Two Paths For Alberta Separation

Alberta Separation Could Be Real Threat  made the case, assuming the federal government continues its anti-natural resource development agenda.

As a result, it is important to explore how Alberta separation could play out. The key driver appears to be the type of negotiation between Alberta and the Rest of Canada (ROC) — good or bad faith — especially after a successful referendum, based on the prescribed steps for a province to separate from Canada.

These two types of negotiations would have differing impacts on the Alberta and Canadian economies, energy security, and whether or not Alberta would remain a stand-alone country or ultimately join the U.S.

The steps

Following Quebec’s near successful secession referendum in 1995 and Parti Quebecois leader Lucien Bouchard the next year announcing his government was planning to hold another — the third — referendum once he was confident of the “winning conditions,” Prime Minister Jean Chrétien initiated a legal process to determine whether a Unilateral Declaration of Independence (UDI) by a Canadian province was legal based on international and domestic law.

The Supreme Court of Canada handed down its ruling in August 1998. In a unanimous decision, the court declared that Quebec — and hence, other provinces — could not initiate legal steps for an UDI. However, the federal government and the other provinces would have to negotiate in good faith the terms of secession with the Quebec government following a successful referendum involving a “clear question” and a “clear majority,” with the court leaving politicians on the two sides to negotiate each of these.

In June 2000, the federal government passed the so-called Clarity Act in an attempt to better define these two terms. It explicitly stated that a simple majority — 50 per cent plus one — would not be enough for a successful “yes” vote in a referendum, but did not indicate what would constitute a clear majority.

In the case of Alberta, our government would have to first negotiate a clear question and what constitutes a clear majority with the Feds before holding our separation referendum. Assuming a successful referendum based on these terms, Alberta would then have to negotiate numerous issues with the federal and other provincial governments to be granted the right to secede. These include the status of national parks, military bases and Indigenous lands, Alberta’s share of the national debt, trade and other relations, and the transit of goods and people across their respective territories.

In what follows, I will discuss two extreme scenarios based on the type of negotiation between the two sides following a successful Alberta separation referendum — Amicable Split versus Dirty Divorce. The Supreme Court ruled that a provincial UDI would be legal if, and only if, the the Feds failed to bargain the terms of secession in good faith, obviously leaving significant room for interpretation and politics.

It should be noted beforehand that the 1982 United Nation (UN) Convention on the Law of the Sea may provide rights to landlocked countries to access the world’s major waterways on paper, but these rights are in fact an illusion as they still require landlocked countries to negotiate with transit ones, which of course requires at least decent relations.

The UN has since attempted to improve landlocked countries’ access through the 2014-24 Vienna Programme of Action, but this only applies to developing countries. Hence, this would not apply to Alberta unless the Trudeau government successfully guts our economy by sabotaging the natural resource sector (see Argentina’s Cautionary Tale For Canadian Economy).

Amicable Split

Under the Amicable Split scenario, Prime Minister Trudeau and his Liberal Party wins a second consecutive majority government in October of this year and Western Canada’s oil industry fails to attain additional crude pipeline capacity to Canadian tidewater over their second four-year term.

The remaining project on the books, the Fed-owned Trans Mountain Expansion (TMX) initially makes progress, meeting the two requirements demanded by the August 2018 court ruling for the project to regain its regulatory approval, but it is derailed again by yet another legal challenge by pipeline opponents and negative ruling by the Canadian courts. It is ruled that TMX has to go back to square one, and the regulatory hell imposed by Bill C-69, given the bill’s passage into law in 2019.

On the relatively bright side, Enbridge’s Line 3 Replacement is completed in early 2020 and TransCanada’s Keystone XL (KXL) in late 2021, allowing western Canadian producers to supply additional discounted crude to the increasingly glutted U.S. market.

The Alberta separatist movement is sparked during the Trudeau government’s first term in office, and spreads like a prairie wildfire during its second. A leader with the charisma of Peter Lougheed, but without his attachment to Canada, rises from the ashes.

The Lougheed-like leader argues, “The Feds have milked the cow but fed it no grass,” and without radical change Alberta will once again become a have-not province. Like it or not, the window of opportunity for developing Alberta’s massive oil — both oil sands and tight rock  —  and natural gas resources is rapidly closing, given the global carbon budget. The time for action is now!

The Alberta Separatist Party wins a landslide majority in early 2023, despite Premier Jason Kenney and his United Conservative Party fighting hard for Albertans within the constraints of Confederation. The Lougheed-like leader immediately schedules Alberta’s separation referendum for October 16 of that year  —  one week before the scheduled federal election  —  and begins pre-referendum negotiations with the Feds. The two sides agree on a 60 per cent majority, and the referendum question reads as follows: “Do you want the Alberta government to negotiate secession from Canada?”

Sixty-two per cent of Albertans vote for separation, and the following week the Conservative Party crushes the Trudeau-led Liberals in the federal election. Despite its dismay, new federal government negotiates the secession of Alberta in good faith.

The Feds agree to grant Alberta title to all military bases and Indigenous lands  —  with the province agreeing to respect all treaty rights  —  in its territory in return for Alberta agreeing to assume its share of the national debt. The five national parks in the province remain under Canadian jurisdiction, but the Feds agree to allow Albertans unfettered access to the parks in perpetuity, with border checkpoints on the far side of each park.

Alberta agrees to the free flow of goods across its territory and people by air, in return for access to Canadian tidewater. A change in the B.C. government, along with the Feds dumping the Trudeau-era Oil Tanker Moratorium Act, opens the door for massive new crude and natural gas pipeline capacity and exports  —  LNG in the case of gas  — through the Indigenous peoples-led Eagle Spirit energy corridor. By 2035, the year global oil consumption peaks, Alberta oil production increases by roughly half to six million bbls/d.

Dirty Divorce

Prior to Alberta’s successful separation referendum, the Dirty Divorce scenario plays out in a similar manner as Amicable Split. But the Liberals win a third consecutive majority government in the 2023 federal election, and the Trudeau government digs in its heels once post-referendum negotiations begin. Prime Minister Trudeau and his brain trust believed the wording of the referendum question was so straightforward and the terms for majority so stringent that the vote could never succeed. Nope!

Out of spite, the Trudeau government demands that Alberta pay its share of the national debt but refuses to relinquish any federal territory in return, which in effect would lead to the Bantustanization of the new Republic of AIn mid-2024, the Alberta government begins to ratchet down the flow of crude, petroleum products and natural gas to ROC, while opening secret negotiations with the U.S. to possibly join the Union in return for massive new crude and natural gas pipeline capacity to the Oregon coast via Montana and Idaho.

The Alberta government declares an UDI in early 2025 on the basis of bad faith negotiations by the Feds, and the U.S. immediately recognizes the former province as a sovereign state. The Lougheed-like leader announces a second referendum for mid-2025, to decide whether or not Alberta should join the U.S. to overcome its landlocked status and access new markets for its crude and natural gas.

Albertans vote to join the U.S., and the Republic of Alberta becomes the fifty-first state on January 1, 2026. Under pressure from the U.S. government, Prime Minister Trudeau agrees to cede regional military bases and Indigenous lands to the new state. In return, Alberta restores the flow of crude, petroleum products and natural gas to ROC to normal levels, and allows the free flow of goods across its territory and people by air. Sadly, Albertans lose unfettered access to the five national parks.

Alberta oil production hits seven million bbls/d in 2035, supported by greater access to American capital and a more friendly investment climate. New Alberta heavy crude production is shipped to refineries in the U.S. Gulf Coast region and new and old light oil output exported abroad via the Oregon coast.