Stewart Muir on B.C. Energy: DRIPA, Pipelines, LNG & Power
This week on the podcast, Peter and Jackie are joined by Stewart Muir, President and CEO of Resource Works, a leading voice in Canada’s natural resource sector with a focus on British Columbia.
Peter and Jackie open the episode with a discussion of the latest geopolitical developments, including escalating tensions involving Iran and the resulting volatility in oil prices over the weekend, as the Strait of Hormuz opened and then quickly closed. They also review the news of Prime Minister Mark Carney’s newly elected majority government, what it could mean for energy policy, and his recent video address, “Forward Guidance with Prime Minister Mark Carney.”
The conversation then shifts to British Columbia, where Stewart provides insight into the province’s current political landscape, starting with the controversy surrounding proposed changes to B.C.’s United Nations Declaration on the Rights of Indigenous Peoples Act (DRIPA) and Premier Eby’s unexpected decision not to proceed with them.
Peter and Jackie also ask Stewart: Will the Major Project Office (MPO) help advance final investment decisions (FIDs) amid ongoing uncertainty around DRIPA? Is the B.C. government’s proposed royalty increase hurting the competitiveness of LNG projects and investment? Is there potential for B.C. to weaken its greenhouse gas policies to better align with federal-provincial agreements, including elements of the Alberta–Canada MOU? What is the current level of support for oil pipeline development in B.C., including among Premier Eby and Indigenous communities, particularly along the northern route? With B.C. increasingly importing electricity and facing potential supply shortages in the future, what are the options to expand generation capacity?
Content referenced in this podcast:
- YouTube, Forward Guidance with Prime Minister Mark Carney (April 19, 2026)
- Power Struggle Podcast with Stewart Muir
- Financial Post Opinion by Deborah Yedlin: The world has an energy problem and Canada is the solution (April 6, 2026)
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Episode 323 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian. Welcome back. It is Monday, April the 20th. We do have to timestamp these. It’s actually 11:00 in the morning. No shortage of all sorts of things happening over the weekend as it relates to Iran. There’s a lot of disruptive things going on and I got to be honest, I’m having a lot of trouble focusing, whether it’s the MOU and what’s going on in Canada, and Carney’s… Even his speech over the weekend. Got of course the Iranian situation, which we’re going to provide an update. We’ve got the increasingly-disruptive nature of artificial intelligence, AI. And just trying to keep track of it all is just crazy difficult. I don’t know how you’re feeling.
Jackie Forrest:
Oh, I am. Yeah. We were just talking on the way in about these AI podcasts we’ve been listening to that are increasingly-
Peter Tertzakian:
Oh my God.
Jackie Forrest:
First, it was exciting, and now, it’s almost scary, some of the things people are reporting back. So, yeah. Lots of disruption going on in 2026.
Peter Tertzakian:
Lots of, lots of disruption. So, we will talk about AI at some future, not too distant time, but today, we are going to focus. We’re going to focus on British Columbia, which we haven’t done for a while. We’re going to come back to that, but I do think we need to have an Iranian update given the current situation. And the situation is highly fluid, I might say. So, what’s going on?
Jackie Forrest:
Well, on Friday, we heard news that Iran would keep the straight open because of this 10-day ceasefire that was arranged between Lebanon and Israel. Oil price fell like $10 immediately. I call this the oil price rollercoaster.
Peter Tertzakian:
Oh yeah. I think it was down 13 or 14 at one point.
Jackie Forrest:
Yeah, at the lowest point. Yeah. And then, over the weekend, of course, now, things have changed. Now, Iran is saying the straight is closed. And actually, we’ve seen ships targeted by Iran, the U.S. has seized an Iranian ship. So, as WTI started trading again on Monday, it’s almost back to where it was, not quite there, but almost back to where it was before we found out that maybe the straight would be open. So, in general, it’s just hard to know where the news is, and the markets obviously can’t figure out what’s going on here-
Peter Tertzakian:
No.
Jackie Forrest:
… because you don’t see drops like that very often.
Peter Tertzakian:
Well, there’s all sorts of stuff going on behind the scenes in Pakistan. We don’t know if the talks are on or off. We don’t even know, candidly, who’s in the talks because now, the situation’s more complicated because the Iranians have the Iranian Revolutionary Guard and the government, and I’m not sure they’re in sync. So, what originally turned out to be a two-party negotiation between Iran and the United States is turning into some kind of three-party murky thing. So, I think the best we can do is just stay tuned.
Jackie Forrest:
Yeah. But you know what’s interesting about this? Because it certainly seems very chaotic and hard to predict, but yet, did you see the S&P 500? It’s almost at a near 10-year all-time high. And actually, I did want to point out a bit of a correction last week. Peter, you had said that Brent was appearing below WTI. Normally, it’s the other way around, but it was actually more due to contract timing, that situation. If you look at the same contract period, WTI has been always under, which it should be. But here’s the thing, we don’t normally even see these distortions, but the oil curve is so backwardated, we call it. So, it so steeply declines after the first month to the second month to the third month contract that you get massive price differences comparing contract terms that are only a month different. So, even the oil price to me, is not really reflecting how severe this could be when you go out several months.
