The Price of Building Again

On Thursday, July 2, Prime Minister Mark Carney signed two separate agreements in two different cities. In Vancouver that morning, he and B.C. Premier David Eby signed the Canada-British Columbia Cooperative Prosperity Agreement, which maintains the federal North Coast tanker ban and commits Ottawa to an annual royalty payment and environmental response fund on any new pipeline that proceeds, alongside $10 billion toward the Roberts Bank Terminal 2 expansion, $3.5 billion for the North Coast Transmission Line, $500 million for the Red Chris copper mine, and up to $3 billion for the George Massey Tunnel replacement. Eby put the federal commitment at roughly $20 billion, without specifying a timeframe.

That afternoon in Calgary, Carney and Alberta Premier Danielle Smith announced that Alberta had submitted a proposed 1,200-to-1,250-kilometre pipeline running from Bruderheim to Roberts Bank, with capacity for more than a million barrels a day, to the federal Major Projects Office ahead of the July 1 deadline. Alberta’s submission puts total project costs at $35.2 billion to $43.7 billion. The federal and Alberta governments would be majority owners; Pembina Pipeline holds a 10 percent stake through construction, with an option on a further 10 percent once the pipeline is operating, and has characterized its involvement as non-binding. Alongside the pipeline submission, the Oil Sands Alliance (Pathways) reached preliminary terms for a 16-megatonne-a-year carbon capture and utilization project, down from the 22 megatonnes by 2030 originally envisioned when Ottawa designed the investment tax credit regime five years ago.

Four days later, on Monday, July 6, Carney was in Halifax to name Germany’s ThyssenKrupp Marine Systems (TKMS) as the preferred supplier for up to twelve new submarines, a program the government has called the largest defence procurement in Canadian history and which media and industry estimates put at roughly $100 billion over its lifetime. The pipeline and the B.C. agreement also revive a fifteen-year-old precedent: in July 2012, then-Premier Christy Clark set out five conditions for B.C.’s approval of a heavy-oil pipeline, including a fair share of the fiscal benefits for the province. Those conditions were used to reject the Northern Gateway pipeline in 2016 while permitting the Trans Mountain Expansion to proceed.

• MEREDITH: Build it. Own it. Say so.
• BOESSENKOOL: The Fifth Condition Comes Back as a Royalty Cheque
• PHILLIPS: Two Premiers, Two Pipelines – BC finally got smart on pipeline politics
• WOODFINDEN: Show Us the Ledger