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Keystone Cutoff: Fireside Chat with Alberta Premier Jason Kenney

Jason Kenney Premier of Alberta, Canada
Mark P. Mills Senior Fellow, Manhattan Institute
Wed, Feb 17, 2021 EVENTCAST

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Keystone Cutoff: Fireside Chat with Alberta Premier Jason Kenney

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Keystone Cutoff: Fireside Chat with Alberta Premier Jason Kenney

Jason Kenney Premier of Alberta, Canada
Mark P. Mills Senior Fellow, Manhattan Institute EVENTCAST 03:00pm—03:45pm
Wednesday February 17
Wednesday February 17 2021
PAST EVENT Wednesday February 17 2021

On his first day in office, President Biden signed an executive order revoking federal permitting for the Keystone XL Pipeline, simultaneously depriving the U.S. of a new source of North American oil and eliminating thousands of Canadian and American jobs. But the decision will impose consequences on the U.S. and Canada in ways that transcend economic and labor interests.

In a virtual fireside chat, Alberta Premier Jason Kenney will join Manhattan Institute senior fellow Mark Mills to discuss the geopolitical implications of President Biden’s executive order, as well as reflect on the future for energy economies in North America’s democracies as the U.S. looks ahead to an era of increased reliance on mining and foreign energy sourcing.

 

Event Transcript

Mark Mills:

Good afternoon, welcome to Manhattan Institute eventcast. I'm delighted to have the opportunity to talk to Alberta's Premier, Jason Kenney in a what we're calling a fireside chat, although I guess the fireside part is virtual. We could use the fire in these cold times. By way of brief introduction, my Homeland, as some of you know, is Canada. My family's from a neighboring province, from Manitoba. So, I feel certain affinity to the conversation we're going to have.

Mark Mills:

It's relevant because Canada is America's second biggest trading partner. Only China is bigger by a little bit. In the first phone call the new administration made, it was made to Canada's prime minister, to Trudeau. In energy terms, if Canada were ... If, rather Alberta were a country, it would be the fifth largest oil and gas producing country in the world. Only a fewer bigger. So, it's a very significant player in the global energy market, and it's significant in the news now because partly motivating our discussion, but also in the broader terms of where the world's going.

Mark Mills:

One of the first actions of this administration, this new administration was to cancel the Keystone Pipeline, which a lot of people have heard about. Canada's parliament, just, I think two days ago, formed a new special committee on US-Canada relationships to look at the impacts of things like the Keystone Pipeline and this administration by America policy as opposed to by North America. With that, permit me to bring in to the conversation here, Premier Kenney, and let's just start with the obvious.

Mark Mills:

You've been answering this question all over American media, and good luck to you on that mission. Maybe you've been on American TV more than Canada, probably more Americans know your face than Canadians. Look, I would think a shock, perhaps I wasn't shocked that this administration canceled the Keystone Pipeline. That was their promise. The promise in the campaign. I'm sure you watched it like I did, was ... And you know the line. Elections have consequences. Nobody knows that better than you after running for a political office.

Mark Mills:

This administration rejoined the Paris accord and canceled what's become an iconic pipeline. Before I tell you my opinion about that move, you might imagine what it is, just give me the framework A, were you surprised at all? Did you think it might not happen? Obviously, it's not a good thing for Alberta. It certainly has a lot of consequences. What do you think happens next? We'll get into the why, but do you have a hope that this gets reversed?

Jason Kenney:

Well, before I answered the question, Mark, first, just let me thank you and the Institute for the invitation. In happier times in, I think, September of 2019, I had a chance to speak to and meet with supporters of the Institute in New York, and admire the ongoing work that the Institute does, and thanks for your focus on issues like this, which really matter to American energy and national security. You're right that here in Alberta, this Canadian province, we are the fifth largest oil producer on earth, but we actually have the third largest proven and probable reserves at over 200 billion barrels of proven and probable, and probably a lot more that we've not yet identified mainly out of the Canadian oil sands in the North of our province.

Jason Kenney:

The only countries with larger proven and probable reserves are Venezuela and Russia. I think one of the greatest security assets the United States has is right next door in this friendly liberal democracy, this close ally and trading partner of the United States, to have this enormous and reliable source of energy, which with this week's cold spell, hopefully people all across America realize is more important than ever that we can't heat our homes and function a modern economy, particularly in the Northern hemisphere without this kind of energy.