Peter Tertzakian:
No, the long end of the curve, as we say, will go as long as into 2028. It’s just above $70. Now, that’s notable because prior to the Iranian situation, it was barely 60. So, it is up $10 the expectation, which is very meaningful in terms of, for example, revenues, royalties, and taxes to the industry. But in the near term, the difference between the paper barrels, as they call them, and the physical barrels is quite severe. And also, the demand for those physical barrels on the other side of the planet in Asia is really high. In some cases, 150. I even heard in some instances, some of these countries like Singapore are paying even more because they need it now. They are so dependent upon Mid-East sources of oil that they will pay whatever to get it.
Jackie Forrest:
Right. And we’re starting to see lots of headlines around energy shortages emerging. I did want to talk about the IEA oil monthly… Oil market report that came out last week, talking about global supply down 10 million barrels a day, which is a number we’ve talked about before. But what was interesting is they estimate demand is also falling sharply. And in April, they expect demand to be down over two million barrels per day. So, these high prices are resulting in people using less and you’re seeing that. Like, airlines are canceling flights. Even here in Canada, we’ve seen Air Canada cancel flights. And for the full year, now, they actually expect no growth, in fact, a little bit of a contraction year-on-year, where before this all started, they thought oil demand was going to grow 700,000 barrels a day, almost a million barrels a day. So, a big change in the expectations for how much oil people will use this year as a result of this shortage.
Peter Tertzakian:
Well, it has to contract because if we are at a deficit of 10 million barrels per day and there’s only a two million barrel per day drop in demand that’s being recorded now, there’s a difference of eight, which is 8%-ish, seven and 8% of the total, which is huge. And with respect to the S&P and other indicators here in North America, we feel relatively shielded because we run pretty much an energy surplus for oil and gas. Whereas on the other side of the world, it’s not the case, certainly not the case in Europe, where they figure they have… The latest data I read was about six weeks of jet fuel left.
Jackie Forrest:
Yeah, I’ve seen that. That was a headline from the IEA.
Peter Tertzakian:
Yeah. So, we seem fairly shielded, or maybe another word is a little naive to what’s going on in the rest of the world the longer this carries on. And as of this morning, it just very vague in terms of what the outcomes might look like.
Jackie Forrest:
Yeah. And different messages, right? You’ve got the IEA putting out some pretty serious messaging like, “This is the largest supply disruption in the history of the global oil market.” Last week, Fatih Birol, who’s the head of the IEA, said, “It could take up to two years to restore a meaningful share of the oil and gas production lost in the Iran war.” So, that sounds very severe, but the markets don’t reflect that, in my opinion.
Peter Tertzakian:
No, they don’t. And also, the damage that’s been done to over 80 energy facilities, those are not coming back quickly. We also have backed up storage in the Middle East, which means that there’s shut-ins of oil field capacity. That oil field capacity does not come back necessarily quickly, even if you turn the valves back on. So, yeah, this is more serious than I think we are being led to believe in North America where we’re more shielded from these effects in other parts of the world.
Jackie Forrest:
Although we are seeing the price, we’re not worrying so much about not having gas at the retail gas stations. Let’s come back to Canada though. Well, of course, we had news last week. The liberal majority was achieved with these by-elections, plus there was a floor-crosser. And so, what do you think, Peter? Do you think that the liberals are going to change their policy direction, maybe move more quickly, maybe soften more on carbon requirements? I was thinking they don’t need Elizabeth May now to pass the budget, so is that going to change things?
Peter Tertzakian:
Well, it’s definitely going to change things. It’s going to give the liberal government a new sense of confidence in its ability to execute on its agenda. Bill C5 led through the major projects office. And so, we shall see in terms of what comes out. The MOU, as we know, has been delayed in terms of its resolution, which was supposed to be April 1st. We’ll see when the next news release comes out on that, but definitely the liberal government is already demonstrating signs of being more emboldened to accelerate the agenda to reduce dependency upon the United States. And Mark Carney made that speech over the weekend.
Jackie Forrest:
Yeah. He put out this YouTube video, Forward Guidance. It sounds like he’s going to be doing more of these as well. It was about nine minutes. We will put a link to it in the show notes, but he talked about that our former strength of our dominant trade and alliance with the U.S. has become our weakness, and we must build a vast network of allies and trade with a wide group of countries. So, to me, that seems to imply that he wants to start building infrastructure, whether it be for oil and gas and other export products because we really need to start trading more. That was the key message.
Peter Tertzakian:
Yeah. The other part of the key message is he’s not going to sugarcoat the message, which I think is super important because this is a very serious situation that we’re in, and he’s even sparring directly with the United States, basically saying, “We are weaker now as a consequence of being so entrenched in this North American trade pattern, and we need to become more global in terms of our exports.” Do you think he’s going to get on Truth Social too?
Jackie Forrest:
I doubt it actually. Yeah. I do follow him on Twitter though. It’s not nearly as spicy as following Donald Trump though. I don’t need to watch it every five minutes to find out what breaking news is coming.
Peter Tertzakian:
At 3:00 AM in the morning. Okay, good. So, we said we’re going to talk about BC, so let’s do it. We are delighted to have back someone who knows a lot about BC, someone who knows a lot about resources and what’s going on the ground in BC. So, we’re delighted to welcome back friend, colleague, and podcast aficionado, Stewart Muir, President and CEO of Resource Works. Welcome back, Stewart.
