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VICTORIA — Last week, the Northern Gateway project was given a tentative green light from a federal review panel with a whopping 209 conditions. The federal cabinet has six months to decide whether it will accept the recommendations, but it has another hurdle to consider, this one constructed by Premier Christy Clark. Somebody, somewhere, is supposed to cough up British Columbia’s “fair share” of the benefits.
There is a very large pie that Ottawa, Alberta and B.C. can expect to share if the pipeline is built. When Ms. Clark laid out her “five conditions” for supporting heavy-oil projects across British Columbia, she said the province’s share under the current tax system isn’t big enough. For 18 months now, this demand has sat without anyone stepping up and offering a solution.
According to B.C., the Northern Gateway project is expected to generate a windfall of $81-billion in provincial and federal government taxation over a 30-year period. Of that total, $36-billion goes to Ottawa and $32-billion to Alberta. B.C. would land $6.7-billion – only slightly ahead of Saskatchewan’s $4-billion.
Ms. Clark has said 8 per cent isn’t a big enough slice. What the B.C. government hasn’t said is what would be enough.
Alberta has already made it abundantly clear that it is not giving up any of its royalties. The two provinces are in negotiations now on a framework of how to meet the five conditions, and a report is expected to be made public in January. But all Alberta has agreed to on the subject of benefit sharing is that B.C. is free to go ask industry or Ottawa to address its demands. Both Enbridge and Kinder Morgan, which is proposing another heavy-oil pipeline across B.C., have indicated they are willing to talk about how to meet all of B.C.’s five conditions.
Industry may argue that B.C. is understating the benefits it enjoys from the development of Alberta’s oil sands, but it is unlikely the B.C. government, having invested so much political capital in demanding more money, could get by with simply restating the existing benefits.
It is possible Enbridge would accept some kind of toll on its pipeline – the value of getting that landlocked oil to new markets may make that worthwhile. The B.C. government and Enbridge have held talks since the May, 2013, election, but the company has not proposed a model.
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