CALGARY – Saskatchewan entered the trade war between Alberta and British Columbia, telling the coastal province Thursday it will consider limits on its out-of-province oil shipments if B.C. continues its efforts to delay the $7.4-billion Trans Mountain pipeline expansion project.
“We are giving warning to say we will do what it takes to ensure that this Trans Mountain pipeline that was approved by the federal government is built,” Saskatchewan Premier Scott Moe said in an interview.
Saskatchewan likely won’t be shipping oil on the proposed pipeline between Alberta and B.C., but is hurt by the project’s delay because the discount to Canadian oil relative to U.S. crude is costing the Saskatchewan government $150 million per year, Moe said. The pipeline is expected to reduce that discount.
“I hope it doesn’t come to this, but if B.C. blocks pipelines for Canadian oil, Saskatchewan will consider retaliation, including restricted export permits for our oil,” Moe said in a Twitter posting.
Saskatchewan’s threat to retaliate against B.C. in the ongoing pipeline fight further aligns it with Alberta and escalates the threat of an inter-provincial trade war, which could now include Canada’s three western-most provinces.
“It’s mostly grandstanding,” University of Regina public policy professor Ken Rasmussen said of Saskatchewan’s threat to restrict oil shipments. “It’s not a serious threat that can be followed up with any meaningful action, so it seems as though it’s good politics domestically to look like you’re all-in on pipelines here in Saskatchewan.”
Asked whether Saskatchewan would restrict other exports to B.C., such as grain, Moe said the oil restrictions were the only retaliatory measures he’s considering so far.
Alberta Premier Rachel Notley Thursday repeated threats to cut off oil shipments to the West Coast, which would send gasoline prices skyward in Vancouver because gasoline and diesel burned in the Lower Mainland arrives there via the existing Trans Mountain pipeline.
She also said new legislation would be introduced soon, giving Alberta the tools to restrict westward oil flows.
“It does sound very much like Saskatchewan is adopting a similar approach to what we talked about in our throne speech and what we will be talking about in our legislature later this term,” Notley told reporters.
“We will bring in legislation that will give our government the authority, should we need to use it, to strategically deploy our oil and gas resources,” she said, adding, “that may also result in some short term price implications to the West of us.”
Alberta had previously imposed, then withdrew, a ban on wine from B.C. and cut off talks to purchase electricity from its neighbouring province after B.C. Environment Minister George Heyman announced plans to study restricting new oil flows into the province.
“What we’re really doing in British Columbia is standing up for our constitutional right to regulate and protect our environment. We understand that the pipeline and the inter-provincial transportation of goods and products like goods and oil is federal jurisdiction,” Heyman said in an interview Thursday.
He also rejected Moe’s claim that B.C. was actively delaying the pipeline.
“Mr. Moe’s claim that we’re delaying the pipeline just doesn’t stand up,” Heyman said. “Kinder Morgan in a conference call with shareholders in fact said that the B.C. government, despite the fact that we object to the pipeline and think it’s a bad project and have challenged it in court, has not been holding up permits.”
“We have been approving them where they’re worthy of approval,” he said.
Still, politicians and energy executives in Alberta and Saskatchewan believe legal challenges by politicians and environmental groups in B.C. are aimed at delaying the project to the point where the construction timeline and costs make proceeding further unfeasible.
Kinder Morgana Canada has already announced delays to its construction start and said it is in a “primarily permitting” process right now, focused on getting necessary permits from some uncooperative governments before construction ramps up.
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