The federal government’s latest approval of the Trans Mountain pipeline expansion project (TMX) produced a frenzy of rhetoric from politicians and industry vested interests. Unfortunately for Canadians, partisan and vested interests have overruled their best interests.
Although Canada does have a pipeline bottleneck due to the 376 per cent growth in oil sands production since 2000, the rhetoric used to justify TMX does not withstand closer scrutiny.
Even if BC’s environmental concerns of increased tanker traffic into Canada’s busiest port city are ignored, the decision was aimed at preserving political capital given the government’s purchase of TMX, not meeting Canada’s climate commitments or long-term energy security and economic needs. Unmentioned, for example, were the Line 3 and Keystone XL pipelines which will provide double the export capacity of TMX before its earliest completion date and yield higher prices on the US Gulf Coast compared to the Asian markets that TMX is allegedly being built to access.
A year ago, before the court-ordered shutdown of the TMX project, Prime Minister Trudeau declared that the “pipeline will be built.” Because the government both owns and regulates the project, First Nations are right to be skeptical of the court-ordered indigenous consultation used to justify TMX and it’s no surprise they will appeal the decision in the courts.
The rhetoric on TMX is sad commentary compared to the objective discussion of Canada’s energy and climate future that is sorely needed:
- Prime Minister Trudeau claims that as Canada has only “one customer,” its oil is unfairly discounted compared to offshore markets. This is untrue as Asian markets offer $1–$3 per barrel less for heavy, sour crude oil as well as higher transportation costs compared to the heavy oil refining complex on the US Gulf Coast. Oil is a world-traded commodity, its price globally consistent minus transportation costs and quality differentials. The price differential on Alberta heavy crude has disappeared since the production curtailment in late 2018 if transport costs and quality are considered.
- The prime minister also claims that profits from the operation and sale of TMX (if there are any) are needed to fund a “transition” from fossil fuels and reduce Canada’s emissions. The taxpayer cost of the expansion is estimated at $9.3 billion in addition to the $4.5 billion purchase price which will take many years to recover. Meanwhile, Environment and Climate Change Canada estimated that operating and upstream emissions from TMX would be 15 to 18 megatonnes per year. This would add two to 2.4 per cent to Canada’s emissions when the Parliamentary Budget Office already projects that Canada will miss its Paris Agreement targets by a wide margin.
- Opposition leader Andrew Scheer, meanwhile, declared he needs to see “shovels in the ground” and cited conspiracy theories that US-funded interests are somehow stopping pipelines and production growth, ignoring the two other export pipelines under development and that the oil sands are at record production levels.
- Alberta Premier Jason Kenney claimed that although TMX, Line 3 and Keystone XL are needed, he wants to resurrect Northern Gateway and Energy East. He is pouring taxpayer money into a ‘war room’ to fight environmentalists and fund misleading ads in Metro Vancouver suggesting high gasoline prices are a result of opposition to TMX.
- The Canadian Association of Petroleum Producers (CAPP) claimed that lack of TMX is costing Canada $80 million per day, which is ludicrous given that two other export pipelines will be built before the earliest TMX completion date. CAPP also bemoans the loss of “thousands of jobs” if TMX is not built. Kinder Morgan’s submission to the National Energy Board for TMX projected “thousands of jobs” during the two-year construction period but just 90 permanent jobs after the pipeline is built.
- CAPP evidently could care less about greenhouse gas emissions as it supports “three additional export pipelines to Canadian coasts and four major liquefied natural gas (LNG) projects by 2025”.
According to CAPP, as of 2017 oil and gas royalty revenue declined 59 per cent since 2000 despite a 112 per cent increase in oil production. And notwithstanding Prime Minister Trudeau’s claims that Canada is meeting its Paris Agreement targets, emissions were down only two per cent from 2005 levels as of 2017.
Canada needs a viable energy plan to meet long-term energy security and climate commitments, not partisan political opportunism.
This article first ran in the Edmonton Journal.
Author: David Hughes
J. David Hughes is an earth scientist who has studied the energy resources of Canada and the US for more than four decades, including 32 years with the Geological Survey of Canada (GSC) as a scientist and research manager.