Could transit treaties save an embattled pipeline?

It's time for governments, not companies, to start addressing aboriginal title

July 01, 2011

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Canada is finally looking west for export opportunities and, some would say, it’s about bloody time. As a country we began our world trade with the export of furs, logs, wheat and so on back east to the motherland across the Atlantic. Then, as England needed less and our American neighbor more, we began to ship our resources south. However, this time we didn’t just send raw materials; we added cars and trucks and buses and planes, the latter mostly coming from Ontario and Quebec, our manufacturing heartland.

But, really, manufacturing is competitive work and, once Canada no longer benefited from a low Canadian dollar exchange with the Americans, our eastern cousins’ manufacturing fortunes suffered and town after town lost out to foreign (read Chinese, Indian, and Vietnamese) suppliers. Let’s be fair here; this was partly because our western resources – oil, gas, potash, sometimes wheat – were all doing very well in foreign markets. This growing world demand increased the need for Canadian dollars with the predictable result that our dollar went up and up, growing from about 63 cents to the U.S. dollar in 2002 to just over parity now.

As a result we are apparently going back to just being hewers of wood and drawers of water and shipping our raw resources to those countries that need them. Or so we hope. Some of our American neighbors, having discovered that it’s always easier to criticize others than to grasp the nettle yourself, are only too keen to try to shut our bitumen out of their market, all in the name of fighting climate change.

Whether it’s the “dirty tar sands” themselves, or the leaking pipes we propose to use to ship the stuff in, lots of Americans are wrapped in morality and, apparently in spite of all the foreign affairs staff at Canada’s Washington embassy and their Alberta helpers, some Americans just don’t seem to want to acknowledge how badly they need our oil. And if you think the U.S. opposition is strong now, just wait until they start heading to court to challenge the pipes and the bitumen.

But not to worry, there’s China, isn’t there? These are people we can do business with and, in fact, they’re keen to do business with us, buying up chunks of our resources and starting to think about getting some pipeline space. All we need to do is get our bitumen and natural gas over to the British Columbia coast, put it on boats heading west and away we go to the Middle Kingdom.

Except that, as Enbridge Inc. president and CEO Pat Daniel and his company colleagues working on the Northern Gateway oil pipeline have found out, it’s not quite that simple. There are all these aboriginal groups to deal with and it turns out that some of those groups don’t want to play ball. So go away, Pat, and take your bitumen with you. This dissent may be the result of a “cultural divide,” as some have suggested. It may be because of concerns over leaking pipes, concerns that haven’t been lessened much as the pipeline companies keep popping pipes all the way from Alaska to Minnesota. It may be the boats that would ship Northern Gateway crude to the Far East are the problem – B.C. has long been worried about oil tanker spills off its coast.

Whatever the cause, it’s going to take a lot of bucks to settle it and get the project going. At least that’s what Enbridge seems to think, having offered up some $1.5 billion to the groups along the pipeline route, a combination of equity, employment and business opportunities. This seems to be the operating amount these days to move a project ahead in the face of aboriginal opposition. It’s roughly the amount Woodside Petroleum Ltd. settled on with the Goolarabooloo Jabirr Jabirr native title claim group to get support for the company’s liquefied natural gas project in Western Australia.

Big dollars to be sure but, in relation to the project’s total costs, maybe not all that bad a price to pay for success. But is it really success or are the companies just paying a market rate today that will, with time and experience on the part of aboriginal groups, only get bigger and bigger? Should each project be handled as a one-off deal to be negotiated between the proponent and the groups that live along the way or should the export of our resources be of such importance to the country that a formal arrangement among governments covering the pipeline routes be established?

In his recent speech to the Calgary Chamber of Commerce, former Conservative cabinet minister and now vice-chair of CIBC Jim Prentice didn’t go quite that far. But if you take his advice on dealing with aboriginal groups to its logical conclusion, that’s where we could end up. His advice in the speech about dealing with aboriginal people was pretty straightforward: just treat them as equals and work to build a consensus with them.

If we accept that premise, it may be that we can learn from other countries that have come together to develop pipeline routes across multiple jurisdictions. There is such an arrangement between Canada and the U.S. that ensures unimpeded access across each others’ territory. There’s another one covering the pipes that cross Europe. These arrangements are called “transit treaties” and perhaps that’s what we need to solve the B.C. mess. Governments negotiate and ratify treaties, not companies. It’s time for our governments – federal, provincial and aboriginal – to get on with this job. You can’t leave it all up to Pat Daniel.

Doug Matthews spent 25 years working on energy issues for the Northwest Territories government. He now lives in Calgary and, along with his ongoing consultancy work in the North, spends much of his time writing about energy issues.

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