Redford’s energy vision gains traction with premiers

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Alberta Premier Alison Redford is quietly building support among her provincial colleagues for a national energy strategy, saying Canada's prosperity hinges on forging a united front to exploit the country's vast resource riches.

Ms. Redford has lined up the support of other premiers in Western Canada ahead of next week's Council of the Federation meeting of provincial and territorial leaders in Halifax.

She met privately on Wednesday with Ontario Premier Dalton McGuinty over dinner at Toronto's Windsor Arms Hotel, where they discussed how both their provinces have a vested interest in developing a strategy that pulls together Alberta's land-locked oil sector and a wide variety of other energy sources from British Columbia to Atlantic Canada.

The relationship between the two premiers is taking on a more cordial tone in contrast to their war of words earlier this year, when Mr. McGunity blamed his province's economic woes on an Alberta-fuelled "petro dollar."

For Ms. Redford, the dinner meeting was her latest effort to use Canada's global status as an energy superpower to help shape the national agenda. Aside from the premiers in Western Canada endorsing her pan-Canadian energy strategy, she has also held one-on-one meetings with other premiers in Atlantic Canada, including Nova Scotia's Darrell Dexter, host of next week's gathering, who is on board.

"I'm pleased that premiers have decided we can talk about this," Ms. Redford said in an interview. "There has been some uptake on the importance of the energy economy."

Her calls for deeper east-west energy ties got a boost on Thursday when the Conservative-led Senate energy committee issued a report endorsing an "energy vision" that includes efforts to ship Western Canadian crude eastward for refining in Ontario, Quebec and Atlantic Canada.

"It was a very pleasant surprise," Ms. Redford said in the interview. "It's nice to see a little bit of momentum around the idea that we as premiers can make some decisions in collaboration that can benefit all of us, not just in this province, but right across the country."

The senators timed the release of their report in part to give Ms. Redford's efforts an added boost. Federal Natural Resources Minister Joe Oliver later issued a statement praising the committee's report. The minister's spokeswoman, Carly Wolff, expressed support for an eastern pipeline expansion.

"Our government believes it is critical that Canada build pipelines west, east and to the south to ensure we have customers for our energy products," she wrote in an e-mail.

In the face of international criticism directed at Canada's oil sands, the federal Conservatives are promoting Canadian oil as a more "ethical" choice than imported fuel. An example of this came this week when Gary Doer, Canada's ambassador to the United States, spoke out against reliance on imports from "petro dictators." Yet, according to the Canadian Association of Petroleum Producers – which supports efforts to move western oil farther east – about half of the oil consumed by Canadians east of Manitoba is imported.

In an interview, Mr. Dexter said energy co-operation will also include working together to promote renewable energy and reduce dependence on fossil fuels. The Premier sees a political window for the provinces to take action.

"Now that the election in Alberta is settled, there is a desire to want to have a good vision of what Canada's energy future is going to look like," he said. "I don't anticipate that big a problem getting us to a shared consensus with respect to the fundamentals of the energy picture for the country."

Mr. McGuinty agreed. "I think the great thing about the Council of the Federation is it's an opportunity to stop seeing ourselves as competitors and to start seeing ourselves as strong players on the same team, Canada, so that we can face the world together and compete as one when it comes to securing growth and prosperity for our economy," he told reporters on Thursday.

The endorsement of shipping western oil east is part of a 68-page report from the Senate committee on energy, the environment and natural resources, released Thursday. The report was adopted unanimously by the committee's seven Conservative members and five Liberals.

The report says Canada's environment must be vigorously protected and outlines various options for curbing emissions such as a carbon tax or carbon pricing. However, the senators take no position on what measures Ottawa should approve to curb energy emissions.

Acknowledging that Canada has so far failed to secure public support for shipping more oil south to the U.S. Gulf Coast and that a new pipeline to the Pacific remains controversial, the committee's Conservative chair, David Angus, said looking east is a "no brainer."

The outgoing Quebec senator said it doesn't make sense for eastern provinces to be importing oil from countries like Algeria and Venezuela when there is excess supply in the West.

"It's pretty crazy when you have such bountiful supplies of your own," he said.

Earlier this year, Enbridge Inc. announced a $2.6-billion plan to reverse the flow of a key pipeline in order to bring western oil from Sarnia to a facility northwest of Hamilton, and ultimately farther east to Montreal. The project's first phase has not yet been approved by the National Energy Board.

Canada's oil and gas sector – as well as Canadian governments that benefit from the billions in revenues from the industry – are currently missing out on the high prices available for internationally traded Brent crude. Canada's current distribution network leaves it largely dependent on supplying the North American market under the separate pricing for West Texas Intermediate, the benchmark for North American crude oil. The WTI price is lower than Brent because of a current glut of supply in the United States.

Resolving this bottleneck has become a political priority for Prime Minister Stephen Harper, who pushed hard for a new southbound Keystone XL pipeline through the United States, which would send oil for export.

After U.S. President Barack Obama put that project on hold, the Prime Minister made clear that Canada's priority would be to ship Alberta oil west to the Pacific. His government's 2012 budget bill include a wide range of measures aimed at speeding up regulatory approval of large-scale resource projects, including new pipelines.

Yet Enbridge's Northern Gateway plan to run a pipeline from Edmonton to Kitimat, B.C., is also facing political opposition and it is unclear at this point whether the project will ultimately go ahead.