Jason Kenney:

On your question, I wasn't entirely surprised, but we were still extremely disappointed. Look, in the Democrat primaries, candidate Biden was the only one of the 18 or so Democrat candidates for the nomination who did not sign a declaration that he would veto President Trump's permit for the Keystone XL border crossing. We took from that some hope this past spring that in fact he would take a moderate position on it and would frankly listen to the labor unions, the construction unions, building trades, LIUNA, steelworkers, and others who strongly support the project and obviously are key part of his party's coalition.

Jason Kenney:

We were surprised in June last year when a member of his campaign team issued a statement, not the candidate himself, not then candidate Biden, but as a staffer issued a statement saying that he would veto it. It's not an issue that he ever once spoke to in 18 months of campaigning in the primary and the general election. He only spoke to a twice when asked at news conferences, but he never raised it proactively. Clearly, it was not a priority, and yet it appears to me that the hard left green faction has exercised out-sized influence in getting to this decision, and that's probably why they wanted the executive order to rescind the permit to hit his desk on day one of the new administration.

Jason Kenney:

Because I think they didn't want to get into a dialogue with Canada about continental energy security and partnership. We regard it as a slap in the face for this country that has done ... We've always stood with the United States on our shared security interests. This is a project that our government here in Alberta was invested in. We have an equity partnership and it to get that infrastructure built. The border crossing section was built, put in the ground last July. So, it is a reality on the ground. Thousands of people were working on it, and this retroactive veto sends a very troubling message about the predictability of the American regulatory system for future investment.

Jason Kenney:

What it ultimately says to us is that the United States would rather buy heavy crude to fuel the Gulf Coast refineries from Venezuela and Mexico than from Canada, that doesn't make any sense to us.

Mark Mills:

Well, you framed it exactly correctly. In fact, some time ago, I wrote a piece for the Wall Street Journal, which I think was the first time they'd heard the word Athabaska. We're going back here more decades that I would care to confess. I was writing then about the fact that, in fact, in my estimation, if you look at the geological resource, the Canadian oil sands in your province are arguably the single biggest accessible resource, known resource of oil in the world. It's an astonishing quantity of oil. There's only a few places on the planet with that much oil.

Mark Mills:

It takes some serious work and capital to extract it cost effectively, as you know better, especially Suncor and others have learned, but it's there. It's not just a flash in the pan resource, but you put your finger on something that's I think critically important and that is worrisome, and it's a conversation that, I got to confess, I'm tired of the word conversation. It's a negotiation, it's a dialogue, it's a relationship that's being highlighted by an extreme position on issues of energy policy and climate change.

Mark Mills:

The extreme position is uncomplicated, and the Keystone Pipeline has become the poster child for it. We're taking actions that are, to use the phrase, virtual signaling actions. It was clearly a virtual signal action. You know, I know that that does not result in less oil being used in the world. You know that the oil get produced, it'll be transported in an expensive way, costing money to your businesses and your tax base, because it'll have to be sold at a discount to go on rail or truck.

Jason Kenney:

With higher emissions.

Mark Mills:

Of course, higher emissions, higher environmental impact, higher risks, all of these things. Pipelines are the cheapest, safest, most environmentally sensible way to transport an energy commodity like full stop, right? But here's what we already know. Today, Saudi Arabia announces it's going to increase our production. The world is going to consume more oil, not less in the future, and this is not you and me saying that. This is Fatih Birol, the head of the International Energy Agency, looking at the most optimistic forecasts for non-oil energy sources, oil use goes up.

Mark Mills:

The only question on the table, totally separate from the climate issue, how you deal with that, that's a debate one can have, we can talk about it, but that's a separate issue. Regardless of what countries are doing, and you know this in your own country, oil use is going to stay, not only where it is, it's going to go up. The issue is, who supplies it? The who geopolitically, economically is important. Simple terms, the money is leaving America and leaving Canada, in this case, going to Saudi Arabia, Venezuela, Russia.