Stewart Muir:
Thank you, Peter. Hi, Jackie.
Jackie Forrest:
Hi. Good. Well, welcome back. This is actually the second time you joined us. Last time, if you remember, in February 2023, but that’s before you started your own podcast called Power Struggle. And we will put a link to that in the show notes for our guests as well.
Peter Tertzakian:
Are you on Truth Social, Stewart?
Stewart Muir:
I monitor it. I don’t have my own ID. Maybe I should work on that in this new world order.
Jackie Forrest:
Okay. Well, maybe just remind our audience about Resource Works and what you do.
Stewart Muir:
Yeah. We’ve been around for 12 years. We’re really navigating through complexity in the same world that you are in trying to fathom things at your podcast, but the way we do it here is focus more on public trust and understanding of the benefits when you get it right of the natural resource industry. We started focused on BC, but you can’t do that in BC without being pulled into the rest of the country eventually. So, we’ve kind of let ourselves do that. And we found a place here based in Vancouver, but looking at national issues, always keeping that BC perspective, trying to explain BC sometimes to the outside world or outside places in Canada and understand it ourselves. It’s not that easy to do. It feels like sometimes you’ve woken up in the morning and imagine someone came into your house and moved all the furniture by two inches. What’s different here? And it’s a funny place, but I love the coast, and it’s home, and I enjoy the work we do here.
Peter Tertzakian:
And so, how has the mindset shifted over the course of the last, I’ll just say even six months from pre-Christmas to where we’re at today is we’ve got a long list of big geopolitical shocks, geoeconomic events, whether it’s the U.S. intervention in Venezuela, the Iranian war, ongoing saber-rattling with tariffs, given the talk about Greenland, Panama, Canada 51st State, kind of a running theme, taking over Cuba, what have you. Has that changed the mind of British Colombians in terms of the national narrative about increasing our exports and becoming more independent as our prime minister wants to do?
Stewart Muir:
A lot has changed. And I think back three years since I was here, you could go to the biggest natural resource conference gathering and hear a speech from the BC Premier from David Eby, and he couldn’t mention LNG or natural gas. Wasn’t in the notes, not in the speech. He could talk about green hydrogen. Now, when he goes to that same conference, he does talk about it. Not only that, he talks about the six LNG plants he wants to see on the coast. So, that’s a very considerable change. Some of the shift has happened in more recent past, but he sounded a more confident note.
Last summer, when he stood and I went down to watch this with the leadership of the Nisgaʼa Nation at the five sales in downtown Vancouver and announced a major environmental approval for that, he looked positively proud of this advance. And yet, at the same time, there are critics who are pointing out, well, in order to get that LNG, you have to have drilling. That has to happen in the Montney, mainly in Northeast BC. And right now, it’s not happening fast enough. I do know that there’s attention to that.
Couple of other things that have happened. The full impact of Trans Mountain expansion project on the Canadian economy is getting pretty hard to overlook, let alone deny exists. And I think that’s been a feature. We’ve also seen some 300,000-barrel-a-day enhancements to that project, which will allow it to become even a bigger contributor. And so, I think there’s less pushback from Victoria in their delicate governing arrangement that the BCNDP have in the way that the federal liberals had, about what to do in this situation. But then, there’s one big thing, and I’ll close on this, which is that the DRIPA, the Declaration of the Rights of Indigenous Peoples Act has completely upended the politics and where the focus is of the premier and probably others around him in British Columbia. And I think right now, he’s probably not thinking about too much else.
Jackie Forrest:
Well, maybe it’s worth just digging into that a little bit more. What’s caused him to focus so much on that?
Stewart Muir:
Yes. It’s such a complex issue. It is a hot issue because it deals with indigenous rights. It can be very close to things that people are uncomfortable talking about. Even a couple of years ago, it’s pretty much a taboo topic for anyone to say, “Well, maybe we shouldn’t have this act. Maybe we should abolish the act.” And now, that is the position of the BC Conservative Party in opposition. They are going through a leadership process right now, and it’s the normal conversation. For a long time, the NDP were holding the line, “We are fine with this as it is.” But now, the premier has conceded that changes are needed. And here’s where it gets really complicated, is that the current government, which before the last election was the government, brought in DRIPA. So, they’re the authors of this legislation and they’re wearing it, good or bad, and right now, it’s not looking so good.
So, they have to explain it to the public. And once you get into the details of it, well, there’s the Cowichan decision. That’s the one that got folks in Richmond where the airport is, up in arms about a particular ruling that has been talked about. It led to The Wall Street Journal at least a couple of times running headlines that seem to suggest that we don’t know whether private property rights exist in BC. Now, I’m not saying that’s because we actually don’t know that. And I think the government has been adamant saying, “No, no, that Cowichan, that’s the courts.” But then others are saying, “Well, it’s because of what you created that the court can make this ruling.” And it has opened up a can of worms.
