The Northern Gateway brief: unhappy political options and geopolitical assessment
However, if the government does find a way to overrule the NEB, this would constitute a direct attack on the interests of British Columbia. Conservatives would become even less electable than in scenario one. It would be a disaster. It is no wonder that even Joe Oliver – the aforementioned minister with the rant that killed the project – is softly using language that backs away from such an outcome.
The escape hatch
This leaves a final – and what I believe to be most probable – scenario. I expect that under intense pressure from the Conservative government, Enbridge will withdraw its proposal before the NEB rules on it.
Because this would save the government from having to make any of the damning political choices above – choices that would either damage the Conservative base in BC, damage the government’s credibility with foreign investors, or both. Yes, this would be a crushing blow to Enbridge, and significantly embarrassing for the government, but the alternatives are likely much worse, especially if the NEB does not approve the project. Of course, I’ve no idea if Enbridge would go along with such a plan, but I suspect that opposing a sitting government – one stacked with allies – is probably not appealing either.
I’m open to the possibility of being wrong about this; it is, of course, impossible to know the future, but my sense is that the interests and pressures facing the various parties involved leave this as a highly appealing option.
Out of the frying pan…
Of course, all of this has even more interesting implications south of the border.
There, President Obama still has to decide whether or not he wishes to approve the Keystone Pipeline, which would connect the oil sands with refineries in the United States. Approval for this pipeline was denied prior to the US election – in part, I believe, so as to not to alienate environmentalists. However, many – including myself – assumed that it would be approved after the election. I assumed in part this was to make the already controversial Gateway project less necessary (I suspect people in BC will be even less interested in Gateway if Keystone is approved) and thereby hurt China’s access to oil while securing more for the US.
However, because of the mismanagement of the Gateway project, the risks of it getting built have vastly diminished. Add on the prediction that the US will likely become self-sufficient in oil within two decades, and the calculus has changed. Now the president could further boost his environmental credentials, not worry about energy and not worry about enhancing China’s involvement in the North America energy market. Whereas I previously thought Keystone was a slam dunk decision, now… I’m not so sure.
If Keystone is not approved, this would be an unmitigated disaster for the government. The Gateway and Kinder Morgan pipelines – along with the political quagmire surrounding them – would become even more significant. Needless to say, if all three failed to materialize it would be hard to imagine much more development in the oil sands, if only because there would be no capacity to get the oil to any market.
Again, I’m sure there are flaws in the above assessment. What is most unclear to me is if cabinet can “overrule” the NEB or not. Having read some on this, it remains a mystery to me. I’ve assumed it can, but if it cannot, that would change the scenarios or, at least, eliminate some.
What I think is most interesting about all of this is that these wounds were virtually all self-inflicted. By alienating anyone with concerns about the pipeline, the government made enemies out of much of the BC public it needed for support. Of course, Enbridge has been the entity that has had to bear the majority of this negative public opinion.
This has been a master stroke, since while Enbridge has been largely incompetent in its communications, it has not been malicious. It is the government, not Enbridge, that has employed an aggressive stance with environmental groups and others.
Either way, supporters of the pipeline will have a hard time blaming others for its likely failure to materialize. The project was always going to be a tough sell in a province that – while big on developing natural resources – has been home to some of the world’s largest environmental protests.
But I really couldn’t imagine a worse bungled communications strategy – one that might end up having big implications for Canada’s domestic political scene, but also for its relations in Asia, and south of the border.
Republished with permission from the author's website.