Mark Mills:

They need money, that's nice, but it's taking our jobs. When it comes to North America, this is an integrated oil and gas market, as you know. The technologies of your country and my country as well, but Canada being my country as well, but the North American technologies, the companies collaborate. I was encouraged by this committee, the commission that the parliament appointed, and perhaps you were, because what this may portend perhaps is that conversation that you were hoping would happened before a summary dismissal.

Mark Mills:

But in the meantime, what's happened is Enbridge pipeline, and this, for those are our audience who .... Let me explain to people that don't ... This is an old pipeline that was first built in the '50s. Carries oil from Alberta through the United States, back to Canada. It carries in US equivalent terms, and I'll put US equivalent terms so people here can appreciate it, the equivalent of all the oil of Texas, sort of 5 million barrels per day equivalent. It's a half a million barrel pipeline for Canada, but in per capita terms, that'd be like, all of Texas's oil going to the East Coast to from a gasoline.

Mark Mills:

Canada has this massive dependence on that pipeline. Environmental groups want to close this operating pipeline down for the same reason, virtual signaling. It won't change behaviors except make gasoline more expensive. In Canada, you'll have to truck it, take it by rail, take it by ship from Europe or from the middle East. You've dealt with this, the environmental challenge in your province up close and personal. What worries me is this is a signal that they've raised the level of we'll call it rhetorical and practical attack, both quite significantly.

Mark Mills:

I know it's hard for you to answer this, but do you think, I mean, you want to engage this, on your media blitz in the United States, people understand it's important to United States too. We're sending money, as you said, to Russia and Saudi Arabia, and Venezuela, instead of ... Not as much Venezuela, because there are different problems. I look at this and wonder, do we have a shot at reversing it? I hope that there is. I think that there is. Keystone, in particular is again, the poster child. It's not done. The pipes haven't been sold. The labor's laid off. If you were thinking about this in terms of a timeline, what they're hoping is that stay shut down long enough that it's just permanently DOA.

Mark Mills:

I don't know if it's months or weeks that you have to turn the switch back on, but it can't be years. We don't have that long. You think we have a shot at it? This is a political question, but this is a political issue, isn't it?

Jason Kenney:

Sure. Well, look, we're going to do everything we can to continue raising the importance of this to American energy and national security, as well as to American jobs in the economy during this crisis. We are gratified by strong support from many quarters, including from the Democrat party in Washington, Senator Manchin with whom I had a great conversation, the chair of the Senate Energy Committee. He and I spoke last week. He and Senator Tester voted in favor of a budget amendment about 10 days ago to force the administration to rescind the veto on the border crossing.

Jason Kenney:

Unfortunately, that we don't appear to have a veto proof majority in either of the two chambers of Congress. Although we do have here to have a simple majority in favor of asking the president to reconsider. We'll keep pushing that, and I want to thank, in particular, the president of the AFL-CIO, the Teamsters, the Steelworkers, the building trades, LIUNA, and other major US unions for having raised their opposition to the president's veto of Keystone XL in very clear terms.

Jason Kenney:

I think the administration imagined that they could just sign this and move on, but this continues to be a very real issue. Now, let me just emphasize some of what you've said, some context. Half of the United States energy imports from outside the United States comes from this province of Alberta. Just think about that for a second. We produce upwards of four and a half to 5 million barrels a day. We sell, in a good year, about $100 billion worth of oil to the United States, and also we're major natural gas exports to the US. Just think about that in context. Think about the trillions of dollars that the United States has spent defending security for access to energy in the Persian Gulf versus $0 spent on securing the access to this enormous reserve of energy, which basically ...

Jason Kenney:

When you talk about US energy independence, we like to talk about North American energy independence. Our economies are so integrated. Our values are so compatible. We really should think about this as North American energy independence. So, this is a big deal, and here's what we don't understand. Here we are, this friendly ally, supplying half of your energy imports, and we get insulted in this way without even a willingness to discuss, for example, environmental issues. There are, as you know, Mark, huge misconceptions that have been about the environmental performance of the Canadian oil sands here in Alberta that have been circulated by a coalition of largely US foundations.

Jason Kenney:

About 12 years ago, the Rockefeller Foundation in New York hosted a gathering of environmental groups, mainly from the US, to develop what they called the Tar Sands Campaign. The explicit goal of which was effectively to landlock this, which you've, as rightly said, may be the largest source of oil in the world. They didn't target Saudi Arabia. They didn't inhibit the doubling of US oil production. They certainly didn't touch Venezuela or Russia. They focused on the United States closest and best ally. How perverse is that?

