It was two years ago that Saskatchewan, Alberta and British Columbia put together an agreement to address issues surrounding business regulations and obstacles to interprovincial trade.
The New West Partnership – put into effect on July 1, 2010 – was said to be an important part of building the increasingly integrated natural resource industries of the three western provinces, their sights set on improving labour mobility from province to province in the face of a skilled labour shortage and exporting their products to Asia and beyond to end their ages old dependence on the American market.
“Signing the New West Partnership really cemented the strong relationship between our three provinces and highlighted our region's growth-friendly policies," said Saskatchewan Premier Brad Wall, celebrating the two year anniversary of its implementation.
“I'm proud of our accomplishments and excited about the potential we're unlocking in the New West,” he added.
“The New West Partnership is the gold standard across Canada in removing inter-provincial trade barriers,” said B.C. Premier Christy Clark.
“It proves that the best way to create jobs and lasting prosperity is by working together to make our economies more competitive by reducing red-tape, streamlining regulation and creating a common business market.
“Not only has the New West Partnership helped to set the three provinces as economic leaders in Canada, but we are also better positioned to access important Asia-Pacific markets."
“More than ever, Alberta's economy is tied to events outside our borders," added Alberta Premier Alison Redford. "Promoting ourselves internationally and continually improving our competitiveness are the keys to growing Alberta's prosperity. Through the New West Partnership, we're building on our regional strength as an economic engine of Canada.”
The Canadian Association of Petroleum Producers (CAPP) has been encouraged by the New West Partnership.
“An important and timely initiative that will position both industry and governments to ensure competitiveness and the social license necessary to develop… hydrocarbon resources,” said CAPP spokesperson Travis Davies, emphasizing that the competitiveness and social license to operate pieces were the most important elements of the deal from their perspective.
Davies added that the flow of labour and the exchange of regulatory ideas and technological advances are important parts of achieving those goals. He noted that harmonizing industry regulations and sharing best practices are also critical.
“There is significant opportunity to strengthen the region's energy sector, which will result in new investments, job stimulation and wealth creation,” said Davies.
“Any actions taken to strengthen and grow the energy sector must promote responsible development and we are committed to that,” he added.
However, certain oil and gas industry experts aren’t quite so impressed.
“I still see individual fiefdoms,” said Bill Gwozd, vice president of gas services with energy sector consultants Ziff Energy Group.
Gwozd points to the Enbridge Northern Gateway project debate as evidence.
Clark had refused to take any stance on the controversial pipeline that would move oil sands bitumen across the B.C. to an export hub in Kitimat until her stating that the project is fraught with environmental risk for her province, but offers little in the way of economic rewards.
Her comments were made a few days after a U.S. National Transportation Safety Board (NTSB) report on the 2010 Enbridge pipeline rupture that poured oil into Michigan’s Kalamazoo River characterized the company as Keystone Kops.
"To cast doubt on the operational capability of a company that's considered to be best in the world does create additional challenges for us," said Enbridge CEO Pat Daniel in response to the report.
"We just have to ensure that we explain fully to [British Columbia] residents that that was not representative of the culture and outline... the changes that we have made,” he added.
Following the NTSB report, Enbridge announced a $500 million plan to upgrade Northern Gateway that includes thicker steel for the over 100 river crossings, many of which are important salmon habitat, and 50 new valves that can be operated remotely to stop the flow of oil in an emergency.
The B.C. government finally officially addressed the matter on July 23 when they outlined the five requirements that must be met if heavy oil pipelines along the lines of Northern Gateway are going to be operating in the province.
"Our government is committed to economic development that is balanced with environmental protection," said Clark.
"In light of the ongoing environmental review by the Joint Review Panel (JRP) on the Enbridge pipeline project proposal, our government has identified and developed minimum requirements that must be met before we will consider support for any heavy oil pipeline projects in our province. We need to combine environmental safety with our fair share of fiscal and economic benefits."
The five requirements were listed in a new heavy oil policy paper appropriately titled Requirements for British Columbia to Consider Support for Heavy Oil Pipelines.
The requirements include: the successful completion of the environment review being conducted by the JRP; world class marine oil spill response, prevention and recovery systems; similar oil spill prevention, response and recovery procedures; and opportunities for First Nations to benefit from the project in addition to proper respect for their Aboriginal and treaty rights.
The final requirement is that the economic benefits coming to B.C. match the level of risk to the environment.
