Stelmach policies export jobs along with bitumen out of province: Premier not acting in best interests of Albertans

While other politicians have been using the first few weeks of summer to hit the barbecue circuit, Alberta Premier Ed Stelmach has been engaged in a much more solitary pursuit: he's been writing letters in defence of a pipeline.

The pipeline in question is TransCanada's Keystone XL, which if approved by U.S. regulators, would have the capacity to send as much as 900,000 barrels of raw bitumen from the Alberta oilsands to refineries on the U.S. Gulf Coast each day.

Last week, Stelmach wrote letters to a number of high-ranking American officials, including U.S. Secretary of State Hillary Clinton, urging them to approve the pipeline despite concerns raised by American and Canadian environmentalists.

This week, the premier turned his attention north of the border, firing off a letter to federal NDP Leader Jack Layton.

Stelmach was apparently annoyed because Layton is opposing the pipeline on the grounds that it would result in the loss of thousands of jobs in refining and upgrading -- jobs that could have been created in Alberta, but (thanks to XL) will now be created in Texas and other Gulf of Mexico states.

Stelmach's letters to the Americans can legitimately be criticized for presenting an overly optimistic picture of the oilsand's environmental record. But it is the premier's letter to Layton that displays an even more muddled approach to logic.

Pipelines, the premier argues, provide access to markets for bitumen, thereby creating jobs for Albertans working on the extraction side of the oilsands sector.

Fair enough if all you want to do is sell raw bitumen. But if we are all agreed that creating jobs here in Alberta is a good thing, then surely creating more jobs is better -- and creating long-term jobs is better still.
Despite his claim that "the government of Alberta is strongly committed to growing and preserving Canadian jobs," Stelmach's enthusiastic support for a succession of massive bitumen pipelines (starting with Enbridge's Alberta Clipper and TransCanada's Keystone Phase I and continuing with Keystone XL and Enbridge's proposed Gateway pipeline to the Pacific) makes one wonder.

The premier seems content to settle for the short-term jobs generated by pipeline construction and the smaller number of long-term jobs generated by extraction-only developments while leaving thousands of high-paying, long-term jobs in upgrading, refining and oilsandsrelated manufacturing to the Americans and others outside Canadian borders.

Of course, Stelmach touts his Bitumen Royalty In Kind (BRIK) program as a tool for keeping upgrading jobs in the province. But the BRIK program will only make 75,000 barrels per day available for Alberta-based upgrading, a drop in the bucket of Alberta's overall oilsands production which is currently pegged at about 1.4 million barrels per day and expected to increase to three million barrels per day in 2018. Meanwhile, reports in the media tell us that oilsands-related manufacturing opportunities continue to be lost. Imperial Oil plans to bring in 200 modules made in Korea for its Kearl oilsands project, while a Montana company recently said it plans to build similar modules in Billings.

When discussing oilsands jobs, it's important to remind ourselves that the oilsands belong to Albertans. We are the owners. If there are jobs to be created -- in manufacturing, in mining or in upgrading -- then the government should ensure that as many of those jobs as possible stay here in Alberta. That is the job of government. Unfortunately, it's a job where Alberta is falling behind other provinces.

In Ontario, for example, rules governing electrical generation have been introduced that say companies cannot feed into the power grid unless 50 per cent of the generation system has been manufactured in that province. This has recently led Samsung to invest $7 billion to set up manufacturing facilities in southern Ontario to build wind turbines and solar panels, with a plan to create 16,000 jobs.

Quebec has embarked on a plan to build wind-energy facilities and has ensured that most of the equipment will be manufactured in that province. Government-owned utility company Hydro-Quebec says 60 per cent of the cost of each wind farm must be incurred in that province, meaning that wind-generation companies must have manufacturing and assembly facilities there.

What's happening in Ontario and Quebec raises the question: Why isn't the Alberta government taking similar steps to keep oilsands-related manufacturing jobs in the province? And why isn't it using regulation to guarantee Alberta-based upgrading and refining (as the Lougheed government did to create Alberta's petrochemical industry)?

The premier has the power to act for the good of Albertans. The government can set rules that require more manufacturing and upgrading be done in the province. It can also set -- and enforce -- tough standards that protect our environment and ensure our access to markets.

Instead of fighting to get bitumen across the border, let's focus on upgrading and refining the stuff here (while observing the highest environmental standards). Obviously, we're going to need pipelines to get our product to market. But the government should be making sure those pipes are carrying refined products, not raw bitumen and lost jobs.

By Gil McGowan
Edmonton Journal, Fri July 16 2010

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