A high-five was exchanged for the cameras to celebrate Wynne’s addition to the girls’ club running provincial governments across the land. But behind closed doors there was serious business to discuss. Like the tar sands, and Ontario’s role in Alberta oil’s future economic viability.
Redford was in town for a speech at the Canadian Club of Toronto, where she renewed her call for a national energy strategy. Stefan Baranski, Redford’s director of strategic communications, says the premier came out of her half-hour get-acquainted meeting with Wynne feeling “very good,” but that there was little detailed conversation on the tar sands.
If you haven’t heard, the tar sands are in trouble. There’s fear in the oil patch. Turns out those rosy predictions that riches would flow forever from the fountains of crude aren’t panning out. Maclean’s weighed in with a cover story this week characterizing the situation as a full-blown crisis.
Blame the vagaries of the global oil pricing system. Blame the depressed U.S. economy. Blame overconfident oil industry execs who’ve used wild projections to tout the tar sands as Canada’s economic saviour. Unfortunately, most of them didn’t foresee the fact that our biggest customer – tar sands crude is almost exclusively shipped to the U.S. – could be self-sufficient by 2030 thanks to untapped shale reserves in the northern states.
Tar sands producers are getting some $50 a barrel less for their heavy crude (which costs more to extract and refine) than the $100 a barrel conventional oil gets on the open market.
For the Canadian economy, that means something like a $27 billion hit.
The bitumen bubble, as Redford calls it, is about to go pop.
Alberta needs ways to get its crude not only to refineries in the Gulf of Mexico in the U.S., but also east to Quebec and New Brunswick for shipping to markets abroad. That’s where Ontario – and Enbridge’s plan to reverse the flow of its Line 9 pipeline from west to east – comes in.
With opposition to the Keystone XL pipeline in the U.S. blocking more Alberta exports south, and the Northern Gateway pipeline proposal to take crude to British Columbia’s Pacific coast more than a decade away (if ever), Ontario is it, at least for the near future, when it comes to moving tar sands oil to world markets – the release valve, if you will, to increase tar sands exports.
Enbridge won approval from the National Energy Board (NEB) back in July to reverse the flow of a portion of pipeline from Sarnia to North Westover, near Hamilton. Environmentalists didn’t know it then, but Enbridge has bigger plans to reverse the flow of the entire length of the pipeline to Montreal.
Some observers see the NEB’s approval of Line 9’s reversal along its entire length as a formality. The board itself has no enviro reps. And federal Natural Resources Minister Joe Oliver has given a qualified nod to the project, including in media reports last week.
For Ontario, the political stakes are high.
Safety issues are a major concern.
Line 9 was built in the 70s to carry conventional crude, not the highly corrosive, acidic tar sands bitumen that requires higher temperatures to move through pipelines. And Enbridge’s plan includes increasing the number of barrels going through the pipeline from 240,000 to 300,000 a day.
A 2011 report of the U.S.-based Natural Resources Defense Council on the subject of bitumen’s effects on pipeline safety says the “potentially unstable blend of thick raw bitumen and volatile natural gas liquid raises risks of spills and damage to communities along their paths.”
Anecdotal evidence seems to support environmentalists’ fears about increased risks. A bitumen spill from an Enbridge pipeline near the Kalamazoo River in Michigan in July 2010 is still being cleaned up, with costs topping $1 billion.
A number of municipalities along Line 9’s route, including Burlington, Hamilton and Kingston, are being urged by Environmental Defence to pass resolutions calling for a full Environmental Assessment.
A Toronto council motion passed in November by Councillor Anthony Perruzza, asks staff to investigate the possibility of sending an expert witness to represent the city’s interests at future NEB hearings on Line 9, whose path snakes through Etobicoke and along Finch.
The province hasn’t yet taken a position on Line 9.
NDP Energy critic Peter Tabuns sent a letter to Environment Minister Jim Bradley in December asking that the project be designated a “major commercial or business proposal” and recommending to cabinet that it be subject to the Environmental Assessment Act.
Tabuns isn’t expecting an announcement about that any time soon. “My guess is that no minister would make a commitment either way on this until they had talked to the new premier,” he says. It’s not clear that Bradley will remain on the environment portfolio.
The jury’s also out on how much tar sands development might mean to Ontario’s economy. Redford says it’s some $63 billion over the next 25 years.
But past rapid expansion of the tar sands and the resulting rise in the value of the dollar have done more harm than good to Ontario’s manufacturing economy.
Wynne’s predecessor, Dalton McGuinty, recognized the impact of a rapidly rising petrodollar. More than 500,000 jobs have been lost in the manufacturing sector over the last decade, 35 per cent of them because of the higher Canadian dollar, according to Industry Canada’s own study.
In her speech to the Canadian Club, Redford noted that pipeline controversies are threatening to choke off tar sands supply to world markets. She acknowledged that Big Oil and the Alberta government itself took for granted that they had support for tar sands development.
“Everyone assumed that Canadians understood why we needed [tar sands development]. Everyone assumed that Canadians understood that this was our economic engine and that people got jobs because of it. We forgot to have a conversation with Canadians about why it mattered.”
Redford was introduced by Jaime Watt, the Club’s immediate past president, who’s better known as Mike Harris’s former director for communications and these days as executive chair of political strategy firm Navigator Ltd.
Watt talked in his brief opening remarks about the need for a “paradigm shift” in Canadian politics away from “the conventional wisdom of right and left, the paradigm of last century.
“Right and wrong are the paradigm of this century,” Watt remarked, before turning over the mic to “very good friend” Redford.
That’s an interesting choice of words that suggests Big Oil’s friends haven’t learned a thing from the opposition breaking out around the tar sands.
The National Round Table on the Environment and the Economy’s 2012 report, Framing The Future: Embracing The Low-Carbon Economy, warns that “allowing an economy to centre its trade on high-carbon exports in the absence of a long-term transition plan can lead to long-term stagnation and economic malaise.”
If there’s a paradigm shift, it’s toward slowing tar sands development, not speeding it up – and deciding where such development fits into a future economy. The Wild West model is proving unsustainable.
Original Article
Source: NOW
Author: Enzo Di Matteo
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