The business case for the Trans Mountain pipeline

Roundtable hears economic arguments in the contentious debate over pipeline twinning project

Business leaders say pipeline expansion could fill job gap from delay in a liquefied natural gas industry taking off. | Submitted

As of August 11, 89% of the people who had addressed the Liberal government’s ministerial panel on the Trans Mountain pipeline expansion spoke against the project, according to Stand, an environmental group (formerly ForestEthics) that has been keeping a running tally.

But during an August 16 economic roundtable in Vancouver, the panel heard a different story when B.C. business organizations addressed the panel. With its higher environmental standards and regulatory controls and processes, commitment to carbon pricing and innovations in clean technology, Canada is in a better position to produce oil in a more environmentally responsible way than most other major oil-producing nations, business leaders told the three-person panel. And it risks deterring global investment if the federal government rejects the pipeline-twinning project.

“Saying no to pipelines in Canada, including the proposed expansion of Trans Mountain, means ceding market share of oil to Russia, Iran, Saudi Arabia and other Middle Eastern, African or Latin [American] producers, who would be happy to take our business,” Greg D’Avignon, Business Council of BC (BCBC) president, told the panel.

He warned that the regulatory delays large energy projects are encountering in Canada are already sending a negative signal to international investors.

“It’s not surprising that capital investment intentions in B.C. and Canada are negative – a worrisome sign for the future. Confidence among investors and companies in Canada’s ability to make timely decisions is waning.”

The Northern Gateway pipeline project is already widely considered to be dead, and Petronas’ $36 billion Pacific NorthWest LNG project has been delayed so often by the federal review process that there is now some doubt that it will get a final investment decision.

The three-person ministerial panel struck by the federal government has no mandate to make recommendations. Kinder Morgan Inc. (NYSE:KMI) already has the green light from the National Energy Board (NEB) for its pipeline-twinning proposal, which would nearly triple its capacity.

But the new Liberal government wanted to give citizens one last chance to air concerns about the project and the NEB process and struck a three-person panel to gather feedback. It will report back to the federal government once it has wrapped up its tour. A final federal cabinet decision is expected by year’s end.

David Crawford, vice-president of the Greater Vancouver Board of Trade, said local benefits of the project are estimated at $1.15 billion in construction spending, 1,200 jobs at peak construction, and $158.7 million in spending by workers just for Vancouver.

The project could provide work for the many British Columbians who took advantage of provincial funding for trades training that was intended to create the workforce needed for a liquefied natural gas industry, which now appears to be stalling.

Canada-wide, the Conference Board of Canada estimates the project – by giving Alberta oil producers access to foreign markets – will generate $46.7 billion for government in taxes and royalties over 20 years, and $23.2 million in additional municipal property taxes just in B.C.

Crawford cited a recent U.S. Energy Information Administration (EIA) report that underscores how much the U.S., a major importer of Canadian oil, has been dramatically ramping up exports to Canada.

Oil exports from the U.S. rarely went above 100,000 barrels per day (bpd) between 2000 and 2013, according to the EIA. By 2015, the U.S. was exporting 422,000 bpd to Canada.

Unlike Canada, which has committed to a national price on carbon, Hillary Clinton won’t even talk about carbon pricing, and Donald Trump once said climate change is a hoax perpetuated by the Chinese.

Canadian businesses, including major oil companies, support a national price on carbon, and B.C. and Alberta already have carbon taxes in place.

Greg Thomas, Surrey Board of Trade chairman, said, “Canada, like many rich countries, appears to be trapped in a cycle of low growth” of 1.3%.

Citing the Organisation for Economic Co-operation and Development (OECD), Thomas said the only way for countries to get out of the low growth cycle is to invest in infrastructure that yields high returns over the long term.

“The short-term economic stimulus the Trans Mountain project will provide could help kick-start the Canadian economy without spending a dime of public funds,” he said.

D’Avignon said the energy sector accounts for 35% of the “business fixed investment in Canada,” all of which trickles down to numerous other business sectors, from banks to manufacturing and construction.

“Presently the only foreign market for Canadian product is the United States. However, we have been dramatically out-manoeuvred and outplayed by our best customer.

“While we keep talking about pipelines, energy projects and social licence, the United States has vastly expanded domestic hydrocarbon production in the last decade. Under President [Barack] Obama’s watch, America constructed and brought into operation 19,200 kilometres of new crude oil pipelines between 2010 and 2014.”

At the same time, large American foundations like the Tides Foundation and Rockefeller Brothers Fund have helped fund anti-oilsands and anti-pipeline campaigns in Canada.

“Largely U.S.-funded organizations decided to shut down the U.S.-Canadian oil industry,” D’Avignon said.

Some of the criticism of pipelines in Canada is the risk they pose to the environment. Incidents like the Kalamazoo River spill and Deepwater Horizon incident in the Gulf of Mexico are held up as examples of the potential environmental devastation that can occur. Both of those spills occurred in the U.S.

In a later session, Vancouver Mayor Gregor Robertson told the panel the city partnered with other interveners to commission 12 reports from independent experts to examine the project. He said the NEB dismissed those reports and did not consider them as part of its review process.

He said the reports “concluded that, firstly, there is no economic case for pipeline expansion, secondly that the massive risks of an oil spill and impact on climate change are not justified, and thirdly that this proposal is not in the public’s interest because the adverse effects outweigh any benefits.”

One business that takes the threat of a spill seriously and doesn’t support the pipeline project is Salish Seas Fishing LP, a seafood company, jointly owned by the Musqueam, Sliammon and Tsleil-Waututh First Nations. It sells crab, prawns, halibut, herring and black cod – all harvested locally.

“It’s safe to say that the local fishing industry will be heavily negatively impacted by this project,” said Salish Seas executive manager Jason Forsyth.

An oil spill would obviously damage the local fisheries, he said. But even without a spill, the local fishery would be negatively affected by the cumulative impact of increased oil tanker traffic.

“It’s a local, sustainable, high-quality industry that is not compatible with this project.”