Trans Mountain pipeline expansion will lead to losses on oil exports, scientist discovers

Earth scientist David Hughes has actually ended up being well known in certain circles as the Cassandra of the oilpatch.

Cassandra, as the classically informed will remember, was the priestess of Apollo cursed to predict the reality and never ever persuade anyone. A figure of Greek misconception, and a walk-on part with a couple of lines in Shakespeare, everybody believed she was nuts.

Back in 2016, when Alberta’s New Democrats were altering prior to our eyes into another centre-right conservative party committed defending pipelines, Hughes released a study that concluded there was no chance Canada could fulfill its international environment dedications if it kept developing new export pipelines and ramping up oil extraction.

This seems pretty apparent, but at the time everybody who was anyone in Alberta acted like he was nuts.

Hughes likewise predicted that “new pipelines with tidewater access will not substantially increase the cost Canada gets for its oil.”

This also appeared apparent to anyone who paid any attention to economics. However it challenged one of the political orthodoxies of the era, that building pipelines to tidewater and shipping ever increasing quantities of Alberta bitumen to Asia would amazingly repeal the iron law of supply and demand.

The belief that pipelines could defy financial gravity and conquer low world oil costs assisted Jason Kenney’s United Conservative Celebration get elected and still holds sway in Alberta. Nowadays, it fuels the nutty Wexit motion along with Kenney’s UCP.

Well, there’s been a lot of oil under the bridge given that 2016.

Hughes has now had a look at the new realities of a world where supply outmatches need, alternative energy sources are on the rise, international climate change is extensively acknowledged, and a pandemic is reducing need even more, and he has reached brand-new conclusions.

He isn’t predicting anymore that pipelines with tidewater access will not significantly increase the rate Canadian oil brings.

No, he said in a report published yesterday by the Business Mapping Task, it will most likely make them even lower

Particularly, he concluded that if the Trans Mountain expansion task (TMX) is completed, it will lead to a loss of a minimum of US$ 4 per barrel shipped to Asia by that route.

” Including the difference in transportation expense to the discount rate in rate selling to Asia compared to the U.S., and the netback loss per barrel to Canadian producers by offering heavy oil to Asia is US$ 4 to US$ 6 per barrel or more,” he stated.

” Really little heavy oil on the existing Trans Mountain pipeline is carried to Asia,” he added. “Instead, seaborne deliveries go mostly to the West Coast of the U.S., which validates the fact that there is no bonanza for carriers in Asia.”

So that isn’t most likely to alter even if the TMX is completed.

” Reported growths of existing pipelines including the Enbridge Mainline, together with conclusion of Enbridge’s Line 3 in 2021, will create ample pipeline export capacity for Canadian oil manufacturers through 2030, and through 2040 and beyond if some of Western Canada’s rail capacity is used,” Hughes added.

TMX will likewise even more intensify Canada’s problem reducing emissions by encouraging extra oil production development, he noted.

None of this is actually breakthrough stuff, anymore than it was 4 years back. It’s quite ho-hum as conclusions about how things work go, although it’s great to have actually the numbers crunched.

Just the very same, it will probably prompt some fury in UCP circles, and, like most of Cassandra’s predictions, be neglected all over else in this country.

Cassandra, they say, precisely predicted the fall of Troy. “Cry, Trojans, cry! provide me 10 thousand eyes, And I will fill them with prophetic tears,” Shakespeare had her say. No one paid any attention.

That old stuff has nothing to do with us Albertans, of course.

Hughes’ “Reassessment of Need for the Trans Mountain Pipeline Expansion Project” was released yesterday by the Canadian Centre for Policy Alternatives’ B.C. workplace on behalf of the Corporate Mapping Project.

The CMP is jointly led by the University of Victoria, the CCPA and the Edmonton-based Parkland Institute. It is funded by the Social Sciences and Humanities Research Council of Canada.

David Climenhaga, author of the Alberta Journal blog site, is a journalist, author, journalism instructor, poet and trade union communicator who has operated in senior writing and modifying positions at The Globe and Mail and the Calgary Herald

Photo: David J. Climenhaga

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