And there’s also another important ruling that came out of the mineral exploration space and the ability to access the land for exploration. And oil and gas is a mineral too, and this is affected. All of these areas are affected by that. And what’s real, what’s not real, and it is being debated daily. We’ve seen the First Nations Leadership Council, which consists of three different organizations coming forward with their view. If I had to just put a line under this, I would say British Columbia is ruled by the Westminster system. That’s our constitutional governance, but there is this other governance system that has come out of DRIPA. Some would say it’s a co-governance, some would say it’s on the side of, but these are almost like two different operating systems trying to run on the same machine, and there’s no interface to let them talk to each other. I think that’s what’s going on here.
Peter Tertzakian:
So, translating that further or extending it further, it just creates confusion to anybody who wants to invest in BC, whether it’s real estate or otherwise. And then, layered on top of that, we’ve got the budget, which is a $13 billion deficit, so a lot of concerns. So, collectively, all these external events plus what you’re describing and the deficit all leading the current government, which has a fairly thin majority to reconsider everything?
Stewart Muir:
Well, the premier is managing the 10 members of this caucus who seemingly were the ones who have forced him to pull back legislation that arguably would’ve fixed some of the issue DRIPA. So, right now, that is stalled. He’s not able to do anything legislative about this. So, when you look at the classic three-legged stool of BCNDP government, you’ve got the social progressives, you’ve got labor who build things, and the environmental, and they always are an interplay. And right now, I think we’re looking at a situation where one of those legs, I would argue the environmental, was very influential in changing regulations that have added to the challenges, whether it’s the forest industry, or mining, or mineral exploration, and certainly oil and gas and the transportation of oil and gas products made it very complicated.
Now, a government with reform as its agenda, as many progressive governments tend to be, can make changes. But sometimes if you’ve built a machine, a regulatory machine to represent the values that you bring into government, if you ask a question, “Do you have control of that machine?” I don’t think there is control of the regulatory changes in the system that we now have because you’ve got the premier saying, “We want LNG plants,” but then you have considerable number of issues arising in the upstream. You could say the same things of forestry, where you have an ambition to have a annual allowable cut, the harvest allowed. And in fact, we’re only seeing that much. And this is a source of real grievance. We have companies that are exiting. They’re going to the United States, other places.
Peter Tertzakian:
Yeah. So, I think that DRIPA is just a subset of a much larger thing and indeed even the LNG. I guess what I’m asking when I said everything in my previous comment question was, has there been an overall mindset shift for resource development and export? Because your Resource Works, it’s not just oil and gas you deal with. It’s minerals and forestry and everything else. Is there now a mindset shift that says, “Oh my gosh, we need to change the way we think about BC and its position in Canada and the world”?
Stewart Muir:
Yeah, I think there is. And I’d love to say that’s the great news here. Unfortunately, it’s so conditioned by countervailing forces. But credit where it’s due, the current government, the government has prioritized mining as a major area of focus and they have permitted an extraordinary number of mine extensions. New mines are a little more challenging. They take such a long time. Last year, we had a new gold mine open that’s creating a great deal of benefit for the First Nations partners. We’ve got a clear mandate on that. Forestry still needs cleanup. The issue around achieving the enormous benefits that would exist for Alberta for all of Canada and BC from the five LNG terminals that have not been built yet is clearly acknowledged by the government. So, how do we close the gap between wanting that and having a political culture where it is wanted?
You can point to, I think, four or five public opinion surveys since last summer, but continuing until recently, where the BC public and the rest of Canada are in favor of east-to-west or west-to-east pipelines, oil pipelines, gas pipelines. I don’t think there’s ever been this amount of support for that in modern times. So, you’ve got these public conditions. I think the fiscal side of things in BC, we had a visit from the top economist at the Business Council of BC last week. The things you mentioned, the deficit, but it’s worse than that. You look at, say, the comparisons with Australia and Canada and the S&P ratings for the different jurisdictions, BC is right at the bottom. It used to be right at the top. It used to be up there with a Swiss canton, nothing better, AAA, but now, it’s at an A, which A might sound good, but it’s not good. In relative terms here, we’re headed for Triple B, and that will be a very bad day should it arrive.
Jackie Forrest:
Hey, Stewart, I just want to clarify something you said, because maybe it’s new to me and some of our listeners. You talked about the NDP that Premier Eby, 10 members of his caucus are not able to support legislation. So, even though the majority of the NDP may support things like changing rules to maybe get projects done, he’s being held hostage by a subset of his caucus. Is that what you’re saying?
Stewart Muir:
I think that statement, I’d find it hard to dispute. I would say right now, there is a sense that 20% of the NDP electorate or NDP voters would be in that 10 MLAs who don’t want to change DRIPA whatsoever, no compromise. And they would be parallel or the same as say the, call it the anti-resource vote, or the strong climate vote, or variations of that.
And then, you’ve got the strongly supportive of industry and jobs who never really waiver, those who work for the trade unions that build things are naturally voters who favor those things. When they elect a party they think represents those things. And right now, there’s quite a buzz that I hear in BC that that segment is probably about the same as the other 20% is not going to show up. And I think a lot of commentators are saying, “Well, it doesn’t really matter what Ebay does at this point because he’s cooked. He’s trapped.” But I would say, some say he’s trapped between a rock and a hard place. It’s almost like he’s trapped between a mortar and a pestle. It’s very serious. It is often right now, described as a crisis situation because of the consequence of DRIPA if it’s not addressed.
