It now appears increasingly unlikely that neither the $6 billion Enbridge Inc. Northern Gateway pipeline or the expansion of the Kinder Morgan Inc.'s Trans Mountain oil pipeline will be approved in British Columbia.
Both proposals, the first that would pipe crude oil from the Alberta oil sands to the northwest B.C. coast for tanker shipment by sea to Asia, the latter which would nearly triple the oil flow from the Lower Mainland, are facing stiff environmental and political opposition. Meanwhile, the Alberta premier is warning of dire economic consequences if oil is not allowed to flow to high value markets, like Asia.
In a television address, Premier Alison Redford warned Albertans that the province faces a $6 billion shortfall in revenues because limited pipeline capacity has driven the price of a barrel of Alberta crude down to less than half that of the international benchmark.
According to the Pacific Economic Cooperation Council, Canada as a whole is losing $28 billion annually due to Alberta's limited access to foreign markets.
If both oil pipeline proposals are frozen out of B.C., the most viable options appears to be either a southern route into the U.S. or an eastern route into Quebec and Atlantic Canada, both of which would bypass British Columbia.
Former federal environment minister David Anderson is among those who question the Northern Gateway proposal. But Anderson noted that the Canadian and provincial governments could lose up to $30 billion in revenue if the pipeline does not go ahead. Still, he said, there viable are options to the northwest route.
"I think you have alternatives that have not been explored," Anderson said. "The obvious one is the Keystone XL, where you ship it south and export it by water from the southern gulf ports."
He said Kinder Morgan's Trans Mountain twinning proposal stands a better chance of proceeding because it's an expansion of an existing pipeline, and therefore has fewer regulatory hurdles to clear.
But the prospect of up to 34 oil tankers sailing up Burrard Inlet every month has already led the mayors of Vancouver and Burnaby and a host of First Nations and environmentalists to denounce the plan.
Currently, only five tankers per month come into Burrard Inlet on their way to the Westridge marine terminal in Burnaby. The twinning would increase the pipeline's capacity to 890,000 barrels of oil per day from 300,000.
Anderson believes Kinder Morgan could avoid a major headache by simply avoiding Vancouver and Burnaby.
The Trans Mountain pipeline splits near Abbotsford. One line runs to Burnaby's Westridge terminal, the other runs south to refineries in Washington state.
In an emailed statement, a Kinder Morgan spokesman said Anderson's proposal would require a new marine facility being built in Washington state.
"While Trans Mountain has a pipeline operation to the U.S., it is a smaller line with the purpose of serving the four Washington state refineries," wrote Michael Davies, director of marine development for the Trans Mountain expansion project. "Trans Mountain doesn't have any marine facilities in Washington state - the docks are owned [and] operated by the refineries."
While Anderson's proposal would avoid increased Burrard Inlet oil tanker traffic, it wouldn't address the concerns environmentalists would have with oil tankers passing through the San Juan Islands. "Shipping out of Washington state would still result in increased tanker traffic in the Salish Sea," Davies wrote, "but with fewer direct benefits to Canada."
As for the Northern Gateway, the odds are stacking towards a switch to an eastern pipeline. A plan to ship Alberta crude oil to East Coast markets by converting part of TransCanada Corp.'s mainline natural gas pipeline system is "technically and economically" feasible, Russ Girling, the company's president and CEO, said during a third quarter earning's conference call.
Girling made the comment during his prepared remarks, an indication that the Calgary-based pipeline company is serious about sending Alberta crude to Canadian and U.S. refineries on the eastern seaboard. "Discussions with potential shippers and other stakeholders are underway to determine if this is a project the market wants to see," Girling said. "And based on early indications, we believe that it is."
In a follow-up phone call, Western Investor was told by TransCanada spokesman Shawn Howard," No decision has been made on this. This will ultimately be a market-driven decision and needs long-term commercial commitments to make that happen."
Unlike in B.C., there appears to be clear political support for an eastern pipeline. New Brunswick Premier David Alward flew to Alberta in late January to promote the idea of a pipeline link to oil refineries in Saint John, NB.
While building a new pipeline from an Alberta oil storage hub to Irving Oil's giant refinery in Saint John would be costly, it could actually cost less than moving the oil through the northwest, even without the threat of delays and blockades that have surfaced during B.C. protests.
Alex Pourbaix, TransCanada's vice-president of energy and oil pipelines, said that 80 per cent of the pipeline is already in the ground and the bulk of the work in converting the line would be building new pumping stations along the route. Pourbaix figures the potential cost of converting the mainline would be in the $5 billion range.
If it is built, the pipeline would ship anywhere from 500,000 to one million barrels of oil per day. And none of it would go through B.C.
