Teaming up to reach new markets

The New West Partnership revives the old alienation chestnut

By Jeff Lewis

December 17, 2010

Energy ministers from Alberta, Saskatchewan and British Columbia were singing from the same hymn book this week as they unveiled a new regional pact to promote common interests among their resource-driven economies. It wasn’t exactly Ian Tyson’s “Four Strong Winds”, but something much closer to “Put Yourself in My Place” by The Supremes.

Regionalism, in other words, is alive and well in Canada. Yesterday’s partnership seems as much an effort to prod Ottawa into recognizing the country’s economic fortunes are inextricably tied to Alberta’s oil sands, B.C.’s unconventional gas and Saskatchwan’s potash and uranium as it was about co-operation. “That’s always one of the things we’ve fought in this country,” Alberta Energy Minister Ron Liepert said, raising the old chestnut of western alienation. “We swing a lot of economic clout,” he added. “It’s the energy industry that’s driving this country.”

There are potholes on the road ahead. The biggest among them, for Alberta at least, is an ailing natural gas industry. After contributing $8.4 billion to provincial coffers in 2005-06, the province’s revenue-generating mainstay is poised to plummet as gas prices stay mired in the $3-$4 per thousand cubic feet range thanks to gluts across much of the United States. Forecast revenues from the cleanest fossil fuel are projected to fall to $1.9 billion for the full financial year of April 1, 2010, through March 31, 2011. To put the projected total into perspective, the haul from sin taxes in Alberta, including $1.3 billion from government gaming and lottery operations and $697 million from liquor, is expected to be around $2 billion. “We have to recognize the natural gas industry is struggling,” Liepert said, surprising no one.

Climbing out of the rut means finding new customers for the province’s exports. That includes gas, as new shale supplies south of the border are expected to make the U.S. a net exporter of the stuff, but also oil. “It’s never good business to be reliant on one customer,” Liepert said. On this issue, the minister seems destined to butt heads with opponents to Enbridge Inc.’s proposed Northern Gateway pipeline, and by extension Ottawa, where Liberal and New Democrat politicians are pressing Stephen Harper’s government to make a symbolic ban on tanker traffic off the West Coast binding. Liepert is clearly looking west through B.C. to Asian markets to raise Alberta’s fortunes. “B.C. is the gateway to the Pacific,” he said. “B.C. has the ports.” It also has vocal opposition to the Enbridge export scheme, which in its application to the National Energy Board anticipates at least two years of regulatory wrangling.