Peter Tertzakian:
So, when is it going to be a result?
Stewart Muir:
The BC conservatives argue that they, in this very fragile governance situation, would be very happy to come in and roll back the legislation, and then, implement their solution. And due to the fact we don’t know who the next leader is, we’re looking at the different formulas being promised right now, with only one seat majority, dependent on the two green seats for power, sounds reminiscent of how it was with the Elizabeth May question. It’s fragile. I think Eby has got a limited amount of room to operate in this. So, it is a very good question.
Jackie Forrest:
With this situation unresolved though, we look towards this major projects office who’s supposed to be fast-tracking projects in BC. And actually, BC has maybe the most projects that have been put forward to the office of any province. You’ve got four projects with the Red Chris mine, the LNG Canada Phase two, Ksi Lisims, and the North Coast Transmission Line. Their goal is to do things faster. So, what do you think that the chances are that the major projects office is going to be successful in moving these to final investment decision this year? We’re hoping, by the way, for LNG, that we get a couple of FIDs this year.
Stewart Muir:
I think the really smart thing that the Eby government has done in order to tiptoe through their governing reality is the pursuit of decarbonized LNG, which is genuinely recognized by investors who say… I think there’s even a transition fund. I know that’s a term that needs scrutiny, but these funds are out there, and they make investments based on their confidence that the goals and measures they have in place are met. Ksi Lisims has very much met that. It’s met it because the transmission line project in the Northwest is going to allow Ksi Lisims LNG to call itself the world’s cleanest, lowest emissions LNG because it will have the electricity that runs the plant on the coast. That’s a smart thing to do. At some point, it is hoped, although right now, it doesn’t exist, that there will be a price premium on such LNG. So, we’ll see whether that ever develops.
But the pursuit of a path on this, I think is the result of the Eby government working towards that outcome and finding it. The fact that Cedar LNG is under construction, the fact that we have LNG Canada phase two that is waiting in the wings, we’ll see what exact conditions are required for that, I think is some evidence that we’ve got conditions. But again, I’ll mention this concern over the upstream, which potentially, if you don’t have any gas that flows to the LNG plants, there’s no business case for them. And so, this is the other thing that hasn’t been as thoughtfully resolved yet as the coastal side.
Jackie Forrest:
Well, maybe we’ll go to that. So, of course you need to supply all these LNG projects. You do need that upstream growth, but there are lots of constraints in the BC money. One is this cumulative development limits from the Blueberry River First Nation, which so far, it hasn’t really slowed down development, but the idea is if you have to ramp up your development quite a bit more from where it is today, it could be a problem. And then, of course, the government recently proposed very high royalty rates on gas, and the industry is not that happy. These royalty rates are higher than what you’ll have to pay in other jurisdictions by quite a bit. And could BC risk driving the investment away and missing on these upstream benefits? I think this gas could still come, but it could come from Alberta.
Stewart Muir:
The current energy minister, BC, Adrian Dix, former health minister through COVID, real details guy, knows this file. By the way, when some other Canadian leaders were in Houston at CERAWeek I learned last week from the minister that he was in the northeast of BC. He was doing some work in January. He told us that he would be focusing on the upstream when we met with him with one of our tables of energy associations. So, it was clear then that he is focusing on that because he has to. I think the long-term effect of the Yahey decision or the Blueberry River First Nation decision is that it is slower. I think generally, you will find those operate, not all, depends on geography, are happy with some of the things they’ve been able to do, but then, the royalty issue came up. Recently, I read Deborah Yedlin’s piece in the National Post on it recently, clearly reflecting a great deal of consternation.
When we spoke with the minister last week at our roundtable, it was clear that he was conscious of that. I think there’s work to be done. He’s mentioned that he has had meetings with Brian Jean. This minister-to-minister dialogue is always helpful, and yet, the patience of industry, I think could be tested if it’s not served with some tangible that we have coherence in this.
Peter Tertzakian:
When you say, “industry,” you’re talking about upstream industry because they’re the ones that have to pay royalties and figure out whether or not they can make any money. And certainly, at today’s gas prices, which are de minimis, and that’s a whole separate issue which we need to address at some point on the podcast, but you crank up the royalties, there’s just absolutely no incentive and no money left to justify drilling in BC, particularly if you’re drilling for dry gas and you don’t have the uplift from any oil that comes out, and that’s very much regionally dependent upon Northeast BC, depending upon where you drill.
So, that’s the upstream, but the midstream, downstream in terms of the LNG and LNG 2, a lot of the same proponents or partners in that project also have upstream operations. And so, they know that they’re not going to build LNG 2 if you can’t fill the facilities. And so, it’s all related. And everybody talks LNG, LNG, LNG, but ultimately, it’s the NG that matters, not the L, right? You got to fill it with natural gas to then liquefy it, and then, send it off to the rest of the world.
