$72B in lost revenue at stake in B.C. Northern Gateway pipeline
Enbridge's proposed Gateway pipeline would carry Alberta bitumen to the West Coast, where it could be sold at a higher price on the international market.
Photograph by: Herald Archive, Afp-Getty Images, Edmonton Journal
Oil producers could lose $72 billion over nine years if a pipeline to carry Alberta bitumen to the West Coast isn't built, a new report for the Alberta government says as community hearings for the proposed Enbridge Northern Gateway project are about to begin this month in British Columbia.
In a 44-page report submitted before Christmas to the federal government panel reviewing the pipeline project, consultants for Alberta Energy peg potential losses for oil producers in the project at $8 billion every year between 2017 and 2025.
The forecast, drawn up by Houston-based consultant Harold York for the firm Wood Mackenzie, is largely based on the expectation that Alberta oil sells at a higher price on an international market than it does in North America.
"If we can get it offshore, there are a lot more markets available to us which are willing to pay a higher price," Alberta Energy spokesman Tim Markle said.
The outlook does not deal with the oilsands production boost anticipated as a result of pipeline construction. It also does not deal explicitly with the effects that offshore bitumen sales would have on oil royalties collected by the Alberta government.
Currently, Alberta's main oil customer is the United States, which recently held off on approving the massive Keystone XL pipeline extension to the Gulf of Mexico.
The Dec. 21 Wood Mackenzie report flags Alberta Energy as the provincial government's lead representative going into 18 months of hearings that start next week. But critics charge the report positions the province to offer just "half of the balance sheet" to the federal panel by not raising environmental issues as well.
"In order to make an informed decision, you need to consider both the benefits and the costs of the pipeline," said Pembina Institute oilsands analyst Nathan Lemphers. "Is it up to environmental groups and concerned individuals, First Nations, to be raising this? Or should it be our governments or proponents doing this?"
Other departments, like Alberta Environment and Water or Sustainable Resource Development, will take a back seat during the hearings, offering Alberta Energy supporting information as necessary.
A spokeswoman for Alberta Environment said the department has no plans to provide its own report on the impacts of the pipeline to the review panel.
"We're not officially participating in the hearings, but we are supporting Energy," said Jessica Potter.
Noting that Alberta already has pipeline infrastructure in place east of the B.C.-Alberta border, Potter called the Enbridge review "a B.C. hearing, not an Alberta hearing."
The provincial government's role, she said, is "to ensure Alberta's energy future. To say, 'Yes, we have the energy required to make this pipeline worthwhile to us.' But we already have our regulatory process in place, our frameworks and stuff that legislate how pipelines are put in, how energy is developed in the process."
The Pembina Institute is an Alberta-based think-tank focused on energy solutions. It is not opposed to pipeline infrastructure in general, but has weighed against the Northern Gateway project because of environmental questions members say have not yet been answered. Lemphers said the province should be discussing the potential costs of cleaning up pipeline or tanker spills and the potential environmental liabilities of additional oilsands development.
The Wood Mackenzie report deals with the outlook for Alberta's share in the international crude oil market, which is expected to grow significantly in the years ahead and demand "additional export capacity . . . by 2017."
"When you're having a pipeline of this magnitude (being) brought forward, it's critical that the panel have balanced information in front of it in order to make an informed decision," Lemphers said.
Community hearings for the Northern Gateway project, expected to carry oilsands oil from Bruderheim, Alta., to Kitimat, B.C., begin in Kitimat on Jan. 10. More than 4,000 people have applied to give oral evidence. Edmonton hearings are scheduled to take place Jan. 24 to 31.
If the province chooses to appear before the hearing panel, it would not be until the fall, said Markle. The Alberta Energy spokesman said an elected member of government likely would not appear.
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