Left wing set to win in Canada's BC, may reshape energy policy

By Jennifer Kwan

VICTORIA, British Columbia (Reuters) - The left-leaning New Democrats are set to reshape energy policy in Canada's Pacific province of British Columbia if, as expected, they seize power from the Liberals in Tuesday's elections to the provincial legislature.

Opinion polls put the NDP between 7 and 10 percentage points ahead of the Liberals, well down from the 20-point lead the party had before the campaign started.

The Liberals's rating rose as they played up fears the New Democrats would be poor stewards of Canada's fourth-largest provincial economy. But the NDP should still win, after being out of power for 12 years.

"It's not as dramatic as a 20-point lead, but even a seven-point lead would give us an NDP government," said pollster Mario Canseco, at Angus Reid Public Opinion, who has the NDP ahead by seven points.

The legislative assembly has 85 seats, with 45 currently held by Liberals and 36 by the NDP, and four held by independents. That means the NDP would need to gain seven seats to take a majority in the assembly.

British Columbia prides itself on a pristine environment and a history of environmental activism - the Greenpeace movement got its start here 42 years ago.

With polls showing the majority of the province's 4.6 million citizens concerned about the threat of spills from oil pipelines, both parties question such developments, especially Enbridge's proposed C$6 billion ($6 billion) Northern Gateway pipeline that would ship 525,000 barrels of oil sands crude per day from Alberta to the B.C. coast for export to Asia.

Enbridge, Canada's biggest pipeline company, acknowledges the opposition to its plan. But Al Monaco, the company's chief executive, said he expects support for the project to climb.

"I admit it's tough at the moment," he told reporters after the company's annual meeting on Wednesday. "As more information comes out I think there's a very good possibility of getting more support."

NDP leader Adrian Dix also opposes a plan from Kinder Morgan Energy Partners LP to more than double the size of its Trans Mountain pipeline carrying crude oil from Edmonton, Alberta, to the Vancouver suburb of Burnaby, a move that would increase tanker traffic in the Port of Vancouver.

Dix's party has also proposed a tax on banks and credit unions to help fund spending promises that include a $4 million environmental review of Northern Gateway, as well as an expansion of the province's carbon tax base to include emissions from oil and gas drilling and production.

The pipeline promises won praise from environmentalists, but the Liberals say they threaten the investment climate.

"These things together are sort of raising doubts about the willingness of the NDP to accommodate investment from which development and jobs flow," said Richard Johnston, a professor of political science at the University of British Columbia.

Jock Finlayson, chief policy officer of the Business Council of British Columbia, said he was confident any government will ensure a stable investment climate.

"We'll judge the government, whoever it is, by their actions and by their policies once they're in office. We're not going to prejudge that," he said.

The Liberals, in power since 2001 and now led by Christy Clark, have focus on balanced budgets and debt reduction in their campaign.

But the party's popularity plunged after it changed the rules for the provincial sales tax in 2009, only to row it back two years later after losing a provincial referendum.

Both parties have proposed increases in corporate and personal income taxes, with rates to come out slightly higher under an NDP government. ($1 = 1.0024 Canadian dollars)

(Editing by Janet Guttsman)

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Canada loses WTO appeal in renewable energy case

BRUSSELS (Reuters) - Canada lost an appeal at the World Trade Organization on Monday in a ruling on incentives offered to local companies, a case that has already led to legal challenges over suspicions of similar perks elsewhere.

Japan and the European Union brought the case over a scheme intended to promote renewable energy in the province of Ontario.

It offered above-market prices for electricity supplied by renewable energy companies but only offered the premium to firms who bought most of their equipment locally.

Monday's appeal decision revised some of a December ruling in which the Japan and the EU had won most of the case.

But it left in place the key finding that Ontario's incentives were illegal because they discriminated against foreign firms.

"Today's ruling is good news for everyone caring about clean energy and the environment: it has been made clear that use of quality, cost-effective technologies should not be hampered by protectionist measures," EU trade spokesman John Clancy said in a statement.

"The EU supports the promotion of renewable energy but considers this must be done in a manner consistent with international trade rules."

A spokeswoman for Canada's federal trade ministry, Caitlin Workman, said the government would work with the provincial authorities to respond to the WTO appeal ruling, which is final.

Ontario will have to bring its rules into line with the WTO rules or risk a claim for trade sanctions against Canada.

