Pipeline war with Alberta escalates as B.C. adds Trans Mountain expansion to ‘fair share’ list

By Kelly Cryderman and Chris Varcoe, Calgary Herald August 1, 2012

CALGARY — A new pipeline battle between the Alberta and B.C. governments could soon be raging over the expansion of an old oil line that runs to the West Coast.

While public attention is focused on Enbridge’s controversial Northern Gateway pipeline proposal, B.C. Environment Minister Terry Lake stresses his government also expects a planned expansion of the existing Trans Mountain line to meet five conditions for heavy oil transport in the province.

That includes a demand that B.C. receives its “fair share of the fiscal and economic benefits” of proposed pipelines that move Alberta bitumen to port, reflecting the environmental risks facing the province.

“This is not about having a fight with Alberta. This is about standing up for British Columbia and having a conversation about a new type of commodity,” Lake said in an interview Tuesday. “What we’re talking about here is a huge expansion and also product that is a little bit different in heavy oil, rather than the typical product that moves there through (Trans Mountain) at the moment.”

The B.C. government has made headlines by demanding a greater share of the benefits of pipelines that cut through its territory — including the proposed $5.5-billion Enbridge pipeline — as one of conditions to support any project. Other points relate to environmental protection and First Nations issues.

In a public spat that dominated last week’s premiers meeting, Alberta Premier Alison Redford ruled out any chance the province will pony up royalty revenue belonging to Albertans in exchange for B.C. project support.

B.C. Premier Christy Clark shot back that Northern Gateway is effectively dead if Alberta doesn’t want to talk about additional compensation.

While Gateway has commanded most of the headlines, Kinder Morgan Canada has proposed a $4.1-billion expansion to its 60-year-old Trans Mountain line. The proposal would allow the company to more than double its current capacity, transporting 750,000 barrels of oil per day to Burnaby, mostly from the oilsands.

The expansion would also increase tanker traffic in Vancouver’s Burrard Inlet. If Trans Mountain is expanded, Lake said Alberta would gain most of the economic benefits and “there would likely be a fiscal imbalance there as well.

“We know if you’re moving that much heavy oil, the fiscal benefits to Alberta and to Canada are significant. And again, the risks still would be borne disproportionately (by)British Columbia.”

Alberta deputy premier Thomas Lukaszuk said Tuesday the Redford government is open to talks, but is not going to negotiate on the “fair share” of the fiscal and economic benefits that B.C. is requesting — no matter what the project.

He said his government is focused on promoting high environmental standards and the economic benefits of pipelines to Canada as a whole.

“It is abundantly obvious that if we compete domestically, we cannot be competitive internationally,” Lukaszuk said.

“There will be no one-off discussions. That has been very clear.”

The deputy premier added discussions about environmental standards don’t mean an “exchange for dollars.”

“We would go much further being partners in developing mutual resources than perhaps hindering each other from doing so.”

Kinder Morgan expects to file the necessary facilities applications with the National Energy Board in late 2013, and the expansion will take place by late 2017, if timelines are met.

Andrew Galarnyk, director of external relations for Kinder Morgan Canada, said his company will look at what they can do to make improvements to pipeline safety and spill response procedures.

“We’re going to work with the B.C. government to satisfy their conditions, to the extent that they are ours to satisfy,” Galarnyk said in Calgary.

“But we don’t view this product to be any more dangerous than the products that we carry through the line now. And we do carry bitumen though the line now.”

However, the line expansion would see “a larger volume of the heavier products that would go through.”

The Trans Mountain pipeline first opened in 1953 and moves some refined products, such as gasoline and diesel, as well as lighter and heavier grades of crude oil.

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 Original source article: Pipeline war with Alberta escalates as B.C. adds Trans Mountain expansion to ‘fair share’ list