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B.C. ready to deal amid shifting global energy market

The energy sector is seeing the softer side of Christy Clark. Or maybe it's just the side that realizes that money, like flies, is more attracted to honey than vinegar.

In the months leading up to her re-election last spring, the British Columbia Premier took a relatively hard line on a range of proposals to tap B.C.'s enormous potential as a conduit for getting oil and natural gas to Asian markets – from pipelines to refineries to liquefied natural gas (LNG) plants. Her tough stance helped paint her as a defender of the province's principled interests when it comes to natural resources, environmental protection and native concerns (albeit less extreme than her prime challenger on the left, erstwhile NDP leader Adrian Dix).

But the end game for Ms. Clark was never to block these projects. As tough as her pre-election talk was, there was always a "show me the money" undertone. The official language has been that to make these projects happen, there must be assurances that B.C. would get its "fair share" of the economic benefits in exchange for shouldering much of the environmental risk. Translation: Get the price (and a few other things) right, and Ms. Clark would be onside.

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Now, Ms. Clark is playing about as nice as she has ever played with British Columbia's energy partners. Last week, in an interview with The Globe and Mail, she said that B.C. and Alberta are closing in on an agreement to develop pipelines to deliver Alberta oil sands crude to West Coast ports. That's quite a change from a year ago, when Ms. Clark and her Alberta counterpart, Alison Redford, disagreed so strongly and vocally on the pipeline file that they were barely on speaking terms.

This week, Ms. Clark told The Globe and Mail's editorial board that her government has been in talks with natural gas producers about a tax regime for LNG exports, and they are close to agreeing on a framework, which could clear the way for billions of dollars of investment in LNG plants along the West Coast.

There has been a fear that in her zeal to cash in on the thirst for LNG from the rapidly growing Asian markets, Ms. Clark would impose a tax regime that would be sufficiently onerous to scare investors away. The fact that producers have been part of this process – indeed, Ms. Clark described it not as a consultation but "a negotiation" – and that they may be close to something that both sides can live with, is cause for optimism.

Ms. Clark must be keenly aware that she pulled off her surprise win in last May's election largely on the belief that she was the best choice to revive B.C.'s economy. The path to doing that goes directly through the energy industry, and she knows it. And in order for the province to get its "fair share," it has to ensure there is something there to share at all.

The industry hasn't been standing still while Ms. Clark fought for B.C.'s interests. Oil producers have aggressively ramped up rail transport. The push for the Keystone XL pipeline to U.S. ports continues. European LNG producers have started pushing through Arctic seas to deliver their product to Japanese customers. British Columbia has to clear away its political impediments, or risk missing a once-in-a-generation opportunity to cash in on a fast-changing global energy landscape.

Of course, until we see the details of the LNG plan, we won't know for sure if it makes B.C. a competitive LNG producer or another government squeezing a cash-cow industry too hard. Ditto a pipeline pact. But at least Ms. Clark is making progress. It could prove much more lucrative than making roadblocks.

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More

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