Last week’s ranty diatribe about the Canadian energy sector sure seemed to strike a nerve with a number of readers, as it certainly appears that there are many people who, like me, are completely frustrated with the state of the industry and the attitude of various levels of government towards it.
This frustration reached an almost fever pitch this week as the BC provincial government announced on Tuesday that it would appoint a special council to study and comment on diluted bitumen and what mitigation measures would be needed in the event of a spill in inland or coastal waterways. In the meantime, it would seek to ban expanded shipments of diluted bitumen until the consultation was over.
It doesn’t take an advanced degree or anything to realize that this is a direct assault on the TransMountain pipeline expansion and an attempt to yet again delay the construction of this vital piece of infrastructure.
Reaction of course was swift and outraged. Outraged!
Never mind that the pipeline has already been approved subject to significant spill response measures and been studied to death, or that this is a preposterous over-reach of provincial authority into federal jurisdiction or that the pipeline has already been given the green light by the BC government’s own environmental department. Never mind all that and focus on the fundamental issue here.
We have a provincial government that is determined to drive a spike into an economy and industry boosting project that has been subject to relentless and thorough analysis over the past five years. A provincial government determined to act against its own, and its country’s, economic self-interest so determinedly that it is willing to cast aside decisions already made, change the rules after the fact and otherwise upset the regulatory and investment landscape all while holding an industry hostage.
If I am in any industry and am thinking that I want to invest in BC, I am now seriously reassessing ALL of my plans. If the government thinks it can so spuriously and cavalierly toss convention, certainty and the rule of law overboard, why in the world would I consider investing a single red cent in that jurisdiction?
This reckless act is sure to send LNG proponents rushing to the pause button on all of their projects. After all, if the government can change the rules of the game so easily for a pipeline, imagine what they might do once an LNG project gets started.
It has been said much more eloquently before, but if you want an industry to take shape and grow and have the ability to both participate and profit from it, government’s role is to set the rules and regulations for that industry and the preconditions for responsible participation in it and then – GET OUT OF THE WAY. BC has demonstrably failed on that front, to their own detriment. Does this kill the pipeline? Probably not. But does it send a shudder through the energy industry and put pause to a lot of plans? Most assuredly.
Dear Premier Horgan. You only have 29 rigs drilling in NE BC when you should have twice that many. The Montney and the Horn River are two of the most prolific natural gas and liquids rich plays in North America. Like Alberta, BC is blessed with a world class resource that could generate wealth and prosperity for decades for your province, but the only way to exploit it is to export it. Your determination to thwart Alberta and deny your own industry is puzzling to put it mildly. Changing the rules before you’ve even finished writing them can only result in chasing all forms of investment away. This latest folly may play well to the coalition partner you so desperately need to retain power, but its long term effects on the province will be significant. Clever politics is not sound economics. But at least you get to stave off the non-confidence vote a little longer. Well done. I guess.
So after writing the preceding, the latest developments on this have the Alberta government acting all tough and threatening economic retaliation – which is great, if not a tad hypocritical since in the fall when Jason Kenney suggested the same thing and much the same tactics, they laughed at him, dismissed the idea and said everything was going to be fine.
Anyway, water under the bridge right? But here’s the thing, while I think economic sanctions or retaliation are fine, this requires bolder action. So accordingly,. I suggest dusting off the Secret Alberta PC party BC invasion plan (betcha didn’t know there was one), otherwise known as Operation Blaze the Bud.
This is a three part invasion that requires skill, daring and a fair amount of executional panache, but I know the Alberta side is up to it.
The key to a successful execution is the fact that the majority of BC’s population is located in Metro Vancouver and the Fraser Valley and that much of the interior is ideologically inclined towards Alberta anyway, if not outright owned by Alberta vacationers. This will allow rapid deployment of troops into the border regions. A final demographic aid is that many Vancouver residents are blissfully unaware of much that goes on outside their surroundings (see BC bud reference earlier) so a surprise attack will be easy to execute.
Phase I is the Calgary army approach involving two rapid pincer movements with the Southern attack moving to Cranbrook via Fernie and the northern portion travelling the TransCanada corridor to Kelowna and Kamloops, sending a division south via Radium to connect the southern flank and continue on to Creston and Osoyoos via the Crowsnest highway. Once these two forces connect in Kelowna they will be ready for the final push into the Fraser Valley.
Meanwhile, Strike Force Whitecourt is charged with securing the Jasper to Valemount region which as we know is where the original TransMountain pipeline crosses from friendly Alberta into hostile BC.
As the same time, ground forces out of Grande Prairie will advance into NE BC to liberate what has often been called NW Alberta, holding the line at Prince George.
The last part of the strategy is a bold two simultaneous paratroop attack on Burnaby Mountain and the Abbotsford Airport to secure both the southern end of the TransMountain pipeline as well as vital road links back up the Fraser Valley towards Chilliwack and Hope. Control over the airport will allow the newly nationalized WestJet to land reinforcements for an eventual march into Vancouver.
If it’s not raining the Burnaby troops are authorized to advance as far as the Second Narrows Bridge. Closing off that crossing will grind the city to a halt.
The plan was for the invasion to last no more than 3 to 4 days depending on traffic, avalanche danger and wildlife on the roads but if traffic is really bad, it could take several weeks and become a protracted war of attrition with no winners on either side – just like the pipeline impasse.
Or, BC could just agree to an existing pipeline being expanded for everyone’s mutual benefit.
Stuart Parnell is a Managing Director at Stormont Energy Advisors, an independent advisory firm specializing in Sell-Side M&A, Corporate Finance and Transaction Advisory Services for North American energy service, diversified industrials, and energy technology companies. Read more Crude Observations from Stuart here.