Mark Mills:

I know.

Jason Kenney:

They poured tens and tens of millions of dollars into Lawfare, into legal harassment of various pipeline projects, both domestic here in Canada and crossing the border. They poured, I mean, Tom Steyer spent upwards of $200 million in the election cycle six years ago to try to get Obama to veto Keystone XL successfully. Even though the Obama's state department determined after rigorous analysis that Keystone XL would reduce rather than increase carbon emissions, because the alternative is a higher emitting rail transport.

Jason Kenney:

Now, Mark, what we're facing is a very, very troubling precedent. The retroactive veto of that pipeline, which is already there crossing the border. Now we have the Michigan governor, Governor Whitmer in Michigan, who, with her attorney general is trying to, as you say, decommission the portion of the Enbridge Line 5 that crosses the straits of Mackinac, that constitutes the single largest source of energy in Michigan. You wouldn't be able to heat homes in the upper Michigan peninsula, or have airplanes take off from the Detroit airport, or fuel the refineries in Northern Ohio and much of the upper Midwest without the 640,000 barrels a day that flow through that Line 5.

Jason Kenney:

She's trying to decommission that, even though Enbridge, this great Alberta company, is willing to spend $600 billion to build a new pipeline, a subterranean under the straits of Mackinac to remove any risk of leakage into the lake, even though it's operated there safely for six decades.

Mark Mills:

That's right.

Jason Kenney:

Now we have a precedent, where if the courts don't allow Governor Whitmer to do that, she or her aid attorney general might pick up the phone and call the White House and say, we want you to use the presidential power retroactively to kill this border crossing. That would then, by the way, have the knock on effect of shutting down much of the Southern Ontario economy, which is totally integrated with the US rest belt manufacturing sector. I mean, this goes on and on. We've got Line 3, where Enbridge is trying to put in a new, safer, slightly larger pipeline that would increase our shipments by 380,000 barrels a day, and facing constant harassment in the regulatory process in the State of Minnesota.

Jason Kenney:

This is not just about Keystone XL. This is about the ability of the United States to depend on the safest, most secure, most environmentally sound source of energy on the face of the earth.

Mark Mills:

That, I can tell that the campaign has coalesced the power of your argument. You have absolutely nailed it. What has happened here is that the Keystone and Enbridge now are the tip of the spear in terms of the difference between aspirational rhetoric about energy and real consequence to people, to economies, to geopolitics. You well know, because you hear this. I'm sure, constantly, in fact, I saw an interview that you gave on a network, I won't mention because it's an offensive network, where the host was saying to you, the last question was well, we just have to use more renewable energy. We don't need your oil.

Mark Mills:

We'll just use some more of this magic renewables. You know this, I know it, and in fact, I've put fact as fact out many times, that even if Elon Musk who's an incredible entrepreneur succeeds and we end up with not only him producing 20 million cars a year instead of a few hundred thousand, and the world gets a 500 million EVs, which won't be Canada or the US, that takes 10% of the world's oil use away. 10%, that's a lot of oil as you and I know, it doesn't end oil. We now have real consequences to real businesses and real jobs. The kinds of transitions that people are talking about that you have thrown in your face.

Jason Kenney:

Mark, on this point, as you know, the International Energy Agency projects, in a standard scenario, continued growth for oil until about 2035, then it starts to come down. But in their bullish, sorry, I should say their bearish scenario, which would be in a fully Paris climate treaty compliant world, they're seeing about sort of 70 million barrels of oil consumption by 2040. And here's the question that Americans left, right, center, liberal, conservative, whatever should be asking themselves, where should the last barrel of oil come from in a energy transition context? Russia? Venezuela? Saudi Arabia? Or North America?

Mark Mills:

Exactly.

Jason Kenney:

The question surely answers itself.

