Canada Spat With Diplomats May Hinder Keystone Lobbying

A labor dispute between Canada and its diplomats will hinder government efforts to lobby the U.S. for approval of TransCanada Corp.’s Keystone XL pipeline, the head of the foreign-service workers’ union said.

Federal diplomats are working no more than the 7.5 hours per day required by their contracts and not answering e-mails or phone calls after 5 p.m., said Tim Edwards, president of the Professional Association of Foreign Service Officers.

The union’s actions are “going to affect our ability to lobby foreign governments on issues important to the country,” Edwards said by telephone from Ottawa. “We are the face and front line of Canada abroad.”

The dispute comes as Prime Minister Stephen Harper’s government and provincial premiers step up efforts to persuade the U.S. to permit the $5.3 billion northern section of the pipeline, which would carry crude from Alberta’s oil sands to refineries near the Gulf of Mexico. The State Department is reviewing the project because it crosses an international border. President Barack Obama has said he will make a ruling this year.

“To date, there has been no impact on operations at home and abroad,” Emma Welford, a spokeswoman for Canada’s foreign affairs department, said in an e-mail, referring to the dispute.

There are a “couple dozen” employees at the country’s embassy in Washington that help the government promote the pipeline, including staff who manage relations with U.S. lawmakers and those who work to build trade between the two countries, Edwards said.

Washington Meetings

Natural Resources Minister Joe Oliver was scheduled to meet this week with officials including Secretary of the Interior Sally Jewel, State Department Undersecretary Robert Hormats, Democratic Senator Ron Wyden of Oregon and Republican Representative Fred Upton of Michigan

“Rejecting this project would represent a serious reversal in our long-standing energy relationship.” Oliver said in a speech at the Center for Strategic and International Studies yesterday.

Alberta Premier Alison Redford appealed to Democrat and Republican lawmakers earlier this month, her fourth trip to Washington, following Saskatchewan Premier Brad Wall’s visit in March.

The Canadian Association of Petroleum Producers, a Calgary-based industry group, plans another trip to Washington this summer following a visit by a delegation of Canadian oil executives in February. Executives from energy companies Imperial Oil Ltd., Royal Dutch Shell Plc, BP Plc and Canadian Oil Sands Ltd., met Republican and Democrat senators and representatives as well as Obama administration aides.

Pipelines Critical

Keystone XL is among a number of proposed oil pipelines that are critical to Canada’s economy, Brian Ferguson, chief executive officer of oil-sands developer Cenovus Energy Inc., said in a phone interview.

“What we as industry and what our government representatives in Ottawa, Alberta and Saskatchewan should be doing is making sure that the correct information is available to decision-makers and legislators,” Ferguson said. “Keystone XL will create a tremendous about of jobs in the United States and increase energy security.”

Over the last month, Canadian oil company stocks have fallen on investor concerns that producers are hindered in their ability to get crude to market, Ferguson said.

Stocks Underperforming

Canadian energy stocks have underperformed their U.S. peers by about 7 percent over the last year, as the price gap between Canadian heavy oil and the main U.S. crude grade widened, figures compiled by Bloomberg show. The price of Western Canada Select, an oil-sands blend, was a record $42.50 a barrel less than the U.S. benchmark in December, a difference that has since narrowed on lower U.S. demand as refineries go offline for maintenance.

The diplomats’ union, which has about 1,400 members, are seeking higher wages to match those paid to public servants who do similar work in Canada, Edwards said. A strike is one of the options “on the table,” he said.

Foreign service workers can earn between C$58,055 ($56,880) and C$112,512 per year, according to a government website listing rates of pay by employee category. That’s about the same as the pay scale for nurses paid by the federal government who work in Ontario.

Canada’s second-largest pipeline company, Calgary-based TransCanada is awaiting the U.S. ruling it expects by mid-year on Keystone’s northern leg, Alex Pourbaix, president of energy and oil pipelines, said last month.

TransCanada aims to start the $2.3 billion southern portion of Keystone XL, which doesn’t require presidential approval, later this year. The company spun it into a separate project after Obama rejected the main pipeline in 2012.