Rachel Notley took office negotiating and 2 years on fights to keep it. The grand compromise by which the Alberta premier and her New Democratic Party hoped to accommodate both energy development and climate mitigation isn't working. Climate activists win or lose; they don't compromise.
Notley toured Canada last month seeking support away from home for pipelines able to debottleneck Alberta's oil sands. She spoke to business groups in Toronto and Ottawa and, at this writing, was scheduled to speak in Vancouver. Her message, from an advance press statement: "Pipelines are just as critical for jobs and economies across the country as they are for Alberta, and to stifle the oil and gas industry would be economically negligent."
Under attack
On that point, she'll receive no dispute here. But pipelines have become targets for political campaigns against the production and use of hydrocarbon energy. Notley hoped to win sympathy for pipeline development from those quarters by taxing carbon and capping greenhouse-gas emissions from oil-sands operations. Now, with supporters of resource development feeling abandoned, she's under attack. Even the Liberal federal government, which should be an ally, approved two of three pipeline proposals only after Notley agreed to raise the carbon-tax rate. One of those projects, Kinder Morgan's plan to triple capacity of its Trans Mountain system between Alberta and Vancouver, faces strong opposition from the British Columbia and local governments, environmentalists, and indigenous groups.
As production grows beyond pipeline takeaway capacity, meanwhile, bitumen values at production sites sag to account for the extra cost of alternative transport. The deepened discount aggravates economic problems of high-cost producers in an oil-price slump and lowers provincial tax and royalty income. Opposition factions newly consolidated as the United Conservative Party sense NPD vulnerability and are attacking behind leader Jason Kenney. Responding to news of Notley's speechmaking on behalf of pipeline construction, Kenney quipped, "Better late than never."
Pipeline opposition hasn't softened. Kinder Morgan has federal and provincial sanction for its Trans Mountain expansion and wants to continue work. But the mayor of Burnaby, BC, where the system terminates, wants more information before issuing permits. His government and that of Vancouver have joined environmental and indigenous groups challenging the earlier approvals.
While Notley was on her speaking tour, the long-contested, southbound Keystone XL pipeline won what should be its final official sanction when the Nebraska Public Service Commission granted approval subject to alternate routing. TransCanada, the project sponsor, is studying the change and will have to secure new landowner agreements. It also will have to fight lawsuits sure to be filed by pipeline opponents if it decides to proceed. The company in October killed its Energy East proposal for a system to carry crude from Alberta to eastern Canada, citing expansion of federal environmental review to encompass greenhouse-gas emissions upstream and downstream of the pipeline itself.
Practical question
Meanwhile, a practical question looms. ESIA Energy points out in a Nov. 20 research note that, by 2019, completion of two relatively uncontested projects—Enbridge's Line 67 expansion and Line 3 replacement—will ease immediate capacity problems. It projects that by 2021, when Keystone XL would be starting, production from the oil sands will be up by 650,000 b/d. But new pipeline capacity, if both Keystone XL and Trans Mountain join the Enbridge projects in operation, will total 2.2 million b/d. "This brings into question the degree of shipper interest for both these projects," ESAI says.
This is no reason for Notley to relax her welcome support for pipeline construction, of course. But her problems show that pipeline advocates nowadays must be prepared for compromise to fail. Burnaby Mayor Derek Corrigan, who also chairs the Municipal Vancouver Climate Action Committee, effused the intransigence of pipeline opponents by directly rebuking Notley's strategy in this quote from the Globe and Mail: "That idea that in order to combat climate change you need to build pipelines—you must see the absurdity of that."