Mark Mills:

Yep. No, you've nailed it. Some time ago, I was pushing optimistically the thesis of a North America NAFTA energy kind of act, that what should happen is that Mexico, Canada, and the United States should look at normalizing and rationalizing our energy infrastructures. There are differences in politics among our countries, but if you think about North America and the combined population, and the resources, as you say, the question answers itself, but this is the fiction that has real consequences, because I worry, like you, that someone will pick up a phone behind the scenes and get an executive order or a ruling from a regulatory body or a court ruling from one of the US courts to shut down Enbridge. That won't be the end of it.

Mark Mills:

They want to landlock this oil resource because it's so big. It's iconic. When I first visited the Tar Sands, I was struck by how eager the producers were to tell me, not about how much oil they had. I mean, you've visited it as well. It's how efficient they've become in both physical resource efficiency, economic efficiency, and environmental efficiency. To your point, that this campaign to vilify the oil sands as uniquely destructive is flat wrong, scientifically.

Jason Kenney:

Yeah. Let me offer some context on that. Look, the Biden veto of Keystone XL was predicated on torqued and inaccurate 10 year old data, which circulated in the Obama administration from the environmental groups in Washington. Here's the reality. The carbon output of an average barrel of bitumen, which is the product of our Alberta oil sands, has declined by about 30% since the year 2000. It's declined by about 19% in the last decade alone because of their investments in new technology, and it's well on track to re to go down by about another 20% over the course of the next decade.

Jason Kenney:

One of the first large scale, industrial scale successful carbon capture and storage programs happen here in Alberta. We're making historic investments on that. We have got industry industrial scale carbon capture utilization in storage, which is actually through enhanced oil recovery technology, helping us to ... We take captured carbon from oil sands refineries, inject it into our conventional sedimentary basin to extract abandoned oil reserves at carbon minus. Not just net zero, but where actually, it's a negative carbon score on discovery that we are doing.

Jason Kenney:

Surely, that's the way forward through these kinds of investments in technology. The oil sands operators have moved from, increasingly they're moving from steam injected gravity drainage to ... Which is basically injecting enormous amounts of steam underground to liquefy the oil sand. They're moving from that to the use of solvents, to radically reduce both water and energy consumption. They're moving to gas cogen as their main power source up there. Many of our oil sands producers, some of the largest oil producers in the world have incredible commitments to net zero carbon emissions by 2050.

Jason Kenney:

Canada ranks only after Norway and Denmark in terms of the environmental social governance, ESG metrics of major energy producers, and our companies, Suncor, Synovus, CNRL, and others rank amongst the top in the world for their ESG score. The average barrel of Alberta bitumen has a lower carbon intensity than an average barrel of heavy crude produced in California. And we are just slightly above the average carbon intensity for a barrel of heavy produced around the world. We're at boy scout jurisdiction that reports these things, honestly. I'm not sure that's the case in Nigeria, Venezuela, or Russia.

Mark Mills:

You're being diplomatic. I'm sure it's not the case being reported honestly. Certainly, we know for a fact, when it comes to carbon accounting, that China does not report. Honestly, we doubt the Middle East reports, honestly. African producers, we can have the same doubts, but let me remind the people that are watching that it is possible, if they ask a polite question, that the prompts to the field, to send questions to me that I can ask you so that if you want participate with talking to the audience, feel free to send some questions through the prompts, and I'll be ... Obviously I'm going to screen then I'm going to ask.

Jason Kenney:

Mark, I'm happy to take impolite questions too.

Mark Mills:

Well. I'm sure you have to have a thick skin to run for any kind of political office, especially being from the province of Alberta. I was watching some reaching news on the movement in Alberta, which is not unlike the movement in Texas. It's a fringe movement that wants to succeed from Canada. The sort of subtext is I feel the same way. They don't feel the love. The political environment is what it is, but you put your finger on something that's technically really important and interesting. For those people who are pushing the thesis that we should do a lot more in the long-term, because anybody that's honest about issues with respect to energy and climate, these are long-term issues.

Mark Mills:

Bill Gates, his new book is out, and he's talking about the long-term, and the big topic that's on the table again, is carbon capture. Carbon capture is extraordinarily difficult. What's interesting, you know this, Greenpeace just funded a study in Europe that looked at global carbon capture programs. All the things that were promised a decade ago, almost all failed at work, except in the oil and gas industry, where it's done for the reasons that you understand. So, if we want to see the advance of this technology, if it ever were to become necessary and viable, it's going to become necessary and economically viable through the kinds of efforts that are going on in the Tar Sands and oil sands, and in the oil industry, not in some basement lab.

