Icy relationship between Alberta, B.C. over energy issues appears to be thawing

Alberta's strategy to export its vast oil sands resources is mired in complications as sticky as the raw bitumen.

Energy companies are developing the province's reserves but Premier Alison Redford still finds herself fighting on two fronts to move them out of Alberta because of continued delays to pipeline projects.

The latest attempt to clear the path for the Northern Gateway pipeline across British Columbia appeared to be stalling Tuesday until Redford and B.C. Premier Christy Clark reached agreement on a "framework" to negotiation the tricky issue of economic benefits.

The Albertans previously had been confident that negotiations were going well to meet B.C.'s five conditions that were prerequisites for supporting the controversial project.

But news reports Monday said a planned Tuesday meeting between Redford and B.C. Premier Christy Clark in Vancouver was abruptly cancelled after Redford's office released a pessimistic-sounding statement late Monday.

However, Redford's communication's staff posted this photo of the two sitting down Tuesday morning.

Then Clark and Redford held a news conference announcing that the two provinces would work on fulfilling the first four conditions, B.C. would approach the energy sector to negotiate its so-called "fair share" of economic benefits called for in B.C.'s fifth condition.

"This is an important step to getting there," Clark explained at the news conference, according to CTV News. "Without this step, it would have been hard to make any real progress on those discussions."

[ Related: Premiers Clark, Redford talk joint energy export plan ]

Alberta believed there would be no problem meeting the first four conditions covering successful environmental assessment, assurances of world-class spill response in case of a pipeline rupture or tanker accident and meeting obligations to First Nations.

But the fifth condition – providing B.C. with a "fair share" of economic benefits that reflect environmental risks the province is bearing – has once again become a stumbling block.

CBC News reported Tuesday that Alberta is claiming the B.C. government wants to negotiate "additional benefits" over and above those laid out in the fifth condition.

In a statement issued late Monday, Redford said it's not Alberta's pockets that B.C. should be reaching into.

"If the government of B.C. decides to place additional charges on industry, that go beyond the federal and provincial restrictions on responsible resource development, this is not something for the government of Alberta to negotiate — it is for the government of B.C. to negotiate directly with producers and industry," Redford said, according to CBC News.

However, the Globe and Mail reported B.C. is saying it's the fifth condition itself that's causing the problem.

Alberta had already ruled out giving B.C. a share of oil sand royalties or agreeing to a precedent-setting transit tax on bitumen crude shipped via the pipeline to the proposed export terminal at Kitimat, on the northern B.C. coast.

CTV News said Redford told reporters Tuesday the negotiation process is complex and will take time.

"In all five areas we're seeing progress," she said. "That doesn't mean we snap our fingers overnight and it's done."

Until Tuesday's announcement, it looked like the relationship between the two premiers was headed back into the deep freeze after thawing over the summer.

Now B.C. has agreed to sign on to Redford's effort to promote a national energy strategy that includes a pipeline taking oil sands crude to eastern Canadian refineries.

The National Energy Board's joint review panel on Northern Gateway is scheduled to publish its report on the project by the end of this year. The pipeline also remains deeply unpopular with environmentalists and many of the First Nations whose traditional territory lies along the route.

While Alberta faces a pipeline stalemate on its western front, Redford is hoping to soften opposition in the United States to the equally important Keystone XL oil sands pipeline that would take crude to refineries on the Gulf Coast.

Redford is heading to Washington, D.C., to lobby U.S. State Department officials who've delayed their approval of the Keystone XL project for more than a year. Observers now believe President Barak Obama, who's voiced skepticism over the project's economic benefits, won't make a final decision until sometime next year.

[ Related: Justin Trudeau shares 'steadfast' Keystone XL support in D.C ]

Keystone XL has become a political football in the U.S., with many of Obama's supporters opposing the project on grounds it will spur oil sands development with adverse impact on climate change. Republicans, meanwhile, are pushing it as a reliable source of oil compared with imports from more volatile parts of the world.

Redford is hoping to address concerns about greenhouse-gas emissions by pitching joint Canada-U.S. efforts to reduce carbon emissions from their respective oil industries, the Globe reported. The idea has the backing of the federal Conservative government but Ottawa missed a July 1 deadline to table draft regulations, the Globe said.

The Globe reported Redford told CBC News that Alberta won't accept an increase in the cost of carbon emissions unilaterally because it would put the province's oil and gas sector at a disadvantage to its U.S. competition.

“We believe in Alberta that if there is going to be any change in the price of carbon, it has to be done in a way that ensures that industry in the United States and Canada can be competitive,” Redford told CBC News. “So in Alberta, we’re not looking to try to increase the price of carbon if we’re not going to see any movement in the United States. There has to be a quid pro quo.”