Letter: Can Horgan outnegotiate Clark on pipeline revenue for B.C.?

Editor: Premier John Horgan and his comrade Andrew Weaver, through their delay tactics regarding the Trans Mountain Pipeline, have chosen a combative stance.

This is great for starting a trade war as it riles everyone up, but we need the strategy to increase “fair share” as B.C. is taking all the risk and Alberta gets the benefits.

Maybe this is a workable first move?

This delay tactic of setting up another environmental review panel is bogus and they know it. Marine spills have been studied to death all over the world and there are no mysteries.

Crude oils or diluted bitumen behave the same in a marine spill and both make an ugly mess. Please don’t waste our tax dollars.

The oil companies and the federal government are supposed to be the ones responsible for cleanup, but talk is cheap and how much can we depend on either one?

Former premier Christy Clark has entered the fray and declared Horgan’s tactics illegal. Clark declared back in January 2017 that all five conditions she had imposed were met. One of the conditions was for B.C. to get a so called “fair share” of the economic benefits.

Clark praised her ‘agreement with Kinder Morgan.’ She tied the agreement to the revenue of the KM Pipeline Company, which, in my mind, makes it unreliable.

In my opinion, the agreement should have been equivalently tied to volumes of product being shipped through the pipeline.

With Clark’s deal, depending on KM’s revenue, B.C. would get between $25 and 50 million per year. That’s quite a range, however if all years are the top $50 million, it would amount to $1 billion in 20 years.

The numbers sound impressive, but I thought we could have done a lot better.

B.C. is taking all the environmental risks and should be compensated to create an alternate insurance fund for backup in the event of major spills.

Without access to tide-water, Alberta’s oil is landlocked, resulting in the Americans having a chokehold on any competition and as the only customer, commands approximately 20 to 25 per cent discount related to (tidewater) world prices. Current world price is approximately $60 barrel, so a 20 per cent loss margin is about $12 per barrel.

How much of this should B.C. reasonably be entitled towards an insurance emergency response cleanup fund?

Here is how Christy Clark’s economic ‘fair share’ agreement breaks down: Assuming KM has all 20 maximum revenue years, B.C. optimistically gets $50 million per year or $1 billion in 20 years.

Upon completion, the capacity of the pipelines is stated at 890,000 barrels per day, so we will assume an average of 700,000 bpd.

Those 700,000 bpd x 20 cents per barrel = $140,000 day x 364 days = $51 million per year x 20 years = $1 billion.

This is what Christy Clark did — peanuts.

Twenty Cents a barrel, and only if KM’s revenue accounting tops out for 20 years?

Twenty cents is only 1.6 per cent of the $12 per barrel increased margin of getting oil to tidewater. It’s a really bad deal for B.C.

It could cost billions to build an adequate quick-response Coast Guard cleanup fleet.

I had in mind more like $2 per barrel which is only one sixth or 17 per cent of the $12 per barrel increased margin of getting oil to tidewater.

Let’s see if Premier Horgan can out-negotiate Christy Clark.

Maybe a stalling tactic is a good outrageous first move, but I would recommend pretending he can negotiate like WAC Bennett did.

He could play the card of calling off the hounds after the new NDP deal is clinched.

Roland Seguin,

Langley

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