Canada's defeat may spur more WTO disputes by countries which are desperate for economic growth and suspect their firms are being illegally locked out of infrastructure projects abroad.

The United States has already charged India with illegally favoring local producers in its solar sector and China has hit the EU with a claim that Greece and Italy favored solar power firms that bought local components.

Other potential disputes are simmering, with Brazil, Indonesia, Nigeria, Russia, Ukraine and the United States all under scrutiny in sectors such as energy, mining, carmaking and telecoms.

(Reporting by Robin Emmott in Brussels and Tom Miles in Geneva; additional reporting by David Ljunggren in Ottawa; Editing by Angus MacSwan)

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Crude-by-rail no substitute for Keystone XL: energy minister

By Patrick Rucker

WASHINGTON (Reuters) - Using trains to move heavy crude oil out of Western Canada would be a poor alternative to the controversial Keystone XL pipeline, Canada's top energy official said on Wednesday, and a rail-only plan would likely dent future oil sands development.

U.S. officials are weighing whether to approve construction of the proposed Keystone pipeline that could deliver as much as 830,000 barrels a day of mostly Canadian and some U.S. crude oil to refiners in Texas and Louisiana.

Joe Oliver, Canada's natural resources minister, said costs and logistical challenges make crude-by-rail a poor second choice for oil sands producers trying to reach the U.S. Gulf Coast.

"I don't think anybody feels that it could be a substitute for pipelines," Oliver told Reuters.

In a report that weighed the environmental impacts of the Keystone pipeline, the U.S. State Department concluded that blocking the 1,200 mile project would do little to slow the oil sands sector since crude-by-rail was such a close second choice.

"Limitations on pipeline transport would force more crude oil to be transported via other modes of transportation, such as rail, which would probably (but not certainly) be more expensive," the State Department said in the report released in early March.

But Oliver said pipelines reliably beat crude-by-rail which "is more expensive for longer hauls than pipelines."

"It is a good supplement but not the longer-term solution," he said. "I don't think anybody would suggest it is."

Industry officials, energy analysts and recent data raise questions about whether the industry is really eager to adopt crude-by-rail should the U.S. government rule against the TransCanada Corp pipeline.

The State Department on Monday closed a public comment period on Keystone with the Environmental Protection Agency criticizing officials' conclusion that crude-by-rail is a likely alternative to Keystone.

The State Department should conduct a new study of crude by rail, the EPA says, and "include further investigation of rail capacity and costs, recognizing the potential for much higher per barrel rail shipment costs."

The State Department said this week it would hold another public comment period after it decides, with the help of federal agencies including the EPA, whether the pipeline is in the national interest.

Oliver said advocating for Keystone is one of his top priorities. He is in Washington this week to meet with lawmakers and other officials. Asked if a rail-only scenario would put a dent in oil sand production, he said "Yes, I would say it would. But we don't see that happening."

Foes of the Keystone pipeline argue that extracting oil sands crude out of Western Canada emits more carbon dioxide than conventional drilling in a process that worsens global warming.

The EPA, which has warned that oil sands production could worsen climate change, suggested that the State Department work with Canadian officials to curb pollution.

Oliver said he expected to see more cross-border efforts to curb climate change and that Canadian officials could boast significant gains in promoting clean energy.

Canada is developing rules that would aim to curtail pollution in the country's oil and gas sector.

"We are going to have those rules soon," he said. "It is going to be helpful."

(Additional reporting by Paul Eckert; Editing by Kenneth Barry and Bob Burgdorfer)

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Ottawa names lawyer to talk energy with native groups

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Canadian Prime Minister Stephen Harper has appointed a British Columbia lawyer to gather views of native groups across the Western province on energy development as the industry struggles to gain acceptance of multibillion-dollar pipelines that would vastly increase oil exports.

However, Harper's new representative for West Coast energy infrastructure, Doug Eyford, insisted on Tuesday his role will not be to cajole holdouts into supporting contentious projects.

Aboriginal opposition to such proposals as Enbridge Inc's C$6 billion ($5.8 billion) Northern Gateway pipeline has been a major stumbling block to the Harper Conservatives' aim of shipping large volumes of oil sands-derived crude to the Pacific Coast to be exported to Asia as a way to increase turns.

Eyford is a veteran of federal negotiations with Indian groups, known in Canada as First Nations, on self-government. Over the next three months, he will meet with communities affected by proposed pipelines, liquefied natural gas plants and marine terminals.