Mark Mills:

These are very difficult industrial scaled programs. There is a question from the audience, which is, it's an interesting one, during the last four years, obviously different administration, pro-pipeline, we all know that. I'm not going to speak to America's politics. We like Canada and this ... I like parliamentary systems, I like this system, they're both different, but politics change. The question is, were the builders facing any kind of obstacles to getting the pipeline rolling even in the last four years? Was it smooth sailing, were there some problems? Setting aside the band, the king.

Jason Kenney:

Sure. Let me just back the clock to Trans Canada Energy first proposed this project, Keystone XL about a decade ago. It went through multiple exhaustive environmental reviews by President Obama's administration. His administration, basically, as we have a Canadian expression, we call it ragged the puck, which means, of course it's a hockey metaphor.

Mark Mills:

I grew up on skates, so again, maybe—

Jason Kenney:

He ragged the puck, or delayed making a decision for seven years, and then he announced this exercise to veto, or rather prohibit the boarder crossing portion of Keystone XL in October of 2015 about 48 hours after Justin Trudeau was sworn in as prime minister. So, President Obama clearly wasn't willing to take on the conservative Prime Minister Harper, who was a strong defender of the energy sector, but the Obama administration assumed that the Trudeau liberal government in Canada would pretty much just fold on this, which is exactly what happened.

Jason Kenney:

Then fast forward to the election of President Trump. He signed an executive order in the first month as president authorizing the border crossing and TC Energy started up again, seeking local permits, etc. The problem is then there were multiple legal challenges to the permits that had been issued. Particularly activist judge in Montana kept granting injunctions against construction of the pipeline. We saw three to four years of delays, largely because for legal reasons. Finally, those were largely resolved and local permitting issues were largely resolved and TC Energy came to our government and said, look, because this has taken so long and there's political and legal uncertainty, we cannot raise the capital after we've spent $6 billion.

Jason Kenney:

We can't raise the capital of the private markets. Are you prepared to backstop this? So, we put in a billion dollar private equity investment to turn out property investment ... Pardon me, $6 billion loan guarantee. Construction started this past summer, and then we got hit by the veto from president Biden on day one in January.

Mark Mills:

The challenge now, obviously, is if, let's be optimistic that I think it's a very high probability, and I'm not an oil traders, but when oil prices are low, they go up as you know, when they're high, they go down. We're in a world that the IEA points out, as you pointed out, we'll be underserved by supply very quickly. In fact, I just saw this morning IEA is putting out that we'll be short supply by the second quarter of this year. I'll start drawing on the reserves that people have built up when oil was cheap. China was a big player in that, but those get drawn out pretty quickly.

Mark Mills:

Sometime around the end of this year, the thing that frightens most politicians in this country, and as I recall, when I lived in Canada, are high gasoline prices, high oil prices. They don't like that. That's coming back. I think that the prospect of relieving supply from the North American sources may become more appealing as these prices keep escalating. But I have to say, I have to commend you for this, but who would join you in this campaign in Canada now to educate American politicians, other than ... Alberta has quite a bias.

Mark Mills:

It's like Texas talking about oil. Of course, they care about oil, but what you've raised are something much more fundamental, which is that geopolitics and the trade relationship in general, that whatever the project, or project, depending what country we're from, whatever it is, if you novate a standing permit, if you damage a capital capacity by the billions of dollars and tens of thousands of jobs, our ability to do anything, build electric transmission lines, build factories to supply. How about if Canada supplies, which it will, more of America's energy minerals, why would Canadians invest in that? if this is the outcome that US keeps, who would join in the fight, do you think? And without giving away any behind the scenes tactics that you might have underway.

Jason Kenney:

Well, I can tell you that all of the other Canadian provincial governments share these concerns. We have huge alliances here. By the way, alliances that cut across, I guess, typical categories. So, you mentioned an interview, I think I did on MSNBC where I was followed by an American native leader. We would call it a First Nations or indigenous leader here in Canada, who said that ... He implied that all of the indigenous people or First Nations here in Canada are opposed to this energy development.

