Alberta, B.C. mulling oil transport options in case pipelines never built

The Canadian provinces of Alberta and British Columbia seem to have finally found a way to resolve their differences over oil pipelines.

On Tuesday, both Premiers acknowledged that if Enbridge's (TSX:ENB) Northern Gateway and Kinder Morgan’s (NYSE:KMP) Trans Mountain pipelines to the west coast are not built, they would look at a transportation alternative that already has its infrastructure in place: trains.

“B.C. and Alberta share an understanding on the critical importance of being globally competitive,” B.C. Premier Christy Clark said in a joint statement with Alberta Premier Alison Redford. “We are laying the foundation to work together to reach new markets, create jobs and strengthen both our economies, and Canada.”

According to The Vancouver Sun, this is the first time the B.C. Liberal government has affirmed that Alberta’s oil will be shipped to the B.C. coast and onto freighters destined for Asia, whether or not pipelines are built.

The terms of reference released Tuesday states that both pipeline and rail transportation are viable alternatives for the movement of energy resources to the west coast.

“If pipelines are not developed, rail will step into the void to deliver bitumen to the West Coast,” says the 10-page document.

Last month, documents obtained by Greenpeace showed that companies such as CN Rail (TSX:CNR) and Canadian Pacific Rail (TSX:CP) have already been ramping up shipments of oil elsewhere in North America. In fact, CN is said to be working with Chinese-owned Nexen (TSX, NYSE:NXY) to transport oil to B.C.’s ports and then ship to Asia.

The Alberta/B.C. working group led by senior energy bureaucrats will now focus on tackling the main issues that triggered antagonism between the two provinces. This is, it will look into how to ensure B.C. gets a share of the benefits from the pipelines that is proportionate to the environmental risks it faces.

Image from Wikimedia Commons.