Work on the Trans Mountain oil pipeline in Acheson, Alta., in 2019.CANDACE ELLIOTT/Reuters
While Canada and Alberta are pondering both a southern and northern route for a new oil pipeline to the West Coast to help get crude to Asia, either one would face steep challenges when it comes to engineering, cost and public buy-in.
Alberta and Ottawa say they haven’t ruled out any options on the route of a potential line. But as The Globe and Mail first reported Tuesday, the federal government is mulling a new route in southern British Columbia to the Port of Vancouver. Some in Ottawa believe it would face fewer environmental hurdles and less resistance from Indigenous groups than the northern route favoured by Alberta.
A memorandum of understanding signed in November by Prime Minister Mark Carney and Alberta Premier Danielle Smith resuscitated discussions of a new pipeline to the West Coast. The agreement included the goal of diversifying export markets and laid the conditions for construction of a new oil conduit to the Pacific, which could carry an additional one million barrels a day.
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The Prime Minister has promised to turn Canada into an energy superpower, and he has signed various agreements or MOUs with other countries to bolster energy trade. Alberta’s goal to target Asia was underscored this week when South Korea agreed to waive a 3-per-cent tariff on the province’s crude exports to the country, removing a key trade barrier.
Here are some of the potential hurdles, what makes each attractive and arguments for – and against – a new pipeline project.
The northern route
Ms. Smith has long talked up a northern route to carry Alberta oil to the Port of Prince Rupert, B.C. – or at least somewhere in that vicinity – for two main reasons.
First, Prince Rupert is North America’s closest port to Asia. It’s also the continent’s deepest port, which would enable access for the large crude carriers that are favoured for transporting oil to Asia.
Each massive tanker can transport about two million barrels of the dense, heavy crude that comes from Alberta’s oil sands. It’s cheaper per-barrel to ship crude via Very Large Crude Carriers than smaller tankers, creating an enormous financial incentive to use them, said Robert Johnston, the director of energy and natural resources at the University of Calgary’s School of Public Policy.
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But Prince Rupert is also an incredibly challenging port to get to.
Enbridge Inc. ENB-T initially wanted its Northern Gateway pipeline to terminate there, but the plan was so stymied by various engineering challenges that the company switched the terminus to Kitimat, B.C. The fact that it was too hard to go to Prince Rupert “seems like a pretty big hill to overcome,” said Andrew Leach, an energy and environmental economist at the University of Alberta.
B.C. Premier David Eby remains steadfastly opposed to the northern route.
“Every time someone muses about forcing a route through Prince Rupert and ignoring the northern tanker ban, they are actually talking about jeopardizing the economy of coastal communities and jeopardizing real projects,” he said Tuesday.
The southern route
A southern route could run alongside the Trans Mountain pipeline or follow another path. In either case, it would require a new terminal for loading oil onto tankers.
Following the Trans Mountain pipeline system would have the advantages of an existing brownfield corridor and knowledge about potential engineering challenges, said Alireza Bayat, a civil and environmental engineering professor at the University of Alberta. But there would still be mountains and rivers to cross, so “it won’t be just as simple as digging right beside it and putting in another pipe.”
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Mr. Johnston added that while it would be easier to add capacity on Trans Mountain than pursue a new route to the north, a southern route “would still have some complexity, especially at the at the end of the pipeline” in Burnaby, B.C.
And there will no doubt be opposition to the proposal; Trans Mountain faced years of pushback due to environmental risks, Indigenous rights and the cost of the project. Prof. Leach said Ottawa could also be “tempted to say, ‘Because we’ve already built a pipeline in this route, we’ll try to shortcut consultations,’” which would land a project in hot water.
Does Canada even need a new pipeline to the Pacific?
That depends on who you ask.
The oil and gas sector says a new pipeline to the coast is crucial to diversifying its customer base and getting a better price for its product. Further, an analysis from Enverus Intelligence Research Tuesday said that the oil sands may approach a critical inflection point for pipeline infrastructure by the early 2030s as companies boost production.
While expansion projects on Trans Mountain and Enbridge’s Mainline will buy some time, “towards the end of the decade, you can end up with a situation where you’re short on pipe again,” said Trevor Rix, a director at Enverus. The result would be a wider differential between Canadian and U.S. benchmark oil prices, which means less revenue and fewer royalties for Canadian government coffers.
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There are multiple environmental and economic arguments against a pipeline to the Pacific coast, too.
Pipelines cost billions of dollars. No company has a proposal out there, and former federal environment minister Catherine McKenna said recently that oil companies are demanding that Canadian taxpayers build pipelines “they won’t risk their own money on.”
A new line to the west would also come into service just as global oil demand enters an era of softening demand and price, Janetta McKenzie, the director of oil and gas at the Pembina Institute, wrote in an analysis this week.
Additional export capacity could instead be found by boosting volumes on Trans Mountain, she said, which would avoid a disturbing new path across northern British Columbia, lifting tanker restrictions or creating conflict with rights-holding First Nations on the coast.
With a report from Justine Hunter in Victoria