Jason Kenney:

Nothing could be further from the truth. In fact, the greatest engine of employment for indigenous people, for native Americans in Canada is the Alberta oil sands. Every single one of the tribes, or what we call First Nations in that region, don't just benefit from it. They are business partners. Many of them have full employment. So, you've got quite a spectrum. I mean, of course, we have the urban-green-left in Canada that just thinks we can replace this energy with good wishes, but most Canadians understand that the largest sub sector of our economy is essential to our future.

Jason Kenney:

On your point about investor confidence. This is exactly why we are prepared to defend our investment in Keystone XL. If the veto is not reversed, it is our intention, with our partner TC Energy, to use every legal tool at our disposal to pursue damages from the US administration that retroactively change the rules after an investment had been made. This is not how a stable democracy operates, and it will I think impair investor confidence in the US. We think it clearly violates the section 11 investor protection provision of NAFTA, which was carried forward for a period of time under the new USMCA.

Jason Kenney:

We think we have legal rights there, given this was effectively ... This caused enormous damage to us. We had proceeded in good faith based on US regulatory approval. That's been pulled back and we think the USMCA can protect us from that.

Mark Mills:

Well, obviously, I, not only would believe that that's the case, it's just a personal, not a, I'll call it an official view from my end. I could more heartily endorse the need to pursue that vigorously and quickly, because the debate that has to be undertaken is precisely that debate. The framework of trade, the USMCA has legal consequence, it has moral consequence, and it has long-term consequence. I think you need to pursue that. You have standing. It will illuminate the fictions that are being presented, in a legal setting, you can eliminate these fictions.

Mark Mills:

The problem is, as you all know, it takes time. One of the values of doing it will be to elevate the debate. It doesn't resolve it, but it elevates it, which I think you have to do. I think that the point you made about damaging investor confidence is extremely important. I mean, the rest of the world, including the United States, is going to want more energy minerals. Oil is going to be used. We're going to want the minerals, steel, the INR, rather, the nickel, copper.

Mark Mills:

Electric cars used two to three times more copper. They use 300% more nickel. Canada's a big nickel miner. It's a big mineral miner. The investments from the United States won't seem credible. I'm not thinking in terms of retaliatory, a sense that's ... So, the emotional part. It's a practical issue. Why would we forge stronger relationships if they can be novated, trivially, retrospectively against what the law says? I think that's the legal and economic one, but from the viewpoint of the great energy debate we're in, the so-called transition, I'll say it again, no one more epidermises this challenge than what's happened to Alberta with the fiction that the oil that doesn't flow from there in a pipe doesn't go somewhere else and isn't being used, it isn't being sold by somebody else. If we shut you down, this is a gift to Russia and Saudi Arabia.

Jason Kenney:

Mark, one issue that Senator mentioned really was focused in on, in my recent conversation with him, was about Canada's ... The fact that we are building a pipeline to massively expand our ability to export Alberta oil off the West Coast, it's called the Trans Mountain Expansion. Trans Mountain runs between where I am here at Edmonton and the Port of Vancouver, been operating safely for 60 years. But the expansion project will allow us to ship an additional 800,000 barrels a day, and that will go to basically Asian markets. I mean, originally, the idea was that Jones Act tankers are going to take a lot of it down to a West Coast US refineries, but increasingly, it looks to us like the United States doesn't want our energy.

Jason Kenney:

So, we'll happily sell it on the global market. What you've got is a situation where the US will be importing Venezuelan and other OPEC sources, while Canada is exporting to countries that are not friendly to the United States. This is completely perverse.

Mark Mills:

I mean, it's perverse in every sense, and in the short term, while the West Coast pipeline gets built. I'd have to say if I were king of Canada, I would say, build that West Coast pipeline yesterday, because the experience of the Keystone is just searingly, not just annoying, but damaging, but the short term, you know what's going to happen. It's going to go on rail, and I think some of the challenges there is the railroads, and again, I don't have any inside information based on what I read publicly, I've essentially been hesitant because the increased capacity is expensive for them.

Mark Mills:

They can increase capacity, but then, when you finish a pipe, you turn them off. In effect, you have to subsidize the railroads to get the oil moving. But it seems to me that there is no alternative, you've got to need more rail cars.

