While many US investors who hold Canadian energy stocks have been understandably focused on TransCanada Corp’s (TSX: TRP, NYSE: TRP) controversial Keystone XL Pipeline project, Enbridge Inc’s (TSX: ENB, NYSE: ENB) Northern Gateway Pipeline is also an important part of Canada’s growth story. And securing its approval has been equally contentious.

But even as the Keystone XL project’s approval remains mired in US politics, the Northern Gateway Pipeline has finally cleared a major political hurdle. Earlier this week, in a surprise announcement, the premiers of the provinces of Alberta and British Columbia announced they had reached a framework agreement for conducting negotiations that are expected to result in the project being allowed to proceed.

The CAD6 billion pipeline would transport an average of 525,000 barrels of crude oil per day from the oil sands in central Alberta to the west coast in British Columbia. That amount would account for one-third of oil sands production, based on 2011 numbers.

Northern Gateway is one of a number of key infrastructure investments along Canada’s west coast that will help the country’s energy exports become less dependent on the US market. And given the fact that these exports have faced intense competition from the prolific US shale plays, the ability to tap Asia and other markets could help Canadian energy producers fetch higher prices for their commodities.

Naturally, higher prices also mean the prospect of greater tax revenue generated for various levels of government, an estimated CAD27 billion from 2016 through 2030, according to an analysis by the University of Calgary’s School of Public Policy.

When we last wrote about Northern Gateway, the project faced significant opposition from environmental groups, First Nations, and labor unions, all of which wield considerable political clout in British Columbia. As such, earlier this year, the government of British Columbia had declared its formal opposition to the project.

Despite that setback, we expected that Enbridge, Alberta’s government, and the federal government would ultimately do what it takes to appease these various constituencies. After all, sometimes even seemingly principled opposition is merely a tactic to wring further concessions during a negotiation. In this case, British Columbia had stipulated five conditions that would have to be met to win its approval, including “world leading” marine and land oil spill prevention, response and recovery systems, and, of course, a “fair share” of the royalties reflecting the risk borne by the province and its taxpayers.

But as one columnist for the Toronto Star cynically noted, four of these five conditions require expenditures on the part of industry or the federal government, with British Columbia essentially demanding remuneration for a cost it won’t be incurring. He characterizes the impasse as having been nothing more than a “shakedown operation” that also helped provide BC Premier Christy Clark with political cover during this year’s elections.

Once she prevailed at the polls, however, Clark was free to pursue a more pragmatic approach to a deal in exchange for her government’s imprimatur. In this case, the aforementioned “fair share” of government royalties, which had been a sticking point during prior negotiations between the two provincial governments, has been creatively diluted, so that now the economic benefit to her province “could take a whole number of different forms,” as opposed to a cut of Alberta’s royalties.

On the other hand, the issue of compensation has simply shifted from the public sector back to the private sector. In the future, BC has agreed to seek financial compensation directly from the companies themselves.

The détente between the two premiers bodes well for the federal government’s environmental review, which finally concludes at the end of the year. And it should also help pave the way for future projects, as Clark has also endorsed Alberta Premier Alison Redford’s push for a national energy strategy. The one thing that remains to be seen is what sort of financial toll BC’s government will extract from energy industry players in the future. But then that’s just the cost of doing business.