To construct or to not construct: that’s the query dealing with Canadian politicians, oil and fuel consultants and trade leaders in terms of home pipelines, as U.S. President Donald Trump continues to tout plans for American vitality independence.
In a wide-ranging digital deal with to the World Financial Discussion board in Davos, Switzerland, on Thursday, Trump made an array of feedback, together with repeating his assertion of not needing Canadian automobiles, lumber, or oil and fuel amid the menace to impose 25 per cent across-the-board tariffs on Canadian imports.
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His statements in latest weeks have fuelled conversations about the place else Alberta might ship its oil.
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“We have to wake up to the reality that there’s been a major shift south of our border and at the same time, we have to look at diversifying our our market,” stated Sonya Savage, who was Alberta’s vitality minister underneath Jason Kenney.
“I think if you look back at the last 10 years, it’s been an extremely difficult time in the history of our country,” she stated of cancelled pipeline initiatives equivalent to Northern Gateway to the west, Vitality East to the Maritimes, and the Keystone XL growth to the U.S. Gulf Coast.
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“I think it took this threat of tariffs coming out of the U.S. to expose how vulnerable we are in Canada,” stated Savage, who earlier than being elected was a oil and fuel govt that, amongst different issues, labored on the Northern Gateway pipeline challenge.
Savage argues the challenge transferring Alberta oil to Kitimat on B.C.’s north coast would have opened up alternative past the US.
“I think the veto of Northern Gateway in 2016 was probably the biggest, if not one of the biggest, mistakes this country has ever made. That project would have would have moved 525,000 barrels of oil to the northwest coast of B.C., which is close to Asian markets,” Savage stated.
“It had been authorised by the Nationwide Vitality Board after a protracted regulatory course of and being deemed to be within the nationwide curiosity. And but it was vetoed by the Trudeau authorities.
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“I would love to see a project like Northern Gateway put back on the table.”
Premier Danielle Smith agrees and believes the challenge would possibly deserve one other likelihood.
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First Nations chief walks again earlier opposition to Northern Gateway pipeline
The president of the Union of BC Indian Chiefs, Grand Chief Stewart Phillip, stated Tuesday that whereas he “really fought against” Northern Gateway’s development earlier than it was scuttled in 2016, that was a “different time” and Canada now has “no choice” however to rethink.
Phillip’s feedback got here after Smith recommended on social media that development of the pipeline must “immediately start” to diversify the nation’s export markets, in gentle of Trump’s threatened tariffs on Canadian exports.
However sooner or later later, Phillip took again his feedback, saying, “I do not support resuscitating dead projects, which would have been an absolute disaster for our lands and waters.”
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The difficult economics of constructing pipelines
McGill College professor Amy Janzwood is an skilled within the politics of vitality and the setting, and has studied the Northern Gateway pipeline at size.
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“Given the changing economic context and market dynamics, it does not make any more sense to try to revive the project,” she stated on Thursday.
“You do not hear these proposals from major pipeline companies — these are politicians that are hoping to really use this as political discourse to talk about what they hope is the future for Alberta’s energy.
“But unfortunately, the sector is facing a number of challenges and the idea of building new pipelines is really going to be met with both commercial, economic and political and regulatory challenges.”
The Northern Gateway pipeline was initially authorised by the federal authorities in 2014 however cancelled two years later after a authorized problem.
“Since then, the economics and the commercial landscape has changed dramatically,” Janzwood stated.
Canada’s main vitality and pipeline firms will not be enthusiastic about constructing new pipelines attributable to business and and regulatory challenges, she stated.
“The number of hurdles to to cross when building massive new pipeline infrastructure like this is quite significant,” she defined, citing the regulatory course of, environmental approvals, land acquisition and public assist.
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“There are a whole host of challenges to building new energy infrastructure.”
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About 97 per cent of Canada’s oil is shipped south of the border, Janzwood defined, making up about 60 per cent of U.S. crude oil imports. Which means practically 1 / 4 of the oil America consumes each day comes from north of the border.
Nonetheless, she stated Canada can’t open up faucets that don’t exist.
“The promise of doubling oil production and increasing exports by building pipelines is really just wishful thinking at this point, given current market dynamics and energy infrastructure, the infrastructure constraints alone.
“You can’t wave a magic wand to double production, nor can you wave a magic wand to build new pipelines.”
Enbridge, the Alberta-based pipeline and vitality firm behind the now-dead Northern Gateway, advised Ontario Chronicle on Thursday it has no plans to revive it.