Jason Kenney:

Yeah, absolutely, and it's less economical. As I mentioned, the Obama state department, under Hillary Clinton's leadership, conducted two exhaustive studies into the environmental impact of a Keystone XL, both of which concluded that it would generate ... That the pipeline would reduce emissions because rail increases, and not just a question of emissions, but what about safety? Mark, several years ago, we had a terrible tragic accident at a small town in Quebec.

Jason Kenney:

There was a train loaded up with crude oil that had come out of the Bakken in North Dakota, it was being shipped out to the East Coast, and it lost control one night and basically destroyed an entire town with dozens ... I think 57 people lost their lives in the small town in Quebec. Oil pipelines have about a 99.8% safety record, and we're not aware of anybody dying because of oil leak out of a pipeline. I can't even understand why we are debating rail versus safe, modern pipeline technology.

Mark Mills:

No, also, I mean, just in the broad scope of things, as you well know, in the United States, and North America broadly, Keystone is a big pipeline. It's long, but it adds about 2% of the total linear miles of existing pipeline. It's not some profound change in the geopolitics of energy movement and energy use. It's important in itself, but big picture, it's just one, tiny is insulting the pipeline, but it really is a small percentage change in the game. I want to come back in close, because we only have a few more minutes to think about these issues. Just come back to where I started with respect to what's happened now in the parliament for our American audience, to understand whether or not that might be a wedge that's useful.

Mark Mills:

Because other than just the province negotiating with a country, it's not much different than Texas trying to negotiate with Italy. It's as an asymmetric geopolitical relationship. It's important that you're there talking to them, but having nation to nation role is really important here. I was encouraged, maybe I shouldn't be, maybe you can aluminate me on this, I was encouraged that, and I know there was a resistance from the Green Movement, the Green Party, that it actually got formed and it was formed around these two issues, Keystone and the Biden administration's other policy, which is by America, not by North America, but by American.

Jason Kenney:

Sure.

Mark Mills:

Geopolitically, that's crazy. Right? Do you think that's a wedge? Do we have a shot at that from Trudeau?

Jason Kenney:

That new committee in the federal, Canadian parliament on Canada-US relations, yeah, and I think that's an encouraging step. Because there are widespread concerns here about, not just the terrible message sent by the Keystone veto, but as you mentioned, by America and just renewal of American protectionism. To be clear, this is something we saw under the Trump government as well, and it's a perennial factor in the US Congress that we always have to contend with. We Canadians often feel like, because we are such good friends, because we're such a peaceful and reliable ally-

Mark Mills:

We're just too nice.

Jason Kenney:

Yeah. Because we're too nice that we are too often taken for granted. That's not a good position to be in, in this relationship. I appreciate that new committee. I don't think it's going to be a game changer, but we need to stand up and defend our interests unapologetically in this bilateral relationship. It shouldn't have to be confrontational like this, but right now, we have senior members of the party in power in Washington who are trying to shut down all of the major pieces of energy infrastructure that the US economy depends on to receive Canadian oil and gas, mainly from my province.

Jason Kenney:

I don't hear them try to block OPEC tankers coming in from Venezuela or the Persian Gulf. I would plead with people across the political spectrum in the United States to ask themselves, why is there a much greater effort to block Canadian exports than OPEC exports? How is that in any sense to the advantage of American national security or the future of your economy?

Mark Mills:

I think that's a terrific point to end on, because that is the single most starkest summation of frankly, a deeply offensive dynamic that we wouldn't ... We would take Russian LNG into Boston, we would take Saudi oil into the Gulf Coast of the United States, and we would block Canadian oil. It makes no sense. I get why it's become ... Well, I actually don't. I don't know why Keystone became the poster child.

Jason Kenney:

Neither do I.

Mark Mills:

But it did, and I commend you for fighting it. I'm not a lawyer. I only play one episodically on TV. I even play politician occasionally, but you do. I commend you for fighting it and you should fight it in the, not just the court of public opinion, but the real courts, because it's important. Thank you for fighting it. Thank you for producing the oil. Thank you for being a great voice for energy sanity, not just in Alberta, but in North America and around the world. Thank you very much for the time.

Jason Kenney:

Thanks so much for the opportunity, Mark. Appreciate it. Stay warm.

Mark Mills:

I'm from Canada. This is a heatwave practically. Thank you.

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