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Energy

First Nations Buy Into Pipelines

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9 minute read

From the Frontier Centre for Public Policy

By Brian Zinchuk

“Meaningful Indigenous participation in our resource economy is maturing. At first, First Nations used to ask for compensation, the jobs, and then for the contracts that created those jobs, Now they seek purchase equity in the project itself. Soon they will create the project and seek others to invest in it. Then they will have real economic power.”

It’s taken years to get here, but there’s a new trend in Canada’s pipeline industry, and it couldn’t come soon enough. That’s because the path we’ve been on until now has been one to ruin.

On July 30, TC Energy announced it was in the process of selling 5.34 per cent of its Nova Gas Transmission Ltd. (NGTL) System and the Foothills Pipeline assets for a gross purchase price of $1 billion. “The Agreement is backed by the Alberta Indigenous Opportunities Corporation (AIOC) and was negotiated by a consortium committee (Consortium) representing specific Indigenous Communities (Communities) across Alberta, British Columbia and Saskatchewan. This results in an implied enterprise value of approximately $1.65 billion, inclusive of the proportionate share of the Partnership Assets’ collective debt,” TC Energy said.

This comes a few months after its March 14 announcement to sell “all outstanding shares in Prince Rupert Gas Transmission Holdings Ltd. and the limited partnership interests in Prince Rupert Gas Transmission Limited Partnership (collectively, PRGT). PRGT is a wholly owned subsidiary of TC Energy and the developer of a natural gas pipeline project in British Columbia and potential delivery corridor that would further unlock Canada as a secure, affordable and sustainable source of LNG.”

The Nova system sale is significant. It’s the principal natural gas gathering system throughout Alberta and a bit into B.C. In addition to supplying Alberta with its gas needs, Nova, in turn, feeds the TC Energy Mainline. It also supplies Saskatchewan via Many Islands Pipe Lines and TransGas, both subsidiaries of SaskEnergy. And since Saskatchewan’s domestic gas production keeps falling, we now rely heavily on Alberta gas to keep our furnaces lit and our new gas fired power plants turning, keeping the lights on. When you look at the Nova map, it’s basically the map of Alberta.

Some of the most significant difficulties in getting major pipeline projects built in this country over the last 16 years has been Indigenous opposition. One of the first stories I wrote about with Pipeline News during the summer of 2008 was a First Nations protest on the Enbridge right of way at Kerrobert, complete with a teepee. That was for the Alberta Clipper project, but it was relatively quickly resolved.

Then there was Enbridge’s Northern Gateway project, which was approved by the Conservative federal government but halted by the courts because of insufficient Indigenous consultation. It was ultimately killed very early into the Trudeau-led Liberal administration, when he said, “The Great Bear Rainforest was no place for a pipeline, a crude pipeline.”

Northern Gateway would have terminated at Kitimat. Yet, curiously enough, that same forest had to be crossed to built the TC Energy Coastal GasLink project. It went grossly overbudget in no small part due to delays and resistance in every manner possible from the Wet’suweten in northern B.C. As Canadian Press reported on Dec. 11, 2023, “By the time the pipeline was finished, its estimated construction cost had ballooned from $6.6 billion to $14.5 billion.”

And then there was Trans Mountain Expansion. It had opposition from the BC government, City of Burnaby, and everyone who could apply a Sharpie marker to a Bristol board. But Indigenous opposition was a major factor. As Pipeline Online reported via the Canadian Press, “The project’s $34-billion price tag has ballooned from a 2017 estimate of $7.4 billion, with Trans Mountain Corp. blaming the increase on “extraordinary” factors including evolving compliance requirements, Indigenous accommodations, stakeholder engagement, extreme weather and the COVID-19 pandemic.”

By this spring, the number was $34 billion, and I anticipate its final cost will be higher still.

Maturing

There’s been a big change in recent years, not just in pipelines, but in other energy industries like wind and solar. That change had gone from consultation to jobs to equity investment.

