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Hughes Highlights Faulty Assumptions about Pipeline

April 30, 2018

Post Carbon Fellow David Hughes describes the faulty assumptions behind the political and corporate rhetoric surrounding the Trans Mountain pipeline in Alberta, Canada. The pipeline, which transports oil from Western Canada to a terminal in Burrard Inlet on the Pacific, has been approved for an expansion to 890,000 barrels of oil per day, up from 300,000. Kinder Morgan, the Texas-based company that operates the pipeline, claims that the expansion will increase the value of Canadian oil by making it available for sale in global markets that will pay price premiums. Hughes notes that this price-premium argument is false.  He says, “If anything, the transportation costs to Asia mean Canada is likely to get a lower price for heavy oil in overseas markets.”

From the article:

On the day that Prime Minister Justin Trudeau approved the Trans Mountain pipeline expansion project in late 2016, Alberta Premier Rachel Notley hailed the decision as a turning point for her province.

The collapse of oil commodity prices had ushered in a “long dark night” for Albertans, she said, and twinning the 1,150-kilometre pipeline from Edmonton to Burnaby finally promised “some morning light.”

“We are getting a chance to break our landlock,” she said. “We’re getting a chance to sell to China and other new markets at better prices.”

It’s a claim frequently repeated by proponents of the $7.4-billion project that will increase the pipeline’s capacity from 300,000 barrels a day to 890,000. But is it true? And is there still a business case for the project more than four years after the National Energy Board received an application to expand the line? Like most things, it depends whom you ask.