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Interview
Energy Bridge Magazine

Alberta Premier Allison Redford appointed Ted Morton Energy Minister on 12 October 2011. Energy Bridge met with Mr. Morton in Calgary on November 22 to discuss his new portfolio.

EBM: How did you react to the Obama administration’s recent announcement about postponing until 2013 the go-ahead for TransCanada Pipeline Ltd’s Keystone XL pipeline?

We were naturally disappointed by the decision, but we are optimistic that the facts will prevail and the go-ahead will ultimately be granted.

EBM: How would you characterize these facts?

There is a very strong and vocal environmental constituency in the United States that opposes the import of oil from Alberta, especially of oil sands derived crude. The rationale behind their opposition stems from the belief that imported oil will cause grave environmental harm. Oil and gas, their extraction, transport and consumption, bring with it many pros and cons. There is no denying that there are risks involved with any pipeline project, however, measures have been put in place to ensure that the harm in this case is minimized.

EBM: Could you explain how this will be done?

Those opposing Keystone XL are motivated by three definitions of “environmental harm”. The first involves concerns about the possible contamination of important freshwater aquifers. For this concern solutions have already been found — such as choosing an alternative route for the pipeline. Secondly, there is the contention that oil sands development itself causes unacceptable degradation of Alberta’s environment. To this I point out the US State Department, in its review of the pipeline application, provided Alberta with a very good “bill of health”. And thirdly, most of the opposition comes from fear of harm from carbon dioxide emissions. It is important to note that Alberta’s oil sands are responsible for just one-tenth of one per cent of the greenhouse gases that are emitted in the world. I would also point out that 80% of the emissions related to the imported oil come from the tailpipes of American cars.

EBM: How would you regard the alternatives for the US to the import of Canadian crude?

The United States imports a great deal of oil. Roughly speaking, about a third of their 15 million barrels per day of consumption must be imported. Other petroleum-exporting countries do offer alternatives to Alberta oil, but these are far less appealing, whether from environmental, energy security or human rights perspectives.

EBM: Similarly to Teddy Roosevelt American president you have spoken about the need to put back the notion of “conservation” into conservative thinking. How does that work?

Conservatives have a strong appreciation of the full sweep of time — past, present and future. They do not want to leave the next generation with unpaid bills. But debt is not just to be construed in terms of money. We must be conscientious stewards of the environment so that our children and grandchildren are not left with messes to clean up. Alberta is currently facing challenges similar to those that worried Roosevelt when he established the national park system. The wealth creation of a modern economy brings with it the risk of our losing touch with rivers, forests, lakes, air. All of these things have an intrinsic value, not only economically, but also in terms of quality of life.

EBM: Alberta has invested heavily into protecting the environment. Is this an area where we have something to offer China?

China is in a very different situation, but rapid industrialization has come at a heavy price to its ecological balance. One of the most promising areas where we could help China with environmental challenges is with our technology. But also our experience in crafting government policy to regulate such areas as water management is exportable. The scarcest resource today is clean, potable water. Any country which has a sound government policy and/or a commercial sector that serves to protect water resources has real economic opportunities.

EBM: What do you see as the three main forces behind Alberta’s prosperity?

Above all I’d mention the people. Alberta’s citizens have come from the four corners of the world and have built up the province through entrepreneurship, self-reliance and a strong work ethic. That’s been the case whether we’re talking about early English and Scottish settlers, Eastern Europeans, or more recently, East Indians and Chinese. The province’s natural resources — great farmland, bountiful forests and hydrocarbon reserves — constitute, of course, another cornerstone. But I’d also give substantial credit to the province’s political stability and legal traditions. The rule of law, respect for property rights and our system of representative democracy have been critical in facilitating wealth creation — but also attracting investment from outside its borders.

EBM: By “outside” you are referring primarily to American investment?

Alberta’s oil and gas sector is dependent on considerable capital investment. Neither the province — nor Canada as a whole for that matter — could provide the amount of capital required for this huge scale of hydrocarbon exploration and production. Actually, we are talking about “global capital”. At one time it may have been largely American capital. But it’s also been British and European. Today we are seeing investors from many other countries such as China, Korea, India.

EBM: Is not this arrangement in jeopardy? Could not the Saskatchewan government’s rejection of a foreign takeover of Potash Corp be a harbinger of a less open attitude to outside investment? Might not Industry Canada, for instance, be moved to prevent the foreign takeover of a major Canadian oil & gas company?

I think that the analogy of potash with Albertan oil and gas is not fitting. Bear in mind that Potash Corp of Saskatchewan has under its control about 20% of global potash supply. The strategic implications of such control are considerable. On the other hand, there is not a single Alberta oil and gas company that has even a significant fraction of 1% of global supply. I do not see any threats to our current open door policy.

EBM: Is your ministry taking concrete measures to strengthen the province’s energy trade with Asia?

This is a very promising area and I’d like to draw attention to one important initiative. The western provinces of British Columbia, Alberta and Saskatchewan established the “New West Partnership” with the aim to facilitating trade with emerging markets in Asia that need the resources. The provinces are working together toward ensuring the infrastructure is in place to get those goods there — and that includes energy exports. Conversely, the attraction of investment from those regions is also a priority issue.