Analysis: Canada may have the second largest oil reserves in the world, but the vast majority are locked up in Alberta's oil sands, far from any ocean. That means that pipelines are needed to transport the oil west to ports on Canada's Pacific Coast or south to markets in the United States. With President Barack Obama having indefinitely postponed approval of Keystone XL, the pipeline that would carry the oil down to refineries in Oklahoma and Texas, Ottawa was hoping to transport the oil through the planned Enbridge Northern Gateway pipeline. It would stretch from Edmonton, Alberta to the deepwater port in Kitimat, British Columbia. Recent tensions, however, have erupted between B.C. and Alberta, causing the pipeline to turn into a national issue with possible consequences for the Arctic.
A report by the Calgary-based firm, Wright Mansell, has estimated that the pipeline would generate $81 billion in tax revenue over the next three decades. B.C. would receive a mere $6.7 billion, while Alberta would receive $32 billion. In July, B.C. Premier Christy Clark demanded a bigger chunk of the revenues, which Alberta outright opposes. A poll by Abacus Data shows that 56 percent of British Columbians opppose the Enbridge pipeline, while only 25 percent are in favor. Contrastingly, 63 percent of Albertans approve of the pipeline. Money isn't the only part of the problem. Many British Columbians are also worried about the environmental risks of having a heavy oil pipeline cross 408 miles of their province. In an interview with CBC's radio program, The House, economist Robyn Allan noted that a highly critical report by the U.S. government on an Enbridge pipeline rupture that sent close to a million gallons of oil into the Kalamazoo River in Michigan had not been submitted as evidence to the public hearings. British Columbians, currently standing to receive only $223 million a year in oil sands revenues, would surely want to vet any related infrastructure that could create a catastrophe in their landscape should anything go wrong. As it stands, B.C. is set to take on a majority of the risks on land and water in return for only a fraction of the rewards. The pipeline could be decisive in the next election, particularly since many Conservatives in B.C. – a province Harper needs to win to secure victory – are set against it.
With Enbridge mired in disputes between Victoria and Alberta, Alberta may turn to its friendlier neighbor to the north: the Northwest Territories. There, Premier Bob McLeod is advocating a rerouting of the pipeline through the Mackenzie Valley, where the territory has been trying to construct a natural gas pipeline for decades. Although the pipeline received the green light from the National Energy Board in March 2011, the plummeting price of natural gas has forced developers to put the project on hold. McLeod announced in a separate interview with The House, "If we can't go south, if we can't go to the United States, if we can't go to Asia, and if we can't go east, then we have to look at other options, which could include a northern route."
Alberta Intergovernmental Affairs Minister Cal Dallas stated, "We view McLeod's comments as a signal that the NWT recognizes that access to markets for Alberta energy would really enhance economic opportunities and jobs across Canada ... A northern route that would see our bitumen transported out of the NWT to Asia might be a project that could be actively contemplated at some point in the future."
Yet the same resistance that the Mackenzie River Valley pipeline has faced from aboriginal and environmental groups could rear its head again if serious consideration really were to be given to a pipeline stretching from Edmonton to the NWT port of Tuktoyaktuk. One reason McLeod is vocalizing his support for transporting oil sands bitumen through his territory is because the NWT has potentially two to three billion barrels of oil in the Canol shale formation in the Mackenzie Valley. These resources could be unlocked with hydraulic fracturing. Still, the NWT has no infrastructure to get its oil to market – the very problem Alberta is facing with oil production forecasted to exceed pipeline capacity by 2015. McLeod stressed, "We have to use what we have to provide for the future of our people. If we can't develop our oil and gas ... it's going to mean we're going to have tough economic times." If the NWT were to have a pipeline to the north to export Alberta's oil, that would also allow it to ship out its own territorial resources. Thus, rerouting the Northern Gateway to the far north could actually be the key to unlocking the NWT's reserves. Without the aid of Alberta, there might not be enough oil to justify building massive amounts of infrastructure, including pipelines to shipping facilities. Tuktoyaktuk is essentially just a small harbor now. In 2006, when Ottawa was deciding where to build a deepwater port in the Arctic, the then-prime minister of the NWT, Joe Handley, vouched for the hamlet to be chosen. Instead, Nanisivik received the honors.
Aside from that, the shipping routes crossing the Beaufort and Chukchi Seas down through the Bering Strait are still quite risky, particularly in comparison to the tried and true route across the Pacific from British Columbia to China. The Chinese icebreaker Xuelong sailed through those very waters this summer, but it would be harder for non-icebreaking ships to navigate the same routes. Should the Northern Gateway defeat the odds and traverse the Northwest Territories to port, it would be a sad twist of fate for Arctic environmentalists. Those who had opposed the Mackenzie Valley Pipeline because of the potential for ruptures and leaks to contaminate the pristine Arctic tundra would then see something possibly even more hazardous to the region. Not only would oil flow through that same planned pipeline, just in reverse. In addition, millions of barrels of oil would have to be shipped through the precarious Northwest Passage.
This analysis is posted on Alaska Dispatch as part of Eye on the Arctic, a collaborative partnership between public and private circumpolar media organizations.