AN ODD THING HAPPENED ON THE WAY TO THE EAST COAST
Posted on October 22, 2014
Canada has the world’s longest coastline. It borders three oceans. It has very large reserves of oil and gas. These reserves are located primarily in Alberta, Saskatchewan and northern British Columbia. Astoundingly, these reserves have considerable difficulty reaching tidal waters and non-US export markets. Only a very rich country would find itself in such a situation!
Quebec has a diversified but slow growth economy, two operating oil refineries, a willingness to support heavy industry (its largest publicly announced industrial project is the $1 billion IFFCO fertilizer plant at Becancour), one of the world’s greatest waterways with many existing ports (the Port of Montreal is Canada’s largest container port yet 1,600km from the Atlantic Ocean), and since April 2014, an openly pro-Canada government that understands the importance of strong Western economies to Quebec. Western economies are a growing market for Quebec companies and goods.
The Quebec government is openly supportive oil and gas exports from Quebec provided that the following preconditions are met:
- Exports must be made in accordance with the highest standards of care, and
- have local acceptability.
Alberta and Saskatchewan want to export oil from Quebec and transit oil through Quebec to Saint John, New-Brunswick. One would think that in light of the above this would be relatively easy.
It has been anything but.
The Quebec government has been embarrassed. A Superior Court judge recently found that an important environmental permit was wrongly issued because the Minister did not have all the information required to issue such permit. Since then another important environmental permit has been suspended by the authorities. Many in Quebec industry are openly unhappy (and vocal) about current pipeline plans. They claim the plans as they now stand will hinder economic growth. Mayors and local officials are worried about infrastructure and safety and find answers and reassurances wanting. The tourism industry is concerned about the impact of exports on its industry. For example, whale watching in the Saint-Lawrence attracts tens of thousands of visitors a year. Opposition politicians and much of civil society want to know what Quebec will gain from such exports. The indirect benefits will be many but they are hard for politicians to explain in sound bites. Last but not least, but in a supporting role, is an environmental movement which is unabashedly against the idea.
How can the Western Canadian proponents of access through Quebec improve the situation and not repeat the mistakes made elsewhere?
The solution will have to recognize that (i) Quebec has no oil and gas culture, (ii) Quebec oil and gas critics have credibility, and (iii) the Quebec government will not compromise on the two preconditions outlined above.
In other words business as usual will fail. The matter is going to require active involvement by the industry’s statesmen and $500 million issues will be rounding errors.