Canada may be open for business again, but Alberta oil is still stuck without a pipeline as indigenous support remains a key stumbling block.
Royal Dutch Shell's commitment to invest in the largest private-sector project in Canada’s history and a new trade deal with the US and Mexico show the country is open for business again. But neither deal is likely to help Trans Mountain, the troubled oil pipeline project that has epitomized the country’s inability to get big projects done and for which Prime Minister Justin Trudeau needs to find a buyer if it’s ever to get it built.
"The comparisons between Trans Mountain and LNG Canada are apples and oranges," British Columbia premier John Horgan told Bloomberg after the gas project’s signing ceremony with Trudeau in Vancouver this week.
Kinder Morgan sold the oil pipeline to the Canadian government for C$4.5 billion after the US energy giant said it faced "unquantifiable" political and regulatory risk. Trudeau’s plan to quickly find a buyer to build the expansion project was derailed by a federal court ruling that quashed its permits. The bungle prompted cries that Canada had become ‘uninvestable’ and resource projects undoable – somewhat quelled by the massive LNG commitment announced this week.
Shell and its four Asian partners signed off this week on LNG Canada, a record C$40 billion (US$31 billion) liquefied natural gas project that the BC premier has been touting while simultaneously battling Trudeau’s government to thwart Trans Mountain, a critical part of getting Alberta’s landlocked bitumen to BC’s coast for export.
While Horgan bantered jovially with Trudeau as they each praised each other for finding common ground on LNG Canada, there’s no indication they’ll find that on Trans Mountain.
For one, there’s the difference between the two fuels: LNG evaporates in a spill while diluted bitumen is messier and less predictable. It also comes down to what’s in it for British Columbia: 10,000 jobs created during construction of the LNG project versus a roughly C$7 billion expenditure on a pipeline "to move an admittedly Alberta resource to tidewater and then to offshore markets," says Horgan.
But most importantly, in a province where indigenous groups have never formally ceded their ancestral lands to Canada, it comes down to aboriginal support, he says.
"Shell and LNG Canada were able to realize benefit agreements from wellhead to water line and Trans Mountain was not," Horgan told Bloomberg. "I think that speaks for itself.”
The federal court’s decision to quash Trans Mountain’s approval asked in its ruling for additional indigenous consultation. Trudeau’s government has subsequently put off the search for a buyer and resolved to restart the approval process.