Horgan's Reasonable Overture

British Columbia premier, John Horgan, has an eminently reasonable solution to Justin Trudeau's and Rachel Notley's pipeline fetish - refine that cruddy bitumen here and sell it on the Canadian market.

"If they have disposable billions, I would suggest a better course of action would be to invest in refining capacity so that we Canadians can benefit from the jobs and we Canadians can benefit from this natural resource rather than sending it in raw form to another jurisdiction," Horgan told reporters Thursday. 

"I think it's a reasonable way forward and I would be absolutely delighted to participate." 

Federal Green Leader Elizabeth May has touted the same plan to avoid shipping more bitumen off the coast, and even suggested branding the gasoline “Fort Mac Strong.” 

“There’s not a Canadian that wouldn’t rather put Fort Mac Strong in their gas tank than buying from Venezuela and Khazakstan and Nigeria,” May said this week.

Horgan said he'll be raising the possibility during a Sunday meeting with Notley and Prime Minister Justin Trudeau, but that he's been pushing the idea "for months" without success.

Hmm, that would certainly satisfy Trudeau's "national interest" obsession. What could be better and safer for Canada than to keep that bitumen at home, refine it into oil products on site and sell it to the Canadian market? Keep the value-added jobs here. Remove the crud, the heavy metals, the carcinogens and other toxins and put them safely back where they came from, deep underground in Athabasca.

Unless, of course, it's not the "national" interest Trudeau is really intent on serving.

There are more and more knowledgeable people beginning to doubt the Trudeau/Notley initiative. One reader of this blog yesterday referred me to a telling article in the National Observer that the Aframax tanker armada intended to ply the BC coast has already been rendered obsolete by another, far larger ship, bringing cheaper oil to Asia.

Two weeks ago, the first supertanker capable of holding two million barrels of oil departed for the first time from America’s newly upgraded—and only—terminal able to dock and load crude-carrying behemoths of this size. Bound for China, the inaugural run signals a major shift in global oil shipping patterns, economics, and the highly competitive oil refinery business. 

It is no accident that the Louisiana Offshore Oil Port (LOOP), terminal was built deep in the Mississippi Delta. To the south, a 29-kilometre pipeline stretches across the shallow Gulf of Mexico coastal shelf, to a point deep enough to allow Very Large Crude Carriers (VLCCs) to unload or load their vast tonnages of oil. Just north of Port Fourchon, an underground complex of salt caverns and surface tanks stores both oil imports headed for U.S. refineries, and fast-increasing volumes of oil bound for export.

The LOOP terminal is a speculator’s venture on steroids. Built with private capital, it is North America’s first oil port dedicated to the planet’s largest crude tankers, handling bi-directional oil flows. It’s designed to thrive on fierce global fights over not just oil supply and demand, but the multi-billion dollar bets corporate oil traders and hedge funds place, hoping to buy low and sell high—now, or two or five years from now.

...That will likely prove fatal to Alberta’s plans to expand unrefined bitumen exports either by the proposed Trans Mountain pipeline to the British Columbia coast, or the proposed Keystone XL pipeline because: 

• Potential foreign refiners and customers will demand that future oil price, quality, shipping costs, and delivery speeds match those that LOOP can offer. 

• For marine safety reasons, the maximum oil tanker cargo allowed through B.C.’s Burrard Inlet is an Aframax class ship at 80 per cent capacity carrying 550,000 barrels, only about one-quarter the load of a VLCC. That means a refiner in Asia would need to book and pay for four tankers to ship the same amount as from the LOOP terminal, then wait longer for the full order to arrive. 

• The diluted bitumen Alberta wants to export has chemical and combustion properties that make it far inferior to the higher-quality oil LOOP has access to from U.S. formations in the Dakotas and Texas, or OPEC countries, or North Sea producers. Tar sands/oil sands bitumen can be upgraded and refined, but that adds significant costs and requires dedicated facilities.

This dovetails rather neatly with Andrew Nikiforuk and others' suspicions that Kinder Morgan knows the Trans-Mountain will be an economic fiasco and the ex-Enron boys are trying to stampede Notley and Trudeau into financing the pipeline or else set up Kinder-Morgan to line its pockets with a huge and specious NAFTA claim for damages.

Nikiforuk, unquestionably the most knowledgeable journalist when it comes to the Athabasca Tar Sands, believes Trudeau and Notley are being played for suckers.

Kinder Morgan prefers bluster and blackmail instead of the reality that the project was never a sound venture because it was about privatizing gains and socializing costs. 

Economist Robyn Allan has repeatedly argued that Kinder Morgan is no ordinary company and the Trans Mountain expansion project has been uneconomic since day one. 

She told The Tyee that “Kinder Morgan is looking for an exit strategy, but it likely includes a need to demonize Ottawa in order to set the stage for a suit under NAFTA.” 

The drama begins with the biased workings of the National Energy Board, which refused to look at downstream and upstream climate impacts of the project and even failed to scrutinize its commercial viability during public hearings. 

The best evidence from experts shows that Kinder Morgan, the Canadian government and Notley have misrepresented the pipeline’s illusory benefits. 

A pipeline to the coast will not raise bitumen prices, because all global markets discount junk crude due to its poor quality.

I can understand Notley. She's worried about keeping her job and for good reason. To be less than rabid on Trans-Mountain would be the conclusive end of her premiership.

Trudeau, however, that's a different story. Sure he's terrified of getting hammered by Scheer if he backs down and Kinder-Morgan's blackmail has him soiling his dainties. He's also a patsy. He's not that bright, not nearly in the same league as the people playing him. That's evident when he clumsily regurgitates the same ridiculous talking points about bitumen paving the way for our Green future and the nonsense about "national interest" and how his government has "done the science" when even Environment Canada and the Royal Society of Canada say it has not been done. It's the equivalent of the kid sheepishly telling teacher that the dog ate his homework.

Now, doesn't Horgan's proposal sound pretty good?

h/t Deacon Jester

Update:

DeSmogBlog has an excellent expert legal analysis on how Trudeau and Notley have grossly overplayed their constitutional case and will be unable to sweep an unruly British Columbia out of their way.