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A former Liberal environment minister is urging Prime Minister Justin Trudeau's cabinet to reject the extension of the Trans Mountain pipeline, saying the project has no economic base.
David Anderson, who served for 10 years in the offices of Prime Ministers Jean Chrétien and Paul Martin, sent a letter this week to six members of Trudeau's cabinet asking them to reject the pipeline proposal.
"There is no credible evidence that Asia is a reliable or important market for Alberta bitumen," Anderson wrote in his June 11 letter.
Cabinet should announce its decision regarding the expansion of the Alberta-BC network. pipeline from here Tuesday. Given that the Trudeau government bought the pipeline and the expansion project for $ 4.5 billion, it is widely planned to give it the green light.
Anderson holds a law degree and has served for eight of his ten years in Cabinet as the federal minister responsible for British Columbia. When he was Minister of the Environment in 2002, Canada ratified the Kyoto Protocol on Climate Change. He is now Honorary Director of West Coast Environmental Law and has already ruled against the Trans Mountain Project.
His letter does not focus on the climatic and environmental impacts of expansion. Instead, he looked at the economic argument of the project, which he described as the "perceived need for a pipeline connection with Tidewater to sell bitumen from the site." Alberta in the Asian markets, where, it is claimed, it would find new buyers. "
"With respect, you and the other government ministers must still provide evidence to support this hope," he wrote.
Anderson wrote that Asian refineries have better supply options than Alberta. Compared to conventional light and medium crude oil from Nigeria and the Middle East, Alberta bitumen is expensive to produce, difficult to handle, and provides no security of supply benefits, he said.
In addition, he added, despite access to tidal waters through unused pipeline capacity in the existing system and US ports in the Gulf of Mexico, Alberta bitumen has not found or developed a significant offshore market. in Asia or elsewhere.
"Why? Because buyers are scarce. This remains the current situation and nothing indicates that it will change in the future. Building a new pipeline will not change the market."
Canada's two main competitors are Venezuela and Mexico, which faced the same low demand and low prices that eroded the value of Alberta bitumen, he added.
Anderson said in an interview that he had sent the letter because he was a Liberal and that he felt that it was necessary to remind the government that it was wrong. Had not justified the project file. He said no one had answered.
"You would think that the owners of the pipeline, the Canadian taxpayers, should be informed of what their badets could yield," he said.
Trans Mountain Corp. said the expansion would inject $ 7.4 billion into the Canadian economy, increase federal and provincial tax coffers by $ 46.7 billion, and increase producer revenues by $ 73.5 billion over 20 years .
Trevor Tombe, an badociate professor of economics at the University of Calgary, said Alberta's bitumen is harder to refine, but that's reflected in the lower price.
Alberta producers are confident that there will be demand and have made contractual commitments to go through the expanded pipeline, he said. He added that all forecasts, including the National Energy Board's badessment, projected an increase in oil production in the province.
"The only question that matters in the economy of the pipeline is: will there be barrels that will be shipped there, not their destination? It could even change from one year to the next, "he said, adding that the United States and British Columbia are other possible markets.
The argument often used to explain this expansion is that Alberta prices are lower because it can currently only access US markets. But Tombe argued that the problem was not that America had market power, but that Alberta was using very expensive transportation options, including rail and truck.
"It is cheaper to ship by pipe than by rail. Full stop, "said Tombe.
The United States is the main source of heavy crude oil demand, but the fastest-growing market is Asia, said Kevin Birn, North American crude oil market badyst at IHS Markit.
People sometimes think of Asia as a code for China, but the continent is a huge market of India, Japan, Korea and other countries. He is looking for a variety of crude, both in terms of quality and geographical provenance, he said.
Refineries can be reconfigured to process different types of hydrocarbons, but it's hard to justify it for Alberta crude if they can not get it in a consistent way, he added.
"In the absence of a significant export capacity, there is no market for Canadian crude." But if there is a significant export capacity, there is a market for Canadian crude. "
Laura Kane, Canadian Press
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