If Rex Tillerson, the former head of ExxonMobil and Donald Trump’s nominee for Secretary of State, taught a class on pipeline strategy Brian Jean would be stuck at the front of the room wearing a dunce cap and Rachel Notley would be excused because she already knows this stuff.
Ever since Donald Trump was elected Mr Jean has been hammering Ms Notley; demanding to know what she’s going to do about Keystone XL.
Mr Jean says Keystone XL will create “a lot of jobs here in Alberta”, remove the “bottleneck” in the oilsands and help Albertans get back on their feet.
Mr McIver echoes Mr Jean’s comments saying the Trump administration offers “new hope” for Keystone XL.
Both conservative leaders want Ms Notley to pledge her support for Keystone and to lobby hard to get it approved.
Ms Notley eyes them patiently, then gives the following response: her government is happy to work with the energy industry to find ways to enhance trade with the US, but the government will focus “on those things over which we have agency,” namely Canadian pipelines seeking access to tidewater from a Canadian port.
Pipeline strategy class
Mr Tillerson recently gave a speech outlining the lessons he’d learned in his 41 years at ExxonMobil. Ms Soapbox has taken the liberty of condensing these lessons into what she’s calling “Mr Tillerson’s pipeline strategy class”.
Mr Jean and Mr McIver would be well advised to stop horsing around and pay attention. Ms Notley is excused from class because she understands these lessons, probably because they’re simply common sense.
LESSON ONE: Make evidence-based decisions
Mr Tillerson says evidence is important—at one time “experts” believed the world was running out of oil, but now the evidence shows that global market supply exceeds demand by one to two million barrels a day.
Mr Jean’s comment that the approval of Keystone XL will remove the “bottleneck” in the oilsands demonstrates he doesn’t understand the evidence at all.
This “bottleneck” doesn’t exist, at least not according to the US State Department which said Keystone XL is “unlikely to significantly impact the rate of extraction in the oil sands.”**
Mr Jean argues Keystone XL will create lots of well-paying jobs in Alberta.
This is ridiculous.
The Canadian portion of the Keystone system was completed years ago. If Keystone XL (the US portion) is approved, the US State Department says it will create 42,000 temporary construction jobs and 35 permanent jobs—all in the US.
Right…now that Mr Tillerson has their attention, Mr Jean and Mr McIver can focus on four other equally important lessons.
(Ms Notley is free to hang out in the lunch room. She’s been applying these lessons in the Alberta context since the NDs assumed power in 2015.)
LESSON TWO: Create a structure that’s viable at the bottom of the cycle as well as at the top
Mr Tillerson says down cycles are a fact of life in a commodity business.
Ms Notley has implemented policies to buffer Albertans from the down cycle as Alberta ricochets from boom to bust.
She’s incenting diversification with tax credits and grants for non-energy sectors including agricultural, petrochemicals and small businesses involved in everything from creating new technologies to entertainment.
Sadly, Mr Jean doesn’t understand the reality of a boom/bust economy. If he gets elected he intends to rip up every piece of legislation the ND’s have passed. Sigh.
LESSON THREE: Control what you can control
Mr Tillerson says you should focus on what you can control.
Mr Jean doesn’t understand that everything concerning Keystone XL is out of his control.
TCPL, not the government, will decide whether to pursue a fresh application under the Trump administration. The shippers, not the government, will decide whether they’re prepared to commit production to Keystone XL in addition to the commitments they’ve made to Trans Mountain and perhaps Energy East.
Mr Trump, not the government, will decide how much of TCPL’s profits he will extract in return for approving Keystone XL and then TCPL, not the government, will decide whether Keystone XL is worth the bother.
Mr Jean can flail about all he likes but he no influence whatsoever over TCPL, the shippers or Mr Trump.
Ms Notley knows this and that’s why she refuses to focus all her resources on “a pipeline to tidewater in someone else’s country.”
LESSON FOUR: Manage the risks
Mr Tillerson says his business, like most, is fraught with geopolitical, financial, technical, environmental and operational risks.
He says the risks of climate change “are serious and warrant thoughtful action” and that the best way to address these risks is by implementing a revenue-neutral carbon tax rather than a “hodge-podge” of ineffective regulations.
Ms Notley, like Mr Tillerson, understands risk, particularly the political and environmental risks facing pipelines. She chose to mitigate these risks by implementing the Climate Leadership Plan. Her efforts paid off when the prime minister approved two out of three interprovincial pipelines.
Notwithstanding the support the Climate Leadership Plan has received from the energy industry Mr Jean and his conservative friends promise to abolish the carbon tax, thereby destroying the very policy that allowed the prime minister to approve the two pipelines in the first place.
THE MOST IMPORTANT LESSON
While Mr Jean and Mr McIver are badgering Ms Notley to support Keystone XL, she’s focusing on the work that has real impact and will “deliver outcomes for our industry partners.”
She understands the role of government in pipeline strategy, which is why she’s in the lunchroom talking to her friends and Mr Jean and Mr McIver are stuck in Mr Tillerson’s class.
Here’s the most important lesson of all: it’s not enough to say you’re standing up for the energy sector. You actually have to do it—effectively.
*NOTE: Ms Soapbox is invoking Rex Tillerson not because he’s the best choice for Secretary of State but because he might get through to the Wildrose and PCs.
Sources: Alberta Hansard, Nov 10, 2016, p 1864-1865
**TransCanada 2015 Annual Information Form, p 11 http://www.sedar.com/GetFile.do?lang=EN&docClass=1&issuerNo=00019418&issuerType=03&projectNo=02442866&docId=3862285