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BLOG: Canada's pipeline politics move East

BLOG: Where oh where will Alberta send its burgeoning supply of oil?

Surely some will flow south once Barack Obama's widely expected approval of TransCanada's (TRP-T) Keystone XL is handed down, but any plans to go anywhere else in Canada seem to keep slamming up against insurmountable hurdles.

It seems almost a waste of words to talk about the Northern Gateway pipeline, which Enbridge (ENB-T) is hoping will see the first 500,000 barrels of northern Alberta bitumen flow west to reach the Pacific coast. Alberta Premier Alison Redford and British Columbia Premier Christy Clark have no plans to meet privately on the issue at the provincial leaders' summit still underway in Halifax, according to a phone conversation I had this morning with Jay O'Neil, Redford's Director of Communication.

Considering the 'frosty' meeting Canada's two westernmost leaders had here in Calgary last month that is hardly surprising, especially when the joint review panel studying the Gateway pipeline will likely not utter a peep on whether the project will be approved until its deadline, around this time next year. B.C. has an election in May, when the staunchly anti-pipeline NDP could unseat Clark, but even so that is the earliest we will hear anything on that.

In the meantime, much hope has been pinned to a backup plan which, on the surface, appears to make perfect sense. You can almost imagine the conversations going on high atop some downtown Calgary oil tower: "Well it doesn't look like we can go west, so how about east?"

Progress on that front appears to be encouraging. Quebec Premier Pauline Marois certainly seemed open to the idea on Thursday when she agreed to form a working group that will consider the plan. It was certainly an improvement from the rhetoric espoused by Marois' Environment Minister Daniel Breton, who thinks the plan amounts to a violation of Quebec's sovereignty.

Bob Schulz, professor of strategic management (and petroleum land management) at the University of Calgary's Haskayne School of Business, poured cold water on the immediate feasibility of the plan when I spoke to him Friday morning.

"There is a lot of homework and economic analysis that still needs to get done before this works," he said.

Shipping bitumen through pipelines designed for lighter crudes could pose safety concerns, Schulz said, adding Quebec refineries may also not be equipped to process heavier oil sands products.

Enbridge, the company with the only official plan on the table at the moment to send Alberta oil east via a reversal of a pipeline that currently runs east from Montreal to Sarnia, is facing another potential roadblock. About 900 barrels of oil leaked from a BP-owned tank farm in Illinois this week, which is precisely what many in Quebec are concerned could happen there if Enbridge is allowed to move forward with its plans.

Todd Nogier, an spokesperson for the energy transport giant, noted the leak was not on any Enbridge mainline and that all the oil had already been contained in dynes that surround the property, which he said "illustrates the safety precautions worked and they worked very well."

In many ways, however, the damage was done just by the news itself. Schulz notes that "some people in Quebec have the same mantra as activists in the U.S. who say Alberta's oil is dirty."

Some of those people include members of Quebec's cabinet, like Environment Minister Daniel Breton and Natural Resources Minister Martine Ouellet. Premier Pauline Marois did agree to have her government study the west-to-east plan late Thursday, but the job of actually doing the studying is more likely to fall to folks like Breton and Ouellet.

Meanwhile, experts back in Alberta simply cannot understand why Quebec would offer anything but enthusiastic support for the plan. It would, after all, provide cheaper and more reliable fuel sources to the province's two remaining refineries and could possibly give cause to re-open the three refineries to have been shut down in recent years.

"It is just confounding to hear these comments from Quebec government. Why would you not want this?" asked Todd Hirsch, senior economist with ATB Financial.

"They should be pressing the Harper government to get this done. It is just amazing the level they are even discussing this on."

Quebecers are also paying far more at the gas pump than anyone in Western Canada, and according to a study published by Statistics Canada on Friday, the culprit is more expensive crude, which refineries in the east are forced to buy, since they lack any access to crude extracted from within Canada.

Just consider this food for thought as Quebecers decide whether to accept Alberta's 'dirty oil' or not. CTV Two CTV News CTV News Channel BNN - Business News Network CP24