Eyford will issue a draft report to Harper on June 28 and the final document on November 29, Joe Oliver, Canada's natural resources minister, said in a speech in Terrace, British Columbia.

His appointment comes a day after Ottawa said it planned a series of measures aimed at improving tanker safety as proposed pipeline projects point to a major increase in coastal traffic.

Eyford said he has not been asked to advocate on behalf of the government or the energy industry in favor of specific industrial developments.

"My role and responsibility is to provide an accurate and complete report to the prime minister on what I'm told by the people who I interact and engage with as part of my responsibilities," he said.

The federal government has a constitutional requirement to consult with and accommodate native communities when developments will affect their lands, and some aboriginal leaders have suggested their rights and title to lands may amount to veto power.

This has presented legal risks to proponents of Northern Gateway, which would ship 525,000 barrels a day of Alberta oil to the coastal port of Kitimat, British Columbia. Regulators are due to decide whether to approve the project by the end of this year following hearings that began at the beginning of 2012.

Oliver said native people have much to contribute to natural resource development, as they bring traditional knowledge that offers better understanding of environmental impacts and remediation measures. He pointed out that the industry supports 32,000 aboriginal jobs in Canada.

Still, some groups, such as the Coastal First Nations and Yinka Dene Alliance, are staunchly opposed to oil pipelines, saying they fear the risks of oil spills as well as potential loss of traditional ways.

Art Sterritt, executive director of Coastal First Nations, an alliance of nine groups, said it appears the federal government realized it needed someone on the ground with experience in native rights, title and consultation, though it is starting the process very late.

"We don't have a lot of optimism around that, but knowing Mr. Eyford, we think that he's a person who is going to be candid with the prime minister," Sterritt told Reuters. "We're happy that he's not reporting at a lower level. We think this needs to be dealt with at the highest level."

He stressed that the appointment will not lead his people to drop their opposition to the Northern Gateway project.

British Columbia's burgeoning LNG industry appears to have wider support among native groups, some of which are equity partners in proposed multibillion-dollar projects.

Eyford said he did not know if his final report will be made public.

($1=$1.03 Canadian)

(Editing by Phil Berlowitz and Gunna Dickson)

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Ottawa names lawyer to talk energy with native groups

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Canadian Prime Minister Stephen Harper has appointed a British Columbia lawyer to gather views of native groups across the Western province on energy development as the industry struggles to gain acceptance of multibillion-dollar pipelines that would vastly increase oil exports.

However, Harper's new representative for West Coast energy infrastructure, Doug Eyford, insisted on Tuesday his role will not be to cajole holdouts into supporting contentious projects.

Aboriginal opposition to such proposals as Enbridge Inc's C$6 billion ($5.8 billion) Northern Gateway pipeline has been a major stumbling block to the Harper Conservatives' aim of shipping large volumes of oil sands-derived crude to the Pacific Coast to be exported to Asia as a way to increase turns.

Eyford is a veteran of federal negotiations with Indian groups, known in Canada as First Nations, on self-government. Over the next three months, he will meet with communities affected by proposed pipelines, liquefied natural gas plants and marine terminals.

Eyford will issue a draft report to Harper on June 28 and the final document on November 29, Joe Oliver, Canada's natural resources minister, said in a speech in Terrace, British Columbia.

His appointment comes a day after Ottawa said it planned a series of measures aimed at improving tanker safety as proposed pipeline projects point to a major increase in coastal traffic.

Eyford said he has not been asked to advocate on behalf of the government or the energy industry in favor of specific industrial developments.

"My role and responsibility is to provide an accurate and complete report to the prime minister on what I'm told by the people who I interact and engage with as part of my responsibilities," he said.

The federal government has a constitutional requirement to consult with and accommodate native communities when developments will affect their lands, and some aboriginal leaders have suggested their rights and title to lands may amount to veto power.

This has presented legal risks to proponents of Northern Gateway, which would ship 525,000 barrels a day of Alberta oil to the coastal port of Kitimat, British Columbia. Regulators are due to decide whether to approve the project by the end of this year following hearings that began at the beginning of 2012.

Oliver said native people have much to contribute to natural resource development, as they bring traditional knowledge that offers better understanding of environmental impacts and remediation measures. He pointed out that the industry supports 32,000 aboriginal jobs in Canada.