The word used almost always is “reconciliation.” That can be a loaded word in many ways, Some feel it will heal wounds, and right past wrongs, or at least try to. Others would say it’s a form of extortion. And some take issue with racial overtones. But here’s something I heard this week that makes a lot of sense:

“Meaningful Indigenous participation in our resource economy is maturing. At first, First Nations used to ask for compensation, the jobs, and then for the contracts that created those jobs, Now they seek purchase equity in the project itself. Soon they will create the project and seek others to invest in it. Then they will have real economic power.”

That’s what Steve Halabura, professional geologist, told me. And he would know, since he’s been working with First Nations on this economic development front.

And you see that in the timeline I laid out. The 2008 protests were very much about compensation and jobs. Trans Mountain Expansion saw significant First Nations’ owned and operated firms awarded contracts. And now, they’re buying equity positions.

You know what? If First Nations bands, and people, do indeed become owners in these resource companies and infrastructure, if it helps pay for housing and water treatment plants, if it means meaningful work and paycheques, are they likely to fight the next project tooth and nail? Or will they want to be a part of it?

And think of it this way – if we could have gotten to this point ten years ago, maybe these projects might have gone much more smoothly. Maybe their final costs wouldn’t have been double, or quadruple, the original budget. When you think of it in that perspective – if a billion dollar equity stake meant Coastal GasLink could have cost $5 billion less, would it have been worth it to bring First Nations in as equity partners?

Some will say that’s extortion. Others would say it’s justice, or reconciliation. But maybe, just maybe, this is how we move forward, and everyone in the end wins. And maybe then Canada can, once again, build great things.

Brian Zinchuk is editor and owner of Pipeline Online and occasional contributor to the Frontier Centre for Public Policy. He can be reached at [email protected].

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Business

Premiers fight to lower gas taxes as Trudeau hikes pump costs

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From the Canadian Taxpayers Federation

By Jay Goldberg 

Thirty-nine hundred dollars – that’s how much the typical two-car Ontario family is spending on gas taxes at the pump this year.

You read that right. That’s not the overall fuel bill. That’s just taxes.

Prime Minister Justin Trudeau keeps increasing your gas bill, while Premier Doug Ford is lowering it.

Ford’s latest gas tax cut extension is music to taxpayers’ ears. Ford’s 6.4 cent per litre gas tax cut, temporarily introduced in July 2022, is here to stay until at least next June.

Because of the cut, a two-car family has saved more than $1,000 so far. And that’s welcome news for Ontario taxpayers, because Trudeau is planning yet another carbon tax hike next April.

Trudeau has raised the overall tax burden at the pumps every April for the past five years. Next spring, he plans to raise gas taxes by another three cents per litre, bringing the overall gas tax burden for Ontarians to almost 60 cents per litre.

While Trudeau keeps hiking costs for taxpayers at the pumps, premiers of all stripes have been stepping up to the plate to blunt the impact of his punitive carbon tax.

Obviously, Ford has stepped up to the plate and has lowered gas taxes. But he’s not alone.

In Manitoba, NDP Premier Wab Kinew fully suspended the province’s 14 cent per litre gas tax for a year. And in Newfoundland, Liberal Premier Andrew Furey cut the gas tax by 8.05 cents per litre for nearly two-and-a-half years.

It’s a tale of two approaches: the Trudeau government keeps making life more expensive at the pumps, while premiers of all stripes are fighting to get costs down.

Families still have to get to work, get the kids to school and make it to hockey practice. And they can’t afford increasingly high gas taxes. Common sense premiers seem to get it, while Ottawa has its head in the clouds.

When Ford announced his gas tax cut extension, he took aim at the Liberal carbon tax mandated by the Trudeau government in Ottawa.

Ford noted the carbon tax is set to rise to 20.9 cents per litre next April, “bumping up the cost of everything once again and it’s absolutely ridiculous.”

“Our government will always fight against it,” Ford said.

But there’s some good news for taxpayers: reprieve may be on the horizon.

Federal Conservative leader Pierre Poilievre’s promises to axe the carbon tax as soon as he takes office.

With a federal election scheduled for next fall, the federal carbon tax’s days may very well be numbered.

Scrapping the carbon tax would make a huge difference in the lives of everyday Canadians.