So, I believe that everybody’s starting to get the holistic picture, but man, it’s just taken so long for people to understand that it’s a system, it’s all connected, and you can’t go down rabbit holes without looking at the full context of how everything has to work together federally, provincially, interprovincially, and also with the indigenous groups and everything else. And so, I’m just hopeful that at some point, we can get some sort of big contextual policy that’s simplified and clarified that gives a green signal for those outside investors to come in as opposed to wait for the day that BC becomes A to triple B, which I agree with you, would not be a good day.
Jackie Forrest:
Well, and Peter, the timing is kind of terrible for this because we wanted these FIDs on these LNG projects. And I think this announcement of this royalty change was in the last month, right? This creates a lot of confusion and maybe delays those final investment decisions. I don’t know what you’re hearing, Stewart.
Stewart Muir:
There’s a huge amount of concern on this. There’s no question about it. And the number of wells that need to be drilled, look at those projections. One of the points I think it can be easy to not get for those who aren’t immersed in this is that it’s not about the next five years of what are the streams? It’s 15, 20, 30 year. So, designing structures for that, that will ensure that capital lands and is put to work in BC, you would think with examples like Ed Stelmach, that royalty would be seen as an area, just be very careful about. And when Rachel Notley, here’s an example that the NDP party could look at. I know Peter, you were involved in the review. And given the timing of it, after the fall of 2014, very wise counsel was provided to the government and a government that recognized what it was being advised, took steps that didn’t cause damage to the industry. I think messing with royalties is a really high risk.
Peter Tertzakian:
Yeah, it is. It’s not so much damage to the industry in terms of recognizing that it’s a competitive world out there, and we have to compete. And I’ve said it before on this podcast. We’re competitive in things like hockey, and we get very emotional, and so, we should because it’s exciting, and we love the competition. Why are we not of similar attitude when it comes to corporate, industrial, and national competition? And if we don’t start getting that kind of passion about competing internationally, then we’re not going to win. We’re going to cede market share and economic prosperity to other countries in the world that have these resources, whether it’s Venezuela, Argentina, and beyond.
Stewart Muir:
And it won’t improve the climate profile of things if Canada is not in it. Canada being in it is what will because of the stack of environmental and climate measures that we’ve got. I think this is something that always has to be argued for prominently and make sure that it doesn’t get overlooked.
Jackie Forrest:
So, Peter, you talked about you need this package of things so that you get the green light and people know this is an open place to invest. I would argue the royalties really are looming large here, but there’s other uncertainties even before that. So, for example, the BC government has a policy that they want to put a cap on oil and gas emissions. They still have the $170 carbon tax. They still have methane regulations. Well, we don’t know, like the following the federal timeline of the 2030. But of course, Alberta and Canada have this MOU now, which would show some softening on a lot of those things like scrapping the oil and gas cap and adjusting the carbon tax to 130. We don’t know exactly the details of that yet. Stewart, do you think there’s going to be some openness for BC to adopt those changes that are made in Alberta or are they going to stick with these much more stringent rules from the past era?
Stewart Muir:
Yes. Well, it’s a little similar to DRIPA in the sense that there is a constituency for the governing party in British Columbia that is built on what referred to as CleanBC, which is a law pass, but it’s not so much that it’s a law as it is a stack of 25 or so different measures. And the things you’ve mentioned, Jackie, included in that, but there’s a lot of other things like the only jurisdiction anywhere in North America that has a specific mandate on aviation fuel, sustainable SAF, sustainable aviation fuel that is starting to bite.
And we’re hearing from the major and not major, like smaller regional aviation companies about the business concerns. They’re putting a number in the billions, single figure billions on what’s at risk here. If this particular policy goes, we have the strange phenomenon of a world envied Montney formation in British Columbia shared across the border with Alberta, but that BC side of it is, what is it? A couple of trillion dollars in value over the long term that we are saying, the province of BC is saying, “We’re not going to use that for benefiting our economy beyond what we’re using it for already.” And as a result of that, you have rationing, essentially, of industrial electricity in the sense that projects are being told, “Okay, we love your project. We love the idea of the jobs, but we can’t service you with electricity because we can only give you green electricity or non-natural gas.”
Now, were we to do what Alberta’s doing, Ontario is doing pretty much anywhere in the world that has natural gas or has access to bring it in, is doing, is use it for industrial growth. Our economy would be completely different right now. We would not have this deficit. We would not have young families moving in droves to Alberta and elsewhere. We would have a different situation were we to acknowledge that we can have processes that are improving, but we can also use the natural gas to build the economy.
Jackie Forrest:
Well, they’re talking about an interconnect between Alberta, BC. That was actually part of the MOU, one of the things. We’ll see if that happens, but it’s to me, inefficient that we might be building natural gas power generators on the Alberta side of the border, trucking that electricity over to be used on the BC side of the border in natural gas facilities. It would be much more efficient just to use the natural gas directly. A lot less emissions created in that and a lot less money has to be spent.
