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Western Collaboration

A win-win for western Canadian business

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Although there are volumes of fine print, clauses and sub-clauses, facts, figures and details, the energy sector, the transportation sector and western business in general are unanimous: Alberta, Saskatchewan and Manitoba signing a milestone memorandum of understanding (MOU) to collaborate on joint economic corridor projects is a definite win-win for western Canadian business.

This April, the governments of Alberta, Saskatchewan and Manitoba drafted and signed an MOU that will identify and prioritize strategic infrastructure projects that will enhance transportation between the provinces and around the world and create economic corridors to support the movement of critical resources, energy and utility projects, as well as secure national supply chains.

By all indications, the MOU will also pressure the federal government to speed up approvals for large projects, infrastructure funding and national supply chain solutions.

In June, the three provincial governments agreed on an MOU to explore the construction of a deep water harbor at Port Nelson on the Hudson Bay, primarily to facilitate the export of valuable natural resources such as liquefied natural gas (LNG) and potash. Some energy industry critics blame years of federal government stubbornness to build pipelines to take advantage of Western Canada’s wealth of natural resources as the trigger for the three provinces to create their own solutions to bring natural resources to tidewater.

The MOU will also establish a rail right-of-way and utilities lines connecting Alberta to Port Nelson. The provinces have also agreed to collaborate and contribute resources for geotechnical studies and other related explorations and investigations.

While awaiting final approval, there is enthusiastic anticipation. Of course there are many complex and exciting details and possibilities but, by all indications, it is a positive done deal. The three provincial governments have signed on to work together to eliminate regulatory inefficiency and uncertainty in hopes of boosting business and attract and develop nation-building projects.

“When it comes to the significance of the MOUs, it will be important to watch the details of how this turns into actionable items for the three provinces,” cautions the respected Dr. Kent Fellows, an assistant professor of economics and associate program director of the Canadian Northern Corridor research program at the School of Public Policy, University of Calgary, as well as a Fellow-in-Residence with the C.D. Howe Institute’s Energy Policy program. “The big advantage is that this is a clear step taken by three provinces, with significant shared interests in terms of inter-provincial and international trade.

“And improving trade corridors and infrastructure between Alberta, Saskatchewan and Manitoba will also benefit trade with other provinces and territories in Canada. For example, consider that anything Alberta sells to, or buys from, Ontario east must go through Saskatchewan and Manitoba.”

There is business and government consensus that the MOU is long-awaited and welcome collaboration. “The issue has been in-discussions for years,” he says. “And there was a major statement on the idea of corridors pre-pandemic, but it got sidelined for a while as everyone was dealing with more pressing healthcare issues. But the idea of corridor development in Canada goes back to the 1970s.”

Business experts and analysts in all sectors, particularly in energy, transportation, and infrastructure, are optimistic and enthusiastically embrace the long-term value of the signed MOU.

The Canadian Association of Petroleum Producers (CAPP) shares the optimism. “Our industry supports any effort to improve project timelines and reduce regulatory delays for infrastructure projects, so we welcome the increased collaboration between the provinces,” says Brad Herald, senior special advisor at CAPP. “Ensuring Canadians have the energy we need, both domestically and for export, improves affordability for Canadians and will ensure Canada has a secure source of energy for the future.

While hindsight may be interesting, it is mostly irrelevant. Although the concept of a utility corridor to Hudson’s Bay has been discussed for decades, the idea was re-booted after the washout of the railway to the Port of Churchill in 2017. Initially focused on oil pipelines, the scope has now been expanded to include multiple commodities such as LNG, potash, grain and timber. Unlike the original proposal centred around Churchill, the MOU’s advocates are now championing Port Nelson, mostly due to its more favorable location further south, particularly because the harbor is ice-free for most of the year.

Herald acknowledges the dragged out timing of the MOU, but emphasizes looking and moving forward, because there is no value in hindsight. “We welcome any opportunity, any time, to open more markets and ensure safe, reliable and affordable energy is available to Canadians and for export. These sorts of initiatives are necessary because Canadian oil and gas producers are integral players in the Canadian economy.

“Reduced regulatory barriers and access to markets ensure that our industry remains competitive. It is important for Canada because revenues from oil and natural gas production represent about $116 billion a year. Canadian producers are forecasting $40 billion in capital investment in 2023 and our industry supports 450,000 jobs across the country.”

Adam Legge, president of the Business Council of Alberta, a group of leaders, policy experts and communicators working with Alberta’s top businesses, underscores the win-win importance of the collaboration between the three western provinces. “There are two core advantages to the MOU. As a resource and utility corridor to tidewater access that would support export of our products is a very promising idea. It could enable Alberta and the prairies to compete at further scale and get resources and goods to global markets. This could unlock opportunities for LNG, critical minerals and agriculture exports.

“These kinds of initiatives also open more doors for Indigenous partnerships, leadership and ownership, which is critical for Canada to grow the economy and meet its environmental goals. Alberta has been a leader in advancing frameworks around Indigenous financing, partnership and ownership, and this agreement appears to prioritize extensive engagement with communities along the proposed route.”

Legge underscores that although the MOU is an exciting plan, it will not be cheap.” It will take a lot of capital and time to build what we need to realize a corridor – total costs have been estimated in the rage of $50 billion – and the projects within it will likely require federal review and approval. We know that process can be unpredictable, time consuming and complex, and we are actively working on improving it.”

All factors considered, including possible speedbumps, Fellows is optimistic that the triple provincial MOU plan is doable. “It took some time for the provinces to realize that a staged approach to corridor development could deliver benefits. Earlier conversations (including a 2016 Senate report) tended to focus on a national corridor that would cover all provinces and territories. But that would be a huge undertaking, requiring a lot of compromise and buy in. By starting with just the three western provinces, this MOU bites off a smaller and more manageable chunk. Sort of a ‘Think Federally/Act Provincially’ type strategy.”

Brad Herald echoes the potential. “CAPP supports any initiative to increase exports of Canadian oil and gas and other resources around the world. While we need to review details and specifics, this MOU certainly has the potential to be a win-win for oil and gas producers, as well as our trading partners and allies.”

Adam Legge capsulizes the MOUs as terrific opportunity. “A corridor like this would expand our capacity to export our natural resources like agriculture products, potash, lower-carbon energies like LNG and hydrogen and allow us to use renewable sources of energy much more efficiently.”

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