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New pipe project a step toward fulfilling Harper's dream of an energy legacy

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(Globalpost/GlobalPost)

OTTAWA - Apparently stymied to the West and possibly to the South, the Harper government's pipe dreams for turning Canada into an energy superpower got a measure of credibility with Thursday's unveiling of a plan to carry Alberta crude east.

The $12 billion Energy East proposal to pipe crude from Alberta to the Atlantic — once considered the least likely escape route for the landlocked resource — has overnight vaulted as the pipeline with the best prospects for success, and the most politically appealing.

Transversing six provinces and some 4,400 kilometres, the West-East route would appear to bring the Harper Conservatives the prospects of votes all along the way, if they can avoid the pitfalls.

On the plus side, it is the only pipe proposal of four that would see Canadian oil actually refined in Canada for domestic customers east of Manitoba. All the others are mere conduits for exporting unprocessed crude to Asia or the U.S.

And since 70 per cent of the pipe is already in place, it is one of the least environmentally intrusive.

"It does seem that this is the pipe Canadians are more willing to get behind," said Warren Mabee, an energy expert at Queens University. "This may be a little bit of a legacy for Harper and his government."

The federal government has placed more than a few of its eggs for economic growth in the oil basket — not just to shore up support in its western base, but also to boost economic growth and government tax revenues generally.

Harper laid out his vision to establish Canada as an energy superpower as far back as 2006 during a speech to the U.K. Chamber of Commerce, but the boast had of late seemed empty given there was no reliable way to get add-on oilsands production — set to expand from about 3.2 million barrels a day to more than five million in the next decade — to market.

Proposals for a Keystone XL pipeline to the Gulf of Mexico, or the Northern Gateway pipe to the B.C. coast, have met stiffening — and in the latter case possibly insurmountable — opposition. A fourth project to twin the current Kinder Morgan TransMountain pipeline to the B.C. coast would appear to have better odds because it doesn't involve obtaining new rights of way.

Conservative strategist Tim Powers says it is likely not in the cards that all four will proceed, but if Harper can witness progress in two over the next couple of years, the political benefits could be significant.

The projects promise to create thousands of jobs, both temporary and permanent. The Energy East proposal would also see work created at refineries and ports in Montreal, Quebec City and Saint John.

As well, Scotiabank energy analyst Patricia Mohr notes if eastern refineries are able to substitute current sources of crude from Nigeria, Saudi Arabia and the North Sea with less expensive Alberta oil, consumers in Quebec, Ontario and Atlantic Canada may benefit through lower pump prices.

"2015 is an important date and if you are the government you would like to see one or two of these projects in motion," said Powers of the next election campaign.

"The prime minister gets a lot of criticism for not engaging in first ministers meetings, but he's actually doing arguably something tangible by engaging in pretty open and overt economic nationalism by creating the conditions for economic growth. And people tend to vote on whether they are getting a pay check," not symbolism, he added.

Some analysts caution that the West-East pipeline idea may be put on the back burner if TransCanada is able to get its first choice, Keystone XL, approved by President Barack Obama.

But there are economic — as well as political — merits to all or at least three projects proceeding, says Todd Crawford, an economist with the Conference Board of Canada.

"We need pipelines running west where we can easily access Asian-Pacific markets, we need the Keystone XL running south, and we need one going east to allow some of the other Canadian provinces to take advantage of the huge gains in oil production in western Canada," he said.

Still, pipeline politics have proved unpredictable in the past. Harper originally assessed Keystone XL as "a no-brainer."

In the cast of the West-East route, most of the affected premiers appear to be on side, but Quebec's Pauline Marois has not fully endorsed the plan, saying last week the province would have to study the proposal.

And already civil society groups are gearing for a fight. The Council of Canadians declared they were preparing a national campaign to block the project, and environmental groups ranging from Greenpeace to the Sierra Club decried the environmental costs, including the risk of leakage and potential spills in New Brunswick's Bay of Fundy.

NDP energy critic Peter Julian, who said his party supports the proposal in principle, advised the government to learn a lesson from the ham-handed way it handled Keystone and pay attention to the real environmental issues involved.

"There’s no doubt that moving oil west to east can be a win-win,” he said, "(but) Canadians will need to have confidence that the project is sustainable and the approval process is fair and open."

http://www.globalpost.com/dispatch/news/the-canadian-press/130801/new-pipe-project-step-toward-fulfilling-harpers-dream-energy