Stewart Muir:
Yeah. And one I’ll point out is that we are shipping through our two main line, the TransCanada and the Enbridge lines that go through BC into Washington state. Some of that gas is being turned into electrons down there and power generation, and it’s coming back up by copper wire because we don’t make enough electricity in BC anymore. We used to. We’re three years running now. We’re in deficit. So, we’re taking our gas. It’s still combusted-
Peter Tertzakian:
Okay. Yeah. Don’t get me going on that because we’re also selling the gas at some de minimis price that is not nearly what they should be paying for it. And that’s a whole other issue, as I said. So, we give them cheap gas to make premium electricity, which you import. It’s just like, we’ve got to get a more contextual view of the big picture here. And it just speaks to, again, this issue of, do we want to be competitive on all dimensions or not? Well, I want to come back and talk to electricity in a few minutes, but while we’re on the hydrocarbon topic, we did natural gas and LNG. What about oil? The Trans Mountain pipeline has now been operating for almost two years with its expansion. It was very controversial when it was undergoing its construction. Now, certainly, I can speak for myself as a Canadian. I’m very happy that we own this thing in the current context of the world where vital strategic infrastructure is at a massive premium. But how has the public sentiment changed in BC with respect to Trans Mountain, the pipeline, and future pipeline construction?
Stewart Muir:
The Southern pipeline expansion is, I would say, accepted. It’s not controversial. During the permitting process, there was a very deliberate focus pitched campaign for years to find the Achilles heel in that proposal, which proved to be not on the land base so much, although there were some spots there where there were oppositional movements, I suppose, but not really on a large scale, but it was about tankers, tanker safety. Who wants this oil on our beaches that would kill tourism? Well, yes, it would affect tourism, but the point that others were trying to make, including myself, was we need a safety regime that will ensure that we’re protected because that’s how we will have both sides of this covered. We’ll have the benefits and we’ll have the risk managed.
That issue’s completely gone away. People are out there having picnics in Ambleside or Kitsilano Beach. They may not realize it, but that tanker there with a tug behind it is carrying Alberta oil to China, or California, or other places, and no one’s thinking about it. So, I don’t think there’s an issue there as far as its built state. I don’t think there’s anyone campaigning to stir up public sentiment where it could be activated right now, yet it remained until recently, politically impossible for the premier to acknowledge that it was full. There were talking points. And it’s not a criticism of David Eby. I think it’s more an observation about the political reality just as in Alberta. It’s really dictated by many factors that Danielle Smith has to be the premier who is talking about the need for oil pipelines. And that’s necessary because she’s the Alberta premier. That’s what the Alberta premier needs to do.
The BC premier, it seems, is in a governing status where the statements made, which were hard to match to reality, I couldn’t match them up, were just reflective of that. I think we’ve maybe moved on from that phase, and the fiscal side of things will be what tips us over. I think the fact that there’s strong support across BC, if you average it out, over 50% of BC residents are supportive of a northern pipeline. And it’s one thing to politically say, “Oh, that’s a good idea. Let’s do that.” It’s quite another to deal with the operating system of indigenous relations that exist today, arguably would’ve existed to some extent, to a great extent, without the DRIPA of legislation that the NDP brought in. It would be happening because of treaties and because of Supreme Court rulings and because of the success that resource companies have when they really, truly partner with the First Nations whose territories they’re operating in. It’s really beneficial, and investors love to see those if they’re real stories because it de-risks their investments.
Jackie Forrest:
Well, let’s two parts to that. There’s the support from Premier Eby, but then there’s also the support of the indigenous communities. And I want to start with Premier Eby. Now, early in January, he made a lot of Albertans kind of angry with some of the things he was saying. First of all, he didn’t support the pipeline at all, but then, he supported just building a refinery instead of a pipeline. But then, at the same time, he acknowledged that it’s important for BC to expand its trade partners, and he had his trade mission to India, but he basically signaled it’s not that important for Alberta to get new clients for its oil because he doesn’t want to build the pipeline. I have noticed he’s been a bit more quiet recently on this topic. Do you think anything to be read into that? Is there more support or more neutral because of that?
Stewart Muir:
I think it’s mainly reflective that his bandwidth is completely occupied by DRIPA. I would like to see evidence that there is something material that has shifted. It may arise where I’d be confident saying that. Right now, not quite ready, but given the ongoing economic situation, he might be able to get there. But he will have, just as there are the 10 MLAs on DRIPA, he’s going to have that many or more MLAs who are so tied to CleanBC and the environmental movement here, that that will be a very significant weight on what he thinks he has the ability to say, let alone do.
Jackie Forrest:
Okay. Well, and then, what about the indigenous? I know you can’t speak for all indigenous communities by any means, but do you get a sense that there is no support at all in the North or are there support if you could get equity ownership or what are your thoughts there?
Stewart Muir:
Great support among the First Nations of the North. I went out last fall, I think it was a day or two before the MOU was announced in Calgary between the Prime Minister and Premier Smith. There was a gathering of First Nations leaders, elders from Northern Alberta, from Northern British Columbia. They got together and invited me. I gave a little talk and participated in some of the discussion on stage. Support for the Northern Gateway Project among First Nations tends to be overlooked. I know you’re well aware of how strong it was, but there’s sort of a mythology built up that there was that opposition. Yes, it wasn’t the same along the route. And the coast is where it gets gnarly, and that’s an interesting discussion I hope we can have a little bit of, but I can for sure confirm that there’s very strong First Nation support in the province of British Columbia, in different nations along the route of generally the Northern Gateway line, wherever this pipeline might go, to be part of a project just as they were back in the Northern Gateway phase.
