Exxon CEO Darren Woods, Enbridge CEO Al Monaco
Prime Minister Justin Trudeau will give a keynote address at a conference for transnational oil and gas corporations on Thursday March 9 in Houston, Texas.
This morning, The Globe and Mail reports, “Top North American energy executives made a plea for continued North American free trade at a high-profile conference where Trudeau will deliver a keynote speech later this week. In separate sessions, Enbridge Inc. chief executive Al Monaco and Exxon Mobil Corp.’s Darren Woods argued industry and consumers are best served by open markets and free trade.”
Their position is not surprising given NAFTA has both the Chapter 11 investor-state dispute settlement provision and a proportionality sharing provision that profits these transnationals at the expense of the public good.
Exxon Mobil Corp.
Texas-based Exxon along with Louisiana-based Murphy Oil sued Canada in August 2009 for $60 million because the Canada-Newfoundland Offshore Petroleum Board had established a rule in 2004 that required them to spend some of their profits from offshore drilling in the nearby Hibernia and Terra Nova oil fields on research in development in the province. In June 2012, a NAFTA arbitration panel sided with the corporations, ruling this was a “performance requirement” prohibited under Article 1106 of NAFTA, but did not settle on a monetary award at that time.
In March 2015, the Canadian Press reported, “An international tribunal [at the the International Centre for Settlement of Investment Disputes] has ordered the government of Canada to pay more than $17 million in damages to two oil companies following a breach of NAFTA regulations. A spokeswoman for Natural Resources Canada says in an email the February 20 decision awarded $13.9 million plus interest to ExxonMobil and $3.4 million plus interest to Murphy Oil.” A CBC report adds, “Unless the governments of Canada and Newfoundland and Labrador agree to change the R&D legislation, Ottawa could be on the hook for continued damages.”
Former Exxon CEO Rex Tillerson has now been confirmed as US President Donald Trump’s Secretary of State.
With respect to Calgary-based Enbridge’s support for NAFTA, The Globe and Mail notes, “Enbridge completed its $28-billion (U.S.) acquisition of Houston-based Spectra Energy Corp. this past month, giving it a continent-wide network of oil-and-gas pipelines, local distribution companies and processing plants. It is also awaiting regulatory approval from the state of Minnesota to dramatically expand its main crude-export line from Alberta to the U.S. Midwest, and from there connecting to the Gulf Coast.”
On November 29, 2016, Trudeau announced his government’s approval of that latter project, the Line 3 pipeline.
If not stopped, the Line 3 pipeline would mean the building of 1,600 kilometres of new pipeline from Hardisty, Alberta to Superior Wisconsin, which is situated on the western tip of Lake Superior. The original 390,000 barrel per day Line 3 pipeline was built in 1968 and would be decommissioned and left underground. The new larger pipeline would carry 760,000 barrels of diluted bitumen per day and would have the capacity to do so for the next 50-60 years. Enbridge admits the pipeline would mean 19 to 26 megatonnes of upstream greenhouse gas emissions each year.
While a decision by Minnesota isn’t expected until the fall of 2017, if it were to reject the pipeline, Enbridge could use the Chapter 11 investor-state dispute settlement provision in NAFTA to sue for lost future profits. That’s exactly what Calgary-based TransCanada did when then-US President Barack Obama rejected their 830,000 barrel per day Keystone XL pipeline. Despite the reality of climate change, the corporation stated that the denial was arbitrary and unjustified. And even though it had spent $2.4 billion on the $8 billion pipeline, the corporation sought $15 billion in their NAFTA claim to cover the lost value of these investments and lost economic return.
NAFTA also has a provision that says Canada must maintain at least the same level of oil and gas exports to the United States as it had supplied for the past thirty-six months. Only if Canadian consumption is cut proportionately, and then only in times of crisis, could the Canadian government cut export levels to the US. According to the US Energy Information Administration, the US imported 3.76 million barrels a day of oil from Canada. That same year Canada consumed 2.32 million barrels a day. This NAFTA provision makes it virtually impossible for Canada to cut oil and gas exports and to begin the transition to a 100 per cent clean energy future.
The renegotiation of NAFTA is expected to begin around June 15. It is urgent to send a message to Trudeau to tell him that the renegotiation process must be transparent, that there must be consultations with the public as as well as First Nations, and that Chapter 11 and the energy proportionality rule must be eliminated. To send your message, please see our online action alert here.