Jim Prentice is working on behalf of the company to conclude agreements with First Nations along the route, though several have declared they have no interest. But early June, Mr. Prentice will have to signify to the company whether he has made significant progress and whether a deadline extension would be helpful.

At the same time, Premier Clark insists the province needs to see some clear financial benefits from the project, and there has been no indication to date that either Enbridge of the province of Alberta has been able to satisfy her condition for support.

The company did chalk up one win this week. It signed an agreement with the Pipeline Contractors Association and four building trades unions in which it committed to provide the equivalent of 2,100 full-time construction jobs.

But British Columbia is a key battleground for the next federal election expected in the fall of 2015. (There are loopholes in the fixed election law that could allow Mr. Harper to go sooner. There are always loopholes.)

With 42 seats up for grabs there, the Conservatives face some tough calculus. If Mr. Harper is going to hang on to his majority against a resurgent Liberal Party and the NDP led by Thomas Mulcair, he'll have to do at least as well in British Columbia as he did in 2011, when his party won a solid majority of the seats.

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Mr. Harper's government has made it a key priority to ensure greater market access – especially to Asian markets – for Alberta's fast-growing oil sands sector. His choice may come down to achieving that goal at the risk of his own political survival. And there is little prospect he can delay that decision for political advantage.

Shawn McCarthy reports on energy from Ottawa.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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