The British Columbia and Alberta governments reached an agreement November 5 on B.C.'s contentious five conditions for new pipelines.
The agreement opens the door to large-scale developments such as Enbridge's (TSX:ENB) Northern Gateway project and Kinder Morgan Canada's (NYSE:KMP) twinned Trans Mountain pipeline from Alberta to B.C. The premiers made the announcement at a press conference at Clark's Vancouver office.
News of the deal came as a surprise as negotiations between the Clark and Redford camps had reportedly broken off November 4, the two sides unable to agree on B.C.'s fifth condition: that the province receive its fair share of the economic benefits of new oil projects.
The four other, more palatable, planks deal with establishing "world leading" marine and land oil spill response, completion of environmental review processes and involving First Nations communities and respecting treaty rights where applicable.
Clark, since releasing the conditions last summer, had been adamant that Alberta surrender a greater portion of its royalties from pipeline projects.
Redford, however, steadfastly refused to negotiate on that issue.
Under the new agreement, B.C. will negotiate with private industry, an option always available to the province, instead of Alberta, for greater economic benefits of pipeline projects. Any additional windfall will now come from energy companies.
B.C. also signed Alberta's energy strategy – a sweeping plan that outlines Alberta's vision for the intense development of fossil fuels such as natural gas, conventional oil, bitumen and coal as well as, to a lesser extent, renewable sources such as biomass and wind.
Redford spoke at a sold-out Vancouver Board of Trade energy forum, also on November 5, and called the deal "the best possible scenario for B.C., Alberta and Canada."
The high-profile event also featured Kinder Morgan president Ian Anderson and Canadian Association of Petroleum Producers (CAPP) vice-president Greg Stringham.
How B.C. will negotiate with private industry remains to be seen. One option could be levying a new tax on the oil travelling through the province, to be paid by the oil companies.
When pressed by reporters on whether or not Kinder Morgan would agree to pay a new tax, Anderson said the company had "no thoughts."
He did stress that any bi-provincial negotiations wouldn't change the focus of the Trans Mountain pipeline expansion. His company's project offers significant economic benefits to both B.C and Alberta and he is committed to highlighting those benefits.
Beginning this week, Anderson is embarking on a 20-city tour, stopping in communities located along the Trans Mountain pipeline route such as Burnaby, Chilliwack, Hope and Abbotsford to discuss the project with area residents.
"We will continue concentrating on our project. We are not changing our approach," he said.
"But it is good to have this discussion in the limelight."
Stringham also applauded the Alberta and B.C. governments for reaching a deal, however broad. But the energy industry, of which CAPP represents companies in both the upstream and downstream sectors, will need more details soon, he said. Any changes in the economics of energy projects – new taxes – need to be known.
"These conditions set the framework for discussion," said Stringham.
"As for the government's process, we'll need to see something by the end of the year. There is lots of work left to do, but this is a very positive movement."
