Don’t’ expect the Canadian provinces of British Columbia and Alberta to raise glasses of wine to toast each other any time soon.
That’s because the neighboring provinces are enmeshed in a war over wines and maybe beers and a $7.4 billion pipeline expansion project in western Canada, Kallanish Energy reports.
Trade war over crude oil line
The trade war began on Feb. 6, with Alberta Premier Rachel Notley directing Alberta regulators to block roughly $60 million a year in wine imports from British Columbia.
“I know a lot of Albertans who love B.C. wine,” Notley told the Toronto Globe and Mail newspaper. “I’m one of them.”
Her wine boycott came in retaliation for proposed B.C. rules that could delay or kill Kinder Morgan Canada’s Trans Mountain crude oil pipeline expansion that would transport crude oil from Alberta’s oil sands to British Columbia.
Trans Mountain is a project energy-driven Alberta strongly supports. B.C. and its left-leaning New Democrats are far less enthusiastic about it.
Can diluted bitumen be cleaned up?
B.C. has been accused of playing politics. The British Columbia government has said it will block pipeline construction on public lands until Kinder Morgan has had meaningful discussions with aboriginal communities. The company said those efforts are continuing.
It has also joined in court fights against federal approval of the pipeline.
The proposed B.C. regulations would block an increase in diluted bitumen shipments from Alberta’s oil sands to coastal ports while a B.C. panel determines if the bitumen can be properly cleaned up if it spills in water.
That review could slow or kill the Trans Mountain pipeline expansion that has already been approved by the Ottawa government, according to observers.
B.C. Premier John Horgan has supported the new review. It is well within the provincial government’s jurisdiction, he said. He called Alberta’s moves “unfair trade actions.”
He said his province has barely begun its review of possible legislation and Alberta is taking actions to impact B.C. businesses.
Cutting off wine imports was a viable target for Alberta because provinces control the purchase of alcohol.
Alberta ends power negotiations
Notley called B.C.’s actions illegal and unconstitutional.
Alberta also cut off negotiations to buy additional electricity from British Columbia.
On Feb. 7, Notley posted a video to her Twitter account, explaining the wine boycott. She also urged Ottawa to intervene. There is no indication Prime Minister Justin Trudeau wants to get involved in the wine war. Ottawa has said that it stands behind its decision to approve the Trans Mountain expansion.
Kinder Morgan stuck in the middle
Kinder Morgan Canada president Ian Anderson has told Canadian media he never wanted to be in the middle of an interprovincial trade dispute.
“It’s disappointing. It’s unfortunate it’s come down to this,” he told CBC News.
“I drink B.C. wine myself so I’m not going to have any anytime soon if this continues,” he said. “I never wanted to be the nexus of a trade dispute between provinces, but it’s certainly speaking to the severity of the matter.”
He said he feels for the B.C. wine producers who are impacted by the boycott, and is hoping for a quick resolution.
There have been other trade war suggestions from both sides, including the cut off of oil and natural gas shipments from Alberta to British Columbia. That suggestion has been opposed by Kinder Morgan and by the Canadian Association of Petroleum Producers.
Millions of bottles, millions of Canadian dollars
B.C.’s wine exports to Alberta make up less than one-half of 1% of its total exports to the neighboring province.
Alberta residents bought roughly 17.2 million bottles of B.C. wine last year, and B.C. exported $60 million of wine and brandy to Alberta, according to government officials. About 95% of the Canadian wine sold in Alberta liquor stores is from British Columbia.
The B.C. wine industry produced 20 million gallons of wine worth $1.15 billion in 2016-2017, according to records.
Drink craft beers
Notley admitted B.C. wines are stockpiled in Alberta, so she encouraged her residents to drink Alberta craft beers instead. She suggested they support Alberta energy workers.
She said she also mulled a boycott of B.C. beers. Alberta bought about $58 million in beer from B.C. last year.
A lobbying group for Canada’s restaurants, bars and caterers, Restaurants Canada, called Alberta’s boycott announcement a “reckless decision.”
It said Alberta was using Alberta consumers and B.C. businesses as pawns.
University of Calgary economist Trevor Tombe told the Globe and Mail Alberta’s boycott was a clever move that will get lots of attention. “It’s going to punch above its weight,” he told the newspaper.
The boycott will hurt B.C. wine producers more than Alberta wine drinkers, he said.
The B.C. Restaurant and Food Services Association is asking its members to sell more B.C. wine to offset the Alberta boycott. “It’s a countermeasure,” spokesman Ian Tostenson told the Globe and Mail. “Those in the B.C. wine industry are going to lose sales. We’re going to replace those sales.”
Trans Mountain line’s opening pushed back
Kinder Morgan has said its Trans Mountain project will not be in service until December 2020, a full year later than originally planned. The project is expected to take about 28 months to construct.
The pipeline expansion would run 715 miles from Edmonton, Alberta, to Barnaby, B.C., near Vancouver. The current oil pipeline transports roughly 300,000 barrels per day (BPD), while the new line will be built parallel to the existing line for crude and refined oil. The expansion would nearly triple capacity, to 890,000 BPD.