Still, some groups, such as the Coastal First Nations and Yinka Dene Alliance, are staunchly opposed to oil pipelines, saying they fear the risks of oil spills as well as potential loss of traditional ways.

Art Sterritt, executive director of Coastal First Nations, an alliance of nine groups, said it appears the federal government realized it needed someone on the ground with experience in native rights, title and consultation, though it is starting the process very late.

"We don't have a lot of optimism around that, but knowing Mr. Eyford, we think that he's a person who is going to be candid with the prime minister," Sterritt told Reuters. "We're happy that he's not reporting at a lower level. We think this needs to be dealt with at the highest level."

He stressed that the appointment will not lead his people to drop their opposition to the Northern Gateway project.

British Columbia's burgeoning LNG industry appears to have wider support among native groups, some of which are equity partners in proposed multibillion-dollar projects.

Eyford said he did not know if his final report will be made public.

($1=$1.03 Canadian)

(Editing by Phil Berlowitz and Gunna Dickson)

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Algeria's security forces to protect energy plants

ALGIERS, Algeria (AP) — An Algerian official says that the country's security forces will take over the job of securing the country's oil and gas sites following a spectacular terrorist attack and mass hostage-taking on a gas installation in January.

An inquiry into the Ain Amenas plant assault blasted private companies currently responsible for site security in Algeria's energy sectors for failing to prevent it, according to an Interior Ministry official who spoke on condition of anonymity because he was not authorized to speak publicly on the matter.

The official said the inquiry found that the site's infrastructure "was not capable of either preventing this terrorist attack and even less so repelling it."

In all, 37 hostages, including an Algerian security guard, and 29 attackers were killed in a four-day standoff.

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Mexico's ruling party says 'yes' to energy reform

MEXICO CITY (AP) — Mexico's ruling party changed its platform on Sunday to allow for private investment in the state-owned oil monopoly, paving the way for a possible overhaul of a company that is seen as a pillar of the Mexican state.

Nearly 5,000 members of the Institutional Revolutionary Party, also known as the PRI, voted unanimously at their national convention to remove language in the party's platform that for years had opposed injecting private money in Petroleos Mexicanos, or Pemex. The party also erased its opposition to sales taxes on food and medicines.

President Enrique Pena Nieto, who led last year's electoral comeback for the party that governed from 1929 to 2000, said the energy and fiscal reforms are needed for Mexico to become more competitive. He urged party members to support him when he sends the bills to Congress, likely in the second half of this year.

"The PRI is seeking renovation to bring the changes Mexico needs," Pena Nieto told a crowd of thousands. "The PRI is not pleased and it is choosing to reexamine and redefine where it stands on the challenges facing the country."

Pena Nieto's intention of opening the oil behemoth to more private and foreign investment has set off warnings among leftists about the privatization of an enterprise whose nationalization is seen by the left as a source of national pride.

Pena Nieto has previously denied any plans to privatize Pemex. On Sunday, party president Cesar Camacho repeated that the Pemex would stay in state hands, saying "We share the need of an energy reform for better growth, keeping the state's control, but modernizing the industry to reach its full potential and making sure the exploitation of our resources benefits everyone."

A meeting of opposition mayors called for protests in mid-March to oppose the ruling PRI's new platform.

After Sunday's decision, analysts said they expect the PRI to put forward a unified front when the bills are voted upon. The PRI doesn't hold a majority in Congress, but it's the strongest legislative block with 241 of 500 representatives. Pena Nieto has also built consensus in other issues with the opposition parties.

"The party is leaving behind its old taboos to be able to discuss the reality of the country," said Alejandro Schtulmann, head of research of the firm Emerging Markets Political Risk Analysis.

During the PRI's 12-year hiatus from presidency, its members firmly opposed such measures proposed by then-ruling National Action Party, arguing the country would lose sovereignty by allowing foreign investment in Pemex. They also alleged that taxing for food and medicines' purchases would severely affect the poor.

"The PRI wanted to wait until it had the presidency," said Schtulmann.

Though oil is a sensitive topic for many Mexicans who learn state ownership is one of the three main principles of the constitution, its production has fallen year after year. But most of the country's reserves remain untapped because Pemex lacks the technology for exploration.

Calderon was able to sign a law to allow exploration deals with foreign companies but political resistance makes the sealing of such contracts difficult. At the same time, Mexico's government relies on oil revenues for about a third of its budget.

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Adriana Gomez Licon is on Twitter http://twitter.com/agomezlicon

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