Peter Tertzakian:
Let’s switch to electricity as we wrap up the podcast here, Stewart. So, hydro has long been a core advantage of BC, but at the end of the day, there’s so many rivers you can dam. And BC has been a net exporter for a long time. And as you mentioned a few minutes ago now, on occasion, you’re importers of electricity from Washington state. So, the things are getting tight, yet there are all these mega projects that are being proposed, including LNG 2, which is a major consumer of electricity. So, where’s it going to come from?
Stewart Muir:
Well, the doctrine of BC Hydro, our energy monopoly is that don’t worry, they have it sorted. They’re going to spend $36 billion on the transmission lines to make sure that the Northwest, where so much of this activity is, the mining, the LNG terminals, so that they can achieve this. The thing that isn’t said in that sentence is, and you can’t do it with natural gas, the thing that’s available. This is the issue. But the other thing not answered is where does this electricity come from? Because until recently, it was thought that Site C, the new dam that was really only completely finished last year, is the last big dam. But over the weekend, we heard that there’s Site E, which has been known as a theoretical, right? It’s only a couple of miles, literally, from the Alberta border in the Peace District, would be another big damn that’s coming along.
And Minister Dix has been alluding to this possibility since I asked him about it last September at a function we did, and now, suddenly there’s a little more meat on the bone. So, the idea of more big hydro, okay, but if you look at the deficit that we have and the projects that are being put in this queue, it’s way longer than Site E would satisfy. And what do we have? We have, I think, eight or nine wind and a solar project that are being proposed that will… Actually maybe four or five maybe on the wind side that will provide intermittent solutions, which obviously don’t satisfy the test for the base load power that industry needs to make investments.
So, I struggle to find the answer to this question at our project, the Energy Futures Institute led by Barry Penner, a former environment minister of British Columbia. He has been flagging the issues around this every day. And I think he’s not getting the depth of answer from BC Hydro that satisfies him that we are on a course to be able to serve the economic needs of growth for the general population, general population growth, let alone industry and the more ambitious side of these opportunities.
Jackie Forrest:
Right. So, short power already. Yes, there’s these wind projects coming and a few other renewable projects, but they’re not very large actually. And now, I’m hearing… This first I’ve heard of this Site E, but how long did it take Site C to come about, right? That doesn’t happen overnight. I’m not sure how advanced the Site E is. Would it be best case scenario, coming on five years, 10 years?
Stewart Muir:
Well, I met someone once who moved to Fort St. John in 1980 to build Site C. Now, that was long before it was approved. That was decades later, but these things take an incredible amount of planning. And so, Site E may have some notional descriptions. I don’t think there’s any engineering. I don’t know much about it really, so I can’t speak too much to it. But yeah, it’s in the earliest stages.
Jackie Forrest:
Right. So, BC looks like they’re going to be short power. Well, sounds like there’s a lot of uncertainty. As we were just starting this podcast, there’s a lot of uncertainty in general. What are you looking for, Stewart? What’s one decision over the next 12 months that’ll tell you a lot about the future of resource development? Is there something you were looking for, a signpost?
Stewart Muir:
Well, I think something that British Columbians would welcome and I’ll bet the premier would see with a source of great relief that his thesis of how he’s going to build the economy has some validity is that Ksi Lisims’ LNG takes FID. Now, it’s been talked about as something that could happen early point of 2026. If it happens inside of 2026, I think that will be something where credit could be claimed. “Look, we threaded the needle on this. We’ve got this cleanest LNG, we’ve got all the conditions. The investors, the most important thing, investors have spoken.”
So, if that condition comes about, then that will be something that a lot of people will be very happy about it because it will signify that there is some certainty as well on the upstream side of the probably 500 to 1,000 wells. I don’t know the exact number that have to be drilled every year to supply all of these ambitions. And of course, the prime minister’s higher ambition of 100 megatons a year, that’s super ambitious. So, how do we do that? It would be a sign if Ksi Lisims’ LNG takes FID, that there’s some confidence in this.
Peter Tertzakian:
Yeah. And sometimes it’s one or two such announcements or signposts that create a snowball effect and more change. And I think that what I’ve gotten out of our conversation, Stewart, is obviously insightful, very insightful, but that the situation remains very complex in BC. However, the world events are forcing a change in sentiment toward resource development there. Nevertheless, BC is a complex mosaic of politics, indigenous stakeholder issues, environmentalism, and the interplay between federal and provincial governments, especially Alberta and BC. And it’s not easy to resolve. But my thoughts are that given the severity of the situation around the world, as highlighted with even our prime minister now pledging to talk about it much more publicly with the nation and not sugarcoat things, I think these are going to be the main drivers of forcing some kind of resolution. And I think the resolution to these sorts of things are going to necessarily have to come in 2026.
So, thanks, Stewart Muir, CEO of Resource Works from British Columbia. I’m sure we’re going to check in with you again as we continue to talk about what is happening in BC, which is essential if we’re going to get to the West Coast.
Stewart Muir:
A real privilege to be back. I love your show and what you guys do. Thank you, Jackie. Thank you, Peter.
Jackie Forrest:
Thank you. And thanks to our listeners. If you enjoy this podcast, please write us on the app that you listen to and tell someone else about us.
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