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“We currently have no plans to develop Northern Gateway. Our current effort is focused on leveraging our pipeline in the ground and our existing rights of way. There’s lots of capacity there that is efficient and less disruptive to communities and the environment,” Enbridge stated in a press release.
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Federal authorities rejects Northern Gateway Pipeline challenge
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So the place does Alberta go from right here?
In a province whose prosperity for the higher a part of a century has been tied on to the oil and fuel trade, Janzwood stated it’s not a straightforward reply.
“I think it’s a huge, important conversation and one that has been very politically difficult to broach in Alberta for a long time.”
She stated within the quick time period, governments need to concentrate on the present uncertainty, whether or not it’s retaliatory tariffs or elevated taxes on our vitality exports.
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Trump says ‘we don’t want’ Canada’s oil and fuel
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In the long run, although, she stated Alberta must take a tough take a look at how the world is altering in terms of vitality consumption.
“The inevitable decline and uncertainty and risk with oil markets is something that, unfortunately, the Alberta government has not been willing to take head-on. This is a significant challenge.”
Janzwood stated oil manufacturing might peak in Canada as early as 2026.
“So as the rest of the world is turning towards cleaner energy sources, it’s really important to be able to have these conversations about what diversification looks like in the Alberta context.”
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Trump’s contradictory statements: ‘Saying things based on his mood’
On Thursday, Trump additionally pushed for the OPEC+ alliance of oil exporting nations to deliver down the price of oil — which consultants stated conflicts with the Republican chief’s personal plans to make America energy-dominant.
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The president’s speech got here on his third full day again in workplace. Trump signed a stack of govt actions this week, quickly charting a brand new path ahead for the US.
He campaigned on U.S. vitality dominance and signed an govt order upon his return to the White Home declaring an vitality “emergency” as a part of his plan to cut back regulatory hurdles. Trump has stated it is going to permit the nation to “drill, baby, drill.”
However trade consultants stated his feedback Thursday contradict his vow to extend oil manufacturing within the U.S. whereas additionally slicing inflation for American shoppers.
“The U.S. energy dominance agenda is mutually contradictory with ‘OPEC lower your oil prices,’” stated Heather Exner-Pirot, an adviser to the Enterprise Council of Canada.
If the members of the OPEC+ alliance determine to extend manufacturing, that may decrease costs, she stated. Decrease costs would displace American provide, which is way costlier to supply.
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American producers are actually near breaking even with oil at $70 per barrel. They might need costs to go up if they’re to extend drilling.
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“There is no coherency or consistency in what he’s saying on oil markets,” stated Exner-Pirot, who can be director of vitality, pure sources and setting on the Macdonald-Laurier Institute in Ottawa.
Exner-Pirot stated she has a concept concerning the inspiration for Trump’s OPEC feedback. She stated American oil producers could have warned the president that they’ll’t ramp up manufacturing as he’s promised.
Exner-Pirot stated she suspects that Trump is “saying things based on his mood in the past 24 hours.”
Requested to react to Trump’s declare that the U.S. doesn’t want Canadian oil, Alberta Premier Danielle Smith’s press secretary Sam Blackett stated the premier’s message “has not changed.”
“A U.S. tariff will hurt American and Canadian consumers, and we should be focused on developing our trade relationship through diplomacy, not threats. Not only should we be focused on outlining the benefits of trade between Canada and the U.S., but Canada must focus on accelerating its two per cent GDP NATO commitment and strengthening our southern border,” Blackett stated on Thursday.
“In a negotiation, both sides will say all kinds of things and use different tactics. It’s important when this happens to remain calm and diplomatic while continuing to carry out Alberta’s and Canada’s strategy. The premier will continue to do so.”
Carlo Dade, director of commerce and commerce infrastructure on the Canada West Basis, stated that if oil costs drop as Trump has requested, it might lower income in a number of Canadian provinces.
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Dade agreed that Trump’s phrases and targets are contradictory, including it is going to pose an ongoing problem for Canadian officers making an attempt to navigate the bilateral relationship amid tariff threats and a pending evaluate of the Canada-U.S.-Mexico Settlement.
“How do you make policy decisions when you’re getting tweets or policy announcements that contradict each other? This is the dilemma going forward and this is why it’s such a hard job dealing with Trump,” Dade stated.
“And I don’t think we’ve really wrapped our minds around it.”
— with information from Lisa Johnson and Kelly Geraldine Malone, The Canadian Press together with the The Related Press
