Northern Gateway pipeline proposal a shakedown by Christy Clark

B.C.’s hardball demands over the Northern Gateway pipeline set a bad precedent for interprovincial trade.

B.C. premier Christy Clark  (Photo: Darryl Dyck/Canadian Press)

It may be 2012, but the Northern Gateway pipeline debate between British Columbia Premier Christy Clark and Alberta Premier Alison Redford has an old-timey feel to it. It’s hard to listen to Clark’s arguments for a “fair share” of pipeline benefits without imagining her sitting in a rocking chair on the front porch of a log cabin with a shotgun across her lap. “Yuh lookin’ ta cross muh land, stranger?” she squints at cowpoke Redford and her herd of thirsty cattle. “Yer gonna pay.”

The prospect of a pipeline from Alberta’s oilsands to the port of Kitimat, B.C., and thence on to eager Asian markets has tremendous economic logic, not to mention the backing of Prime Minister Stephen Harper. Standing in the way of all this, however, is the B.C. premier’s outstretched hand. So how much will it cost to satisfy Shotgun Christy? And what does this sort of frontier justice mean for all of Canada’s energy projects yet to come?

In a pipeline policy paper released last month, B.C. demanded it get “a fair share of the fiscal and economic benefits” from Northern Gateway. Putting some muscle behind this demand, B.C. Environment Minister Terry Lake warned darkly that more than 60 permits are required from the province before Enbridge can start laying pipe. G

uaranteeing a pipeline’s safe passage across provincial borders is well within federal jurisdiction, and B.C. has no right to maliciously pervert its own regulatory processes. Yet Clark’s position has nevertheless created considerable uncertainty for the project. It’s worth a closer look at what she considers “fair.”

The July policy document is packed with pie charts allegedly showing B.C. gets the short end of the stick. Over 30 years, the project is projected to produce a total of $270 billion in economic benefit. Alberta’s share is expected to hit 68%; B.C. gets just 17%. Of $81 billion in incremental tax income, Alberta gets 39% while B.C. gets 8%. This, it implies, is unfair: another chart shows 42% of the pipeline’s length (and thus 42% of the risk of an oil spill) lies in B.C. And the port will be entirely in B.C., of course. “We get very little benefit and have the bulk of the risk,” Clark claimed.

Risk of an oil spill is clearly an important element for any pipeline decision. But tying pipe distance to total economic return is sheer misdirection. An empty pipeline is not much use, and the oil required to fill Northern Gateway belongs entirely to Alberta. Ownership is a concept entirely foreign to B.C.’s pipeline policy. Further, the paper makes it clear Clark expects Ottawa and Enbridge to pay the full bill for spill prevention and amelioration. All of which leaves B.C.’s position looking much more like brazen loot-seeking, not altruistic environmentalism.

B.C.’s quest for fairness is also unfair to Enbridge. The firm has already promised to build a thicker and more secure pipeline, adding an additional $500 million to the $5.5-billion plan. It must also find a way to bring First Nations groups onside with economic goodies. Now it apparently has to win over the B.C. premier in the same way. This sets a troubling precedent for any future projects planning to cross provincial borders. Speaking of risk, Enbridge is the only actor in this tumbleweed drama with any real capital in play.

Clark’s shakedown effort is reminiscent of the manner in which Quebec, nearly 50 years ago, used its geographic leverage to extort Newfoundland’s Churchill Falls hydro project into selling it electricity at an enormous discount. Tensions from that improvident deal continue to poison relations between the two provinces to this day. While B.C. signed the New West Partnership Trade Agreement in 2010 pledging to “remove barriers to trade, investment and labour mobility” between western provinces, Clark’s demands pose the biggest barrier to interprovincial trade this country has seen for a long time.

So where’s Sheriff Harper when you need him?

Peter Shawn Taylor is a writer specializing in economic issues.