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Ottawa urged to referee provincial oil pipeline disputes

Alberta has unresolved pipeline issues with British Columbia, whose Premier, Christy Clark, has demanded unspecified financial benefits for the province.


As leaders in Canada's energy sector sound an increasingly urgent warning over the need to find new markets for Alberta oil, one of the country's top executives is calling on Ottawa to take an active role in mediating interprovincial disputes.

"The federal government, I believe, can be the honest broker, the independent party that can arbitrate" between the competing interests among provinces, said Murray Edwards, the chairman of Canadian Natural Resources Ltd., an influential voice in the Calgary business establishment.

The most prominent interprovincial disputes have flared in recent months between Alberta and other provinces over pipeline proposals to carry oil sands crude to British Columbia, for export to California and Asia, and to Quebec, for use by refineries there. The Quebec dispute gained a measure of calm this week, when Alberta Premier Alison Redford and Quebec Premier Pauline Marois agreed to jointly study how Alberta oil might flow east.

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But Alberta continues to have major unresolved issues with British Columbia, whose Premier, Christy Clark, has demanded unspecified financial benefits for the province, and described a recent meeting on the topic with Ms. Redford as "frosty."

Ottawa has largely stayed out of the cross-boundary fray – in recent years taking a back seat even on discussions toward a national energy policy, which have now faltered, in part to avoid meddling in areas of provincial jurisdiction.

Mr. Edwards, however, said decisions on building new pipelines, and the oil sands development they would enable, are "going to come from all Canadians," and that the federal government could provide "a more national view" in mediating between sparring provinces. There is an urgency to doing so, he added.

"Frankly, if we don't develop these resources and move these resources to markets as a country, we're going to be less economically successful."

Mr. Edwards made his comments at the Bennett Jones Business Forum in Lake Louise, Alta., where others supported the view that Canada must view access to new energy markets as a national priority.

It is, for example, a far more important issue than that raised by the $15.1-billion bid by Chinese company CNOOC Ltd. to buy Canada's Nexen Inc., said Jim Prentice, the former cabinet minister who is now vice-chairman of the Canadian Imperial Bank of Commerce. Canada's reliance on the United States as virtually the sole market for energy exports is "our major vulnerability as a country," he said.

In the oil patch, "a lot of assumptions have been based on the seemingly insatiable appetite of the United States for energy. And with the way the world is unfolding, we as Canadians can't build our prosperity on that assumption," he said.

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At the same, Mr. Prentice warned, the window to find new buyers in Asia is unlikely to stay open forever.

"Everybody in the Asia-Pacific has alternatives," he said. He added: "Canadian prosperity is not a birthright. It will belong to us only if we play out our hand on this global chessboard in a smart way, and a strategic way, and with real determination."

The challenges for Canada go beyond getting oil onto supertankers, however. The global energy industry is in a period of rebalancing after the massive runup in prices that ended in 2008 – and that means companies now find themselves in an increasingly competitive marketplace, said Peter Tertzakian, chief energy economist for Calgary's ARC Financial Corp.

There is, he said, a real imperative for Canada's industry to slash the cost of producing oil, lest it be outrun by countries and companies with cheaper output.

"It's not [like] as soon as we touch the coast with our pipelines, we can start cutting flowers and throwing them up and being happy again. It's not going to work that way," Mr. Tertzakian said.

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About the Author
Asia Bureau Chief

Nathan VanderKlippe is the Asia correspondent for The Globe and Mail. He was previously a print and television correspondent in Western Canada based in Calgary, Vancouver and Yellowknife, where he covered the energy industry, aboriginal issues and Canada’s north.He is the recipient of a National Magazine Award and a Best in Business award from the Society of American Business Editors and Writers. More


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