Right now, the carbon tax costs 17.6 cents per litre. For a family filling up two cars once a week, that’s nearly $24 a week in carbon taxes at the pump.

Scrapping the carbon tax could save families more than $1,200 a year at the pumps. Plus, there would be savings on the cost of home heating, food, and virtually everything else.

While the Trudeau government likes to argue that the carbon tax rebates make up for all these additional costs, the Parliamentary Budget Officer says it’s not so.

The PBO has shown that the typical Ontario family will lose nearly $400 this year due to the carbon tax, even after the rebates.

That’s why premiers like Ford, Kinew and Furey have stepped up to the plate.

Canadians pay far too much at the pumps in taxes. While Trudeau hikes the carbon tax year after year, provincial leaders like Ford are keeping costs down and delivering meaningful relief for struggling families.

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Economy

Gas prices plummet in BC thanks to TMX pipeline expansion

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From Resource Works

By more than doubling capacity and cutting down the costs, the benefits of the TMX expansion are keeping more money in consumer pockets. 

Just months after the Trans Mountain Expansion (TMX) project was completed last year, Canadians, especially British Columbians, are experiencing the benefits promised by this once-maligned but invaluable piece of infrastructure. As prices fall when people gas up their cars, the effects are evident for all to see.

This drop in gasoline prices is a welcome new reality for consumers across B.C. and a long-overdue relief given the painful inflation of the past few years.

TMX has helped broaden Canadian oil’s access to world markets like never before, improve supply chains, and boost regional fuel supplies—all of which are helping keep money in the pockets of the middle class.

When TMX was approaching the finish line after the new year, it was praised for promising to ease long-standing capacity issues and help eliminate less efficient, pricier methods of shipping oil. By mid-May, TMX was completed and in full swing, with early data suggesting that gas prices in Vancouver were slackening compared to other cities in Canada.

Kent Fellows, an assistant professor of Economics and the Director of Graduate Programs for the School of Public Policy at the University of Calgary, noted that wholesale prices in Vancouver fell by roughly 28 cents per litre compared to the typically lower prices in Edmonton, thanks to the expanded capacity of TMX. Consequently, the actual price at the gas pump in the Lower Mainland fell too, providing relief to a part of Canada that traditionally suffers from high fuel costs.

In large part due to limited pipeline capacity, Vancouver’s gas prices have been higher than the rest of the country. From at least 2008 to this year, TMX’s capacity was unable to accommodate demand, leading to the generational issue of “apportionment,” which meant rationing pipeline space to manage excess demand.

Under the apportionment regime, customers received less fuel than they requested, which increased costs. With the expansion of TMX now complete, the pipeline’s capacity has more than doubled from 350,000 barrels per day to 890,000, effectively neutralizing the apportionment problem for now.

Since May, TMX has operated at 80 percent capacity, with no apportionment affecting customers or consumers.

Before the TMX expansion was completed, a litre of gas in Vancouver cost 45 cents more than a litre in Edmonton. By August, it was just 17 cents—a remarkable drop that underscores why it’s crucial to expand B.C.’s capacity to move energy sources like oil without the need for costly alternatives, allowing consumers to enjoy savings at the pump.

More than doubling TMX’s capacity has rapidly reshaped B.C.’s energy landscape. Despite tensions in the Middle East, per-litre gas prices in Vancouver have fallen from about $2.30 per litre to $1.54 this month. Even when there was a slight disruption in October, the price only rose to about $1.80, far below its earlier peaks.

As Kent Fellows noted, the only real change during this entire timeline has been the completion of the TMX expansion, and the benefits extend far beyond the province’s shores.

With TMX moving over 500,000 barrels more per day than it did previously, Canadian oil is now far more plentiful on the international market. Tankers routinely depart Burrard Inlet loaded with oil bound for destinations in South Korea and Japan.

In this uncertain world, where oil markets remain volatile, TMX serves as a stabilizing force for both Canada and the world. People in B.C. can rest easier with TMX acting as a barrier against sharp shifts in supply and demand.

For critics who argue that the $31 billion invested in the project is short-sighted, the benefits for everyday people are becoming increasingly evident in a province where families have endured high gas prices for years.

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