Although blessed with an abundance of coveted energy resources, Alberta is a landlocked province without any outlet to the ocean, and her refining capacity is small in comparison to the extraction potential that now exists in the province’s oilsands region. For provinces, or nations, in a similar position to Alberta, the obvious solution is pipelines to reach shipping destinations on the world’s oceans or refinery complexes elsewhere on the continent.
The government of Premier Alison Redford has been championing pipeline projects which might have a chance of shipping Alberta’s oil elsewhere and narrow the so-called “bitumen bubble” it contends is slowly eroding the province’s fortunes.
The most coveted direction to ship Alberta’s oil has logically been viewed as west, to reach the Pacific Ocean and from there to other global destinations via supertanker. While it might seem logical, political and environmental objections in British Columbia are making Enbridge’s proposed Northern Gateway pipeline project to Kitimat, B.C., a less likely development. Not to mention caveats suggested by B.C. Premier Christy Clark demanding a slice of Alberta’s royalty revenue in exchange for the right to cross B.C. soil — something Alberta is unlikely to accede to.
TransCanada’s much-vaunted Keystone XL pipeline project, designed to bring oilsands bitumen from Alberta to major refining and shipping hubs in Oklahoma and Texas is also still in limbo, after the project became a political and environmental hot potato in the lead up to the last presidential election and was put on indefinite hold. More recent word on approvals from the Obama administration has been cryptic with regard to the project, and for now it still remains largely on the drawing board.
With stumbling blocks firmly in place both to the south and west, Alberta has even been considering endorsing a project to ship bitumen to the high Arctic at Tuktoyaktuk, and from there to other ports worldwide. The impact of climate change and the increasingly-feasible shipping potential for Arctic waterways has made such proposals less pipe-dream and more reality in recent decades. However, the Arctic remains a less than attractive locale for shipping oil for obvious reasons, both environmental and logistical, and still inhabits the realm of the last resort rather than first choice.
The announcement earlier this month by TransCanada that it would be pushing forward with a $12 billion Energy East pipeline to reach refinery and port facilities in New Brunswick should come as welcome news to Albertans.
The proposed pipeline is intended to have a capacity to ship 1.1 million barrels of crude oil per day to Eastern Canada.
With Alberta-based pipeline projects encountering resistance at almost all points of the compass, the situation in New Brunswick is almost the exact opposite. The economically-depressed province, which sports the country’s highest unemployment rate at more than 11 per cent, is desperate for good economic news and is welcoming the announcement with open arms as a way to kickstart the province’s economy and keep jobs and citizens at home. Possible expansion of existing refining and port facilities in Saint John and the prospect of more than 2,000 construction jobs mean nothing but good news for both Alberta and New Brunswick.
Although transporting oil thousands of kilometres east, instead of west, might seem ridiculous at first, closer examination of the political situation — often the key ingredient, rather than geographical proximity — make the Energy East pipeline a virtual necessity if Alberta wishes to ship oil to a friendly shore, and thus reduce the discount its oil currently suffers under.
At the same time, hostility to the proposed Northern Gateway pipeline project in British Columbia might also begin to crumble once the province realizes they no longer have Alberta over the proverbial barrel when it comes to shipping our oil to international ports — leaving them completely out of any economic benefits they might stand to gain from a pipeline project could see a softening of attitudes in B.C., and should open vital new doors for Alberta oil.