The latest analysis: What does Canada gain from the Trans Mountain Pipeline purchase?

pbologoInto Canada’s highly sensitive and highly political debate over pipelines comes the report on January 31 from the Parliamentary Budget Officer (PBO) :  Canada’s purchase of the Trans Mountain Pipeline – Financial and Economic Considerations . The report provides an overview and timeline of the negotiations and federal government purchase of the pipeline and its assets from Kinder Morgan, in August 2018 . The PBO financial analysis estimates that the $4.4 billion  price paid by the government  was at the high end of the value, and calculates the effects of construction delays or higher construction costs on the price that the Government could negotiate for its re-sale –for example, a one year delay would result in a loss of value $693 million. The report finds that the economic benefits relate to the pre-construction and construction periods: impact on GDP is estimated to peak at 0.11 per cent in 2020; impact on employment is estimated at  7,900 in 2020, with both declining thereafter.

“The main benefit of the TMEP would arise from the increased capacity of Canadian producers to sell oil to export markets, which could lead to a reduction in the differential between Western Canadian Select (WCS) grade of crude oil and other grades, most notably West Texas Intermediate (WTI).”  Stating “It is difficult to determine the impact of the TMEP on the price differential between WTI and WCS grades”, the report refers to estimates in its December 2018 report to Parliamentarians, and flags the other factor which might affect the economic impact, which is “increasing transportation capacity.”

Coinciding with the PBO report, the National Observer has brought an article out of its archives, which critiques the economic arguments used by supporters of the Trans Mountain purchase. “False oil price narrative used to scare Canadians into accepting Trans Mountain pipeline expansion” was written by Robyn Allen, and was originally published in November 2018.  More recently, she has also written,  “What Bill Morneau didn’t tell Canadians about the Trans Mountain Purchase” (Dec. 5 2018)  and an Opinion piece “Trudeau’s oilsands supply outlook reflects a future that doesn’t exist” (Jan. 25 2019)  , which concludes: “It is madness pretending that Trans Mountain’s expansion is financially or economically viable. A return to sanity begins with getting realistic about the supply of heavy oil in a world that knows — even if Trudeau won’t take his head out of the oilsands — that neither the economic system nor the ecosystem can, or will, support rapid oilsands growth.”

orcasagainstvancouverskylineFor coverage of both the economic and environmental aspects, follow the National Observer Special Reports on Trans Mountain.  An up-to-date review of the  environmental arguments by experts Marc Jaccard and Kirsten Zickfeld  appears there in “IPCC authors urge NEB to consider climate impacts of Trans Mountain pipeline expansion” (Jan. 21).

The National Energy Board documentation about all stages of the Trans Mountain Expansion project is here (and  here for French documentation).  Information about the current Reconsideration process is here   (and here in French); the deadline for the Reconsideration report to the government is February 22, 2019.

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