So what now? What are the various options available to a province and an industry that finds it's Plan A on the skids? Here are a variety of optional plans, with an assessment of their probability or usefulness.
Plan B: Sell oil to Asia. This is by default the most attractive option, at least on paper, and is the option seemingly favored by the federal and provincial governments. The problem is, however, getting a pipeline built to the West coast. The Northern Gateway pipeline, even if it had already cleared all regulatory obstacles, will take years to build. Plus, it is certain to face ferocious opposition from environmental interests, who are newly energized and emboldened by their victory on Keystone. We could also ship more oil
to the coast by rail. While there is certainly some scope for this, rail capacity would not match that of an actual pipeline. Costs would also be higher by rail (although we would be receiving the currently higher Brent crude price).
Plan C: Reverse flows of certain existing pipelines in eastern Canada and start shipping oil out from the Atlantic (rather than importing as we do now). This option is also attracting some interest, and may hold some distinct advantages. It would require no approval from the US, and plenty of foreign buyers would likely be interested. The problem is finding refineries that need bitumen or heavy oil to upgrade (like those in the US). Barring that, we could upgrade and refine it here, which takes us to the next plan.
Plan D: Build more refineries and upgraders in Alberta and ship out the value-added product. That would satisfy a lot of Albertans who worry that we export too much raw resource and that we should keep those manufacturing and value-added jobs here at home. But it still doesn't solve the main problem of cost, which is the primary reason why industry is not racing to build refineries in Alberta today. By the time we build refineries and upgraders and ship it to willing buyers, margins would be squeezed—possibly to the point of making it uneconomic.
Plan E: Hammer away at the Americans in making the case that Canada's oil is not dirty. This is, perhaps, the easiest course of action (which isn't saying much). And perhaps there is a moral imperative to do this anyway.
But as one observer who has recently appeared in front of US legislators said, "In America, it's all politics, all the time." We can send down the most convincing lobbyists with the most impressive PowerPoint slides, with all the best data and logical reasoning. But at the end of the day, it's politics. And we don't get to vote down there.
Four plans, and a lot of holes in all of them. The most likely scenario is probably that industry will pursue a combination of some or all of these plans. But whatever the outcome, Alberta may find out that building a sustainable oilsands industry is more challenging than we originally thought.