Alberta rebuffs B.C. demand for a greater share of Enbridge pipeline benefits

VANCOUVER – British Columbia is demanding a greater share of economic benefits from the controversial $5.5-billion Enbridge (TSX:ENB) pipeline and a greater spread for the potential risks as some of the preconditions that must be satisfied to give its blessing to the project.

But the Alberta government has said compensation for B.C.’s risk is not an option.

“Given that B.C. would shoulder 100 per cent of the marine risk and a significant portion of the land-based risk, we do not feel the current approach to sharing these benefits is appropriate,” B.C. Environment Minister Terry Lake told reporters Monday in Vancouver.

“British Columbians are fair and reasonable, but they have to have confidence that a fair share of benefits would come to this province before we would consider supporting any such proposal.”

Lake pointed out that B.C. stood to gain just eight per cent of the projected financial benefits of the pipeline.

Alberta Premier Alison Redford rebuffed any suggestion of increased compensation for B.C.

She noted the National Energy Board review of the project and the extra $500 million Enbridge is planning to spend on monitoring and safety.

“These efforts, combined with the fact that pipelines are still by far the safest means by which to transport oil, significantly mitigate the environmental risk and weaken the B.C. government’s argument for compensation based on potential risk,” Redford said in a statement.

She was not available for questions. Her statement added that Canada works well because of the free flow of goods across the country, “including forest products, oil, liquefied natural gas, potash, uranium, grain and manufactured goods.”

Alberta’s intergovernmental affairs minister went further.

“I think that’s a difficult conversation,” Cal Dallas said of the compensation question.

“Clearly we need to move all kinds of product around the country through a variety of different infrastructure. That hasn’t been the way we’ve done business.”

Monday is the first time the B.C. government has outlined a detailed position on the Northern Gateway project, which will run from the Alberta oil sands to port at Kitimat, B.C., for shipping to Asian markets. The statement comes just ahead of the annual gathering of provincial and territorial leaders in Halifax on Wednesday, where they will discuss a pan-Canadian energy strategy.

The preconditions will also apply to government consideration of any future heavy oil pipeline proposals, along with a second major proposal currently underway by Kinder Morgan (NYSE:KMP) to expand its Trans Mountain pipeline from Alberta to the West Coast by 2017.

While Lake said he had “no doubt” that issues could be resolved, he also suggested the province has some levers available if its preconditions aren’t met.

“Even if they were to approve it at the NEB, there are scores of provincial permits that will be necessary and we will have to give due consideration to each one,” he said.

“And of course, there’s the issue of being able to supply the power necessary through B.C. Hydro.”

Enbridge responded to B.C.’s tough talk by welcoming further dialogue, while Ottawa reiterated its support because of the thousands of jobs and billions in revenues it will generate.

“Enbridge and the Northern Gateway project team have worked hard to ensure this unique project would be built and operated to the highest standards and has committed to further enhancements to make what is already a safe project even safer,” the company’s spokesman Todd Nogier said in a statement.

For B.C. to support the project, it must:

— Pass the environmental review by the National Energy Board joint review panel, which is currently underway.

— Include a world-leading marine oil spill response plan.

— Include world-leading practices for response to an oil spill on land.

— Address aboriginal and treaty rights and give First Nations the chance to participate in the project.

— Ensure British Columbia receives a fair share of the fiscal and economic benefits to reflect the level of risk undertaken by taxpayers and the environment.

The province has said it wants to work with Ottawa to limit B.C.’s liability in the event of an oil spill and to ensure there are sufficient financial resources if one happens.

It wants increased government response and tougher federal rules requiring industry to provide and replace marine response equipment.

And the province wants a Natural Resources Damage Assessment process to give certainty that a responsible party will address all costs associated with a spill.

“Our conclusion is that the answers to these questions at this particular time are insufficient,” Lake said.

The province decided last week it will participate as an intervener in the ongoing environmental assessment hearings being led by the National Energy Board’s panel.

Officials haven’t determined what amount of financial compensation would be enough, he said, but they will engage in a series of negotiations with Enbridge and other levels of government aimed at sorting out those details.

Federal Natural Resources Minister Joe Oliver sent out a statement that did not directly address any of B.C.’s concerns. He repeated that Ottawa will only back projects that meet its “rigorous” environmental standards.

“Our government is determined that Canada seize today’s enormous opportunities in a careful and responsible manner, for the benefit of Canadians now and in the future,” he said.

The government’s policy already requires First Nations and treaty rights to be addressed and for aboriginals to be provided with opportunities as part of any heavy-oil project.

B.C.’s requirements come just days after Premier Christy Clark was critical of Calgary-based Enbridge following a U.S. report slamming the company’s handling of a major oil spill in Michigan.

Clark has joined other critics in noting B.C. bears most of the risk and almost none of the benefits from the development.

To address the outcry, Enbridge announced last week plans to spend up to $500 million to improve safety features for the Northern Gateway project.

Alberta, which vigorously supports the project, also announced an independent pipeline safety review following three leaks over the past year.

However, many First Nations have already dismissed the plan, complaining it fails to address concerns about the environmental threat from tankers carrying oil along the B.C. coast.

B.C. Aboriginal Relations Minister Mary Polak acknowledged the vast and staunch B.C. First Nations opposition, but said while she is determined to ensure they are given an opportunity to gain from it, at the end of the day they will not have “veto power.”

The Union of B.C. Indian Chiefs called her pledge “meaningless.”

“Quite frankly, both Premier Clark and Enbridge are completely missing the boat,” Grand Chief Stewart Phillip said in a statement. “It’s not about the money, it’s about the environment, stupid.”

High-profile eco-activist Tzeporah Berman rejected the notion B.C. could do anything to make the pipeline safe for the environment. She said the government should take a stand in opposition immediately.

“The industry defines success in the clean-up of a spill as ten to 15 per cent recovery of the oil. So how is this government defining success? What does it mean by ‘world class’? What’s the long-term legacy that British Columbia would be left with, and how much does that cost?”

The Official Opposition panned the government’s approach.

“The government is saying, as long as we can clean up a massive spill after the fact, that’s OK with us,” B.C. NDP leader Adrian Dix told reporters. “It’s not OK with British Columbians, and it’s not OK with me.”

The NDP have formally opposed the project since April, when they sent a letter to the National Energy Board’s joint review panel.

Dix said certain conditions are already a given, including waiting for the completion of the environmental review process and engaging with First Nations.

He added the criteria for bringing in economic benefits and asking Ottawa to contribute to oil spill response are reactive and do nothing to stop oil tanker traffic or prevent a catastrophe.

Dix said his party remains opposed to the pipeline project, regardless of the outcome of the environmental assessment which is expected early next year.

— With files from Vivian Luk