Alberta's government has raised the stakes in its feud with British Columbia over the expansion of a Kinder Morgan Inc.-controlled oil pipeline with an implied threat to reduce oil exports to its western neighbor.
The provincial government on March 8 alluded to the actions of former Alberta Premier Peter Lougheed, who in the 1980s ordered a 15% cut in oil shipments to refineries in central Canada to protest then Prime Minister Pierre Trudeau's energy legislation. The speech from the throne, which sets the provincial government's agenda when a new legislative session begins, threatened a repeat of those actions if British Columbia continues its attempts to block the expansion of Kinder Morgan Canada Ltd's Trans Mountain pipeline.
"In the past, when workers in our energy industry were attacked and when the resources we own were threatened, Premier Peter Lougheed took bold action," Lieutenant Gov. Lois Mitchell read from the government-prepared speech. "We will not hesitate to invoke similar legislation if it becomes necessary owing to extreme and illegal actions on the part of the B.C. government to stop the pipeline."
The threat marks an escalation in a dispute that had appeared to be subsiding in recent weeks. The dispute had flared when British Columbia's government suggested it would introduce a policy that would limit increases in transportation of diluted bitumen from the oil sands through the province. The ban would impede Kinder Morgan Canada's plans to almost triple the capacity of the Eisenhower-era Trans Mountain network to 890,000 barrels per day. That led Alberta to halt negotiations to buy power from British Columbia and to a ban on importation of its wines. Both sides backed down when British Columbia omitted the limit from a package of proposed policy changes and Alberta lifted the wine ban.
Trans Mountain is the largest source of crude oil and refined products to British Columbia. Along with oil sands bitumen from Alberta, the pipeline carries light crude to a key refinery in the province's populous Lower Mainland region and gasoline and other products from refineries in Alberta. While the province can receive shipments by barge from refineries in the U.S. Northwest, outages at the Burnaby refinery adjacent to Trans Mountain have pushed gas prices to as much as C$1.50 per liter, or about US$4.42 per gallon.
Kinder Morgan's Westridge Terminal connects to the Trans Mountain pipeline. |
"There is no question that the Lower Mainland of B.C. in particular struggles from rather high gas prices and that they have a very high sensitivity to supply changes," Alberta Premier Rachel Notley said in a news conference earlier on March 8. The government will update existing legislation that gives the province the ability to limit exports of petroleum products, she said.
The government was not specific about how it would limit exports. Trans Mountain is federally regulated and overseen by the National Energy Board, a fact that Alberta has raised in British Columbia's attempts to block the expansion. The line ends in British Columbia, but it connects with a conduit that runs to U.S. refineries, and Kinder Morgan's Westridge Terminal in Burnaby loads tankers for export to other countries.

