For all the fuss and bother about that pipeline moving oil north to south mostly through a foreign nation, it’s the pipeline moving from west to east that we should be most interested in.
The Keystone XL pipeline that would have taken Alberta oilsands oil (and some from Saskatchewan) to the refineries of U.S. gulf area has clearly been an environmental lightning rod in both U.S. and Canadian politics.
Last week, the pipeline builder TransCanada Corp. asked the U.S. Secretary of State, John Kerry, to pause the review of the massive project until there is resolution of litigation in Nebraska over the pipeline route.
Naturally, this drew more teeth gnashing from pro-oil Western Canadian politicians like Premier Brad Wall who was quick to note that the move will impact Saskatchewan “from a fiscal standpoint.”
The issue at hand is that the pipeline will take oil from landlocked Alberta and Saskatchewan to tidewater.
As it stands now, the only option for Saskatchewan is selling our oil at the West Test Intermediate (WTI) price that those in the oil patch will know all too well has been all too low these past two years.
Getting Saskatchewan oil directly to sea so Saskatchewan oil can be sold at the British-based Brent price – which happens to $2 to $3 a barrel higher than the WTI price _ is especially important at today’s lower prices of $45 to $50 U.S. a barrel.
It amounts to a four- to eight-per-cent price differential — $40- to $50-million more a year. That may not seem all that significant – at least not as significant as a market-driven increase in price would be.
But as Wall points out, it’s still very significant because having to sell at a lower price deprives oil companies the chance to create the capital to reinvest.
Of course, Wall is still optimistic Keystone will one go ahead one day and is buoyed by the fact that Keystone has always received the fill support of new Liberal Prime Minister Justin Trudeau.
“We should be about getting more customers for our oil,” Wall said.
“Right now we have one — that’s the United States. But just one foreign customer. We need more customers, and that’s what these pipelines will achieve.”
But in that regard Wall may is likely better severing Saskatchewan residents, rural Saskatchewan residents and all Canadians, for that matter, by switching some of his focus to Energy East where Canadians do have more direct say.
For starters, let us be clear that this was a decision by TransCanada that may very well have been a political move as much as financial one.
If TransCanada sees it necessary to change gears for whatever reason, it’s just as important for Wall to adjust as well.
And the Saskatchewan Premier showed an ability to do just that late last month.
Gallant was meeting with Western Premiers and Chambers of Commerce to make his case for why Energy East is good for the New Brunswick economy.
“We’re talking about an increase of $1.5 billion to our (gross domestic product) and an increase of $300 million to the revenues of the government of New Brunswick that we can then invest in education, health care and helping those who are vulnerable in our province,” the young, Liberal New Brunswick Premier told Saskatchewan reporters.
This buttresses nicely with the Wall/Saskatchewan need to get our oil at tidewater.
To have an Eastern Premier onside is important. Coming together for perhaps different reasons on a common cause is how politics should work.
But the value of this all-Canadian Energy East project goes beyond the economic benefits for both provinces.
We are also talking about here an issue of unity and economic security in which Atlantic provinces would no longer have to be as reliant on unstable middle east oil.
In this sense, this makes the east-west pipeline perhaps even more important than a north-south one.
Murray Mandryk has been covering provincial politics for over 22 years.
