​B.C premier wants more gasoline from Alberta, but still doesn't want dilbit

B.C. Premier John Horgan holds a press conference on May 1, 2019. Image: Province of B.C.

B.C. Premier John Horgan is offering Prime Minister Justin Trudeau and Alberta Premier Jason Kenney a solution to B.C.’s high gasoline prices, but offering nothing in return.

Horgan wants more Alberta gasoline, but still doesn’t want more Alberta diluted bitumen.

In dueling press conferences Wednesday, Kenney talked about his turn-off-the-taps legislation, and Horgan responded to it.

Both agreed that they have already had respectful and diplomatic phone conversations and plan to keep the lines of communication open. But Horgan already seems to be offering a one-way solution to the impasse over the Trans Mountain pipeline expansion.

Kenney on Tuesday proclaimed Bill 12, which gives Alberta the ability to control the exports of refined fuels and oil to B.C.

On Wednesday, Horgan said his government’s lawyers filed two court actions aimed at striking down the bill.

B.C. is also waiting the outcome of a reference case, in which B.C. has asked the BC Court of Appeal to determine whether or not B.C. has the constitutional authority to restrict the flow of diluted bitumen from Alberta through B.C.

If the court rules it doesn’t have that authority, Kenney may have no need to use Bill 12.

Contrary to Kenney’s allegations of obstruction by B.C., Horgan said his government has already issued 309 permits needed for the Trans Mountain pipeline expansion, and has no plans to obstruct the pipeline through permitting.

“At no time over the past two years have we disrupted or delayed the permitting process in any way beyond those that would be required to protect the interests of British Columbia,” Horgan said.

In other words, if the court rules B.C. can’t restrict bitumen through B.C., there isn’t much his government can do to stop the pipeline’s expansion.

If the court rules B.C. does have the authority to restrict bitumen, and if the Horgan government moves to do just that, Kenney has made it clear that Horgan will have a war on his hands.

Horgan is coming under increasing public pressure from escalating gasoline prices. The Lower Mainland currently has the highest gas prices in North America. High taxes are part of the problem. But a lack of refining capacity and lack of supply of refined products from Alberta also appear to be a factor.

Horgan said Wednesday that part of the problem driving high gasoline prices in B.C. is that, over the last two years, the amount of oil flowing on the existing Trans Mountain has increased, reducing the volumes of refined fuel products that can flow on the pipeline.

Citing data from 2017 and 2018, Horgan said that refined fuel products flowing on the Trans Mountain pipeline has decreased from 37% to 27%, because the amount of oil for export increased from 9% to 21%.

As Business in Vancouver has reported, an unusually high number of oil tanker shipments through Vancouver to Asia, especially China, took place in 2018.

That likely means that imports of refined product from Washington, at much higher costs, have likely increased.

“So there is less refined product coming into the Lower Mainland now with the existing pipeline and no commitment from TMX to do something about that with the twinning of the pipeline,” Horgan said.

Trans Mountain says it is a neutral conveyor, and that it is up to shippers who have pipeline allocations to decide what to ship on the pipeline.

Except the federal government now owns the pipeline, so the federal government may actually have some say in the matter.

Horgan said he reached out to Prime Minister Justin Trudeau Wednesday and hopes to talk to him again about increasing the amount of refined fuels on the pipeline.

“I hope to talk to him again today before nightfall about what the new owners of that pipeline can do about relieving pressure here in the Lower Mainland,” Horgan said.

But Horgan is offering nothing in return.

Asked if his government might make some deal that would allow the pipeline to be expanded, in return for more gasoline from Alberta, Horgan dug in his heels, and made it clear his government will not support a pipeline expansion that sees increased bitumen exports.

“I’ve said all along that I didn’t believe that Burrard Inlet, the centre of the largest metropolitan area in British Columbia, should be the terminus point for the export of diluted bitumen,” he said.

Horgan said he planned to meet face-to-face with Kenney soon, prior to the Western Premiers Conference.

— Business in Vancouver