Gwozd views Redfords position much differently.
“She’s probably kind of voting that we want to move oil out that way,” he said. “We don’t want to have any noise from any premier out in British Columbia. So, this seems like they have their own fiefdoms. Rather than get their stories straight, they sort of … just shoot from their hips, rather than have a collective speech.
“And so that’s not positive in the sense that you’re trying to do work together. They should have the same story. They should be both singing from the same choir sheet. And they seem to be singing their own tunes. Some in tune. Some out of tune.
“And the young fellow over in Saskatchewan,” he continued, referring to Wall, “he’s more interested in the low price of natural gas because it’s going to help spur some of the industrial facilities over there. So, his choir sheet says keep the price low for a long time, and don’t export anything, because exports might push the prices up. So, I don’t see any coordination.”
Richard Dixon, executive director of the Centre for Applied Business Research in Energy and the Environment (CABREE) at the University of Alberta’s Alberta School of Business, points to B.C.’s position in the New West Partnership as a reason for the inconsistent approach to major projects such as Northern Gateway.
“B.C. is in the corridor business,” he explained. “And they’ve been in the corridor business – among other businesses – for the last 120 years. That’s the whole reason that they got into Confederation.”
Dixon suggested that B.C. has to be careful about any decision to step out of the corridor business, even if it is just in terms of Northern Gateway, because piping oil to Texas is probably the better option regardless.
“Then what does that say about that partnership?” he quipped.
The problem, according to Dixon, is that B.C. is unable of becoming a full, equal partner in the New West Partnership because Saskatchewan and Alberta are almost entirely natural resource economies, at least in terms of land area devoted to that sector, while a relatively small portion of B.C. is devoted to natural resource operations.
The rest of the province is simply the transportation route.
CAPP refutes that theory.
“B.C. is a full partner… and a significant natural resource player,” said Davies.
“As with other jurisdictions,” he continued, “there remains a challenge around the disconnect in understanding between how energy is produced and how it is consumed. [The New West Partnership] has a vital role to play in improving energy literacy, but that is not a short-term project. It will take time and focus.”
Dixon also suggests that a lack of consistency over the course of the two years of the partnership has hurt its chances of becoming a fruitful initiative.
After all, during that time, B.C. has seen two premiers and two energy ministers, while Alberta has had two premiers and three energy ministers.
“How are you going to get anything on the go?” he said. “Which is the nature of the agreement.”
Dixon isn’t encouraged by what he has seen in terms of encouraging innovation, which is supposed to be an element of this collaborative approach.
“I think there’s a real challenge to rethinking innovation,” he said.
“I think we haven’t figured that one out as well for the kind of society we live in nowadays.”
Gwozd also pointed to the amount of change in the provincial governments as causes for what he perceives as a lack of success.
“Turnover’s a big thing,” he said.
“But I also think that British Columbia natural gas is going to grow quite a bit,” Gwozd continued.
“And I think Alberta’s natural gas is going to shrink quite a bit. And I really thought that partnership was to help transfer staff from the Alberta department of energy, who have less to do, over to the department of energy in Victoria, where they have lots to do.
“And I get into these funny squabbles with [human resources] directors in British Columbia, saying, ‘Well, you know, Bill, we’ve been monitoring our wells and we’ve been getting our permits out in X number of days and our plans out in X number of days.’ They’ve missed the boat.
“I’m not talking about things like that. I’m talking about blunders by the B.C. government where they slashed royalties in all areas of British Columbia. Some of the areas where the full cycle cost is double digit, why slash the royalty at all? Slashing it from $2.00 to $0.50 is only going to make the full cycle cost come down from a higher double digit to a lower double digit. They’re still not going to add any additional boom to spend more money and drill more. So, things like that, that’s a direct indicator of simply lack of resources, lack of staff doing proper analyses for royalty strategies.”
Davies doesn’t believe that a transfer of government staff was ever part of the plan.
“Sharing regulatory expertise and frameworks certainly was,” he said.
Davies doesn’t agree with Gwozd’s assessment of the changes to oil and gas royalties either.
“It has been effective in a time of very low gas prices,” he said, citing the growth in land sales as proof. Ultimately, Dixon still has more questions than answers.
“What are the announcements? And what’s out there that’s happening?” he said.
“It would be nice to see them just bringing down barriers between… the three provinces,” he added.
“So, whether they’ve really put their heart into this one or not, I’m not sure.”