Pipeline opponents see vindication in Canadian oil patch's woes

By Kevin Orland on 12/6/2018

CALGARY (Bloomberg) -- As the Canadian oil industry endures its worst crisis ever, a fair share of the blame has been lobbed at environmentalists who oppose pipeline projects. 

But while industry boosters say the message from the recent price crash is that the government needs to reduce regulations and help get new pipelines built more quickly, environmental activists see different lessons entirely. Here’s their take, according to three of the most prominent:

Wean oil-rich Alberta off crude. “The writing is on the wall -- we need to stop expanding the oil industry now and create a plan for retraining and economic diversification,” said Tzeporah Berman, co-founder of the Stand.Earth activist group. The government needs “to ensure that families and our economy are not so dependent on oil sands and what clearly has become a boom-and-bust economy.”

Output cuts, which boosted crude prices and producer shares, are a “short-term, last-ditch effort” to prop up a dying industry, Berman said in an interview from Katowice, Poland, where she was participating in the United Nations Climate Change Conference.

To be sure, Alberta Premier Rachel Notley is an advocate of economic diversification herself and many in the oil industry wouldn’t disagree that the Canadian province’s cash cow won’t be here forever. Diversifying might be more easily said than done, though, for a remote area in the prairies whose main economic appeal is still its crude.

Focus on renewables instead. The sense that government efforts are misplaced is shared by Clayton Thomas-Muller, who helped organize indigenous opposition to the Keystone XL pipeline and is a campaigner for climate change activist Bill McKibben’s 350.org. Perhaps the most egregious misstep was Prime Minister Justin Trudeau’s C$4.5 billion ($3.4 billion) purchase of the Trans Mountain pipeline and expansion project to save it from cancellation, he said.

“None of these pipelines are going to solve the problem,” he said in an interview from Winnipeg. “What’s going to solve the problems is a bold and visionary policy that moves us off fossil fuels and to 100% renewables.”

There is little disagreement in government or the industry that the current mismatch between pipeline space and production is the root of the current problem. Alberta estimates that the industry was producing 190,000 bpd more than can be shipped.

Can’t flip a switch overnight. Despite the desire to stave off climate change, Keystone XL opponent Jane Kleeb says she doesn’t see Alberta’s output cut as a victory. Kleeb, whose Bold Alliance has been instrumental in delaying the TransCanada Corp. pipeline’s passage through Nebraska, said she feels bad for the families that rely on oil jobs. She also says she knows that you can’t flip a switch and have the economy running on 100% renewable energy overnight.

“We should have a diverse energy system, and that’s what Bold has advocated from the beginning, but that does not include the creation of new pipeline infrastructure,” Kleeb said in an interview. “That is where we draw the line.”

Don’t expect a major new pipeline in Canada. Despite the government support, the three activists said they don’t expect Keystone XL or the Trans Mountain expansion, both currently being delayed by court cases, to ever be built.

More broadly, opposition to pipelines will continue for years because it’s being led by the younger generation and has involved other organizations like indigenous groups and workers’ groups to become more effective, Thomas-Muller said.

“It’s very much a new kind of social movement that we’re seeing, one that is not siloed up in the way that historically movements have been,” he said. “They’re quite savvy.”

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