Pipelines run at the McKay River Suncor oil sands in-situ operations near Fort McMurray, Alta. The Alberta government will propose a southern route for its new oil pipeline to the West Coast, sources say.Todd Korol/Reuters
The Alberta government will propose a southern route for its new oil pipeline to the West Coast, relenting on its insistence that a conduit to the Pacific be routed to B.C.’s northern coast, three government and industry sources say.
Alberta Premier Danielle Smith has said from the start of the planning that the new, one-million-barrel-a-day pipeline should run to a marine terminal in northwestern B.C. However, several First Nations in the area have voiced strong opposition to a pipeline in the region. A northern route would have also required changes to the federal tanker ban along that part of B.C.’s coast, which is considered a non-starter by that province’s government.
West Coast oil pipeline has yet to secure private-sector backing, Carney confirms
That opposition, as well as numerous environmental challenges, prompted the Liberal government of Prime Minister Mark Carney to try to persuade Alberta to change tack and consider building a pipeline that largely follows the right-of-way for the Trans Mountain Pipeline from Edmonton to southern B.C.
The sources said that’s the path Alberta will propose in its submission to Ottawa’s Major Projects Office.
The Globe and Mail is not naming the sources as they were not authorized to speak publicly about the negotiations.
Current federal rules prohibit tankers from loading and unloading oil along the northern B.C. coast. The Alberta-Ottawa memorandum of understanding that laid the groundwork for the pipeline plan to be unveiled Thursday said Ottawa may consider adjusting the ban, but that piece of the deal appeared to be superseded in a new B.C.-Ottawa MOU announced by the Carney government in Vancouver on Thursday.
“Today’s Canada-B.C. agreement also commits to maintaining the federal North Coast tanker ban, in accordance with the proposed route of a new transprovincial pipeline under the bilateral agreement between Canada and Alberta,” Mr. Carney said in his remarks on the wide-ranging deal.
B.C. Premier David Eby said Thursday his province’s deal with Ottawa doesn’t obligate it to support an Alberta pipeline proposal. But he said he also knows his province doesn’t have the constitutional ability to stop a pipeline and won’t fight it in good faith.
“That’s why this agreement matters,” Mr. Eby said during an event with Mr. Carney in Vancouver.
“It ensures that the northern tanker ban stays in place, and it ensures that if a pipeline goes ahead, that British Columbians are fairly compensated for the environmental risks we would take on any new pipeline project.”
Ottawa-Alberta pipeline deal includes cancellation fee critics say is too low
The Alberta government had scheduled a news conference about the pipeline proposal for Thursday morning, but late Wednesday it announced without explanation that the event was postponed.
Mr. Carney and Ms. Smith are now slated to make a joint announcement Thursday evening in Calgary. The Prime Minister’s Office said it would concern “proposed new energy infrastructure to diversify Canadian exports and build a stronger, more sustainable, more competitive economy.”
The Prime Minister would not confirm the southern route plans during his Vancouver event, saying it would be discussed later in the day when he appears with Ms. Smith.
Alberta had set itself a deadline of July 1 to file its application for the new pipeline – a date that was included in the MOU Mr. Carney signed with Ms. Smith on Nov. 27.
Alberta was proposing a series of options for a pipeline route to the northern coast, as well as various ideas for the location of a marine terminal.
Ms. Smith said she preferred such an export point because it afforded shorter sailing time to Asian markets versus the Vancouver area, and it was deep enough to enable access for the large tankers that are favoured for carrying crude long distances.
It is not the only aspect of the contentious project that has yet to be finalized. This week, The Globe reported that the proposal was still without a private-sector proponent, which Mr. Carney later confirmed.
The MOU signed by Ms. Smith and Mr. Carney stipulated that any new pipeline would be constructed and financed by the private sector, with co-ownership and economic benefits going to Indigenous peoples.
Mr. Carney said Tuesday that he was still waiting to see which company or consortium that would be, adding that talks to secure a private backer were going well and that the process will run through the summer.
In October, Alberta tapped three energy infrastructure companies – Enbridge Inc., South Bow Corp. and Trans Mountain Corp. – to provide technical and regulatory expertise on its proposal.
Greg Ebel, the chief executive of Enbridge, said during a February earnings call that the company was unwilling to take on the financial risk of developing the new line. In May, during the company’s annual meeting, he said: “Enbridge is not a proponent of this pipeline. And frankly, nobody is at this point in time, as the conditions just don’t exist to commercialize such a proposal.”
Asked during a May interview whether Trans Mountain would consider becoming the project’s proponent, CEO Mark Maki said the federal government – which owns the corporation – has “expressed a strong desire to have a private proponent move the project forward, but they know very well that we’re here and what we’re capable of doing.”
South Bow chief executive Bevin Wirzba said in May that he wouldn’t speculate “on anything to do with the West Coast pipeline,” including whether his company would pursue an ownership stake.
Another snag in the pipeline negotiations, according to sources, is the lack of an agreement on a massive carbon-capture project in the oil sands known as Pathways.
Ottawa has said the industry must build Pathways if the pipeline application is to be fast-tracked by the Major Projects Office. But oil sands developers have been increasingly concerned about the costs of the carbon-capture venture and say it would require major public subsidies.
The MOU envisages the pipeline plan being designated a project of national interest by October. If that designation is made, the government will assess the project under the Building Canada Act to determine the conditions required for construction and development. Alberta officials have said oil could then flow in a new pipeline by 2033 or 2034.
With a report from Tim Kiladze