The small-bore view of oil-pipeline critics

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Anyone who has used a garden hose knows you don’t wait for one bucket to fill before fetching another. Recognizing what’s plainly ahead is key.

That ability appears to elude David Eby, the Premier of British Columbia and Steven Guilbeault, the former federal environment minister, now the heritage minister. Both Mr. Eby and Mr. Guilbeault insist that there is no need for a new oil pipeline from Alberta’s oil sands because existing pipelines are not yet fully utilized.

“So I think before we start talking about building an entire new pipeline, maybe we should maximize the use of existing infrastructure,” Mr. Guilbeault told reporters in May. Mr. Eby voiced similar sentiments late last month.

Their critiques are of course disingenuous – both are longtime opponents of oil pipelines. But they are also wrong on the numbers.

Just over a year after a tanker hauled the first shipment from the expanded pipeline to China, the Trans Mountain expansion is operating at about 85- to 90-per-cent capacity. In Mr. Eby’s view, that leaves “significant additional” space to handle a surge in production.

That view is wrong, or at least short-sighted. For one, producers – and Alberta – benefit from a small capacity buffer that preserves flexibility.

And the “significant” space left in TMX is projected to be filled by next year. S&P Global, which has revised its oil-sands production forecast upward four times in a row, now projects that Canada’s pipelines will hit capacity by 2030.

That’s accounting for costly upgrades already being made to optimize output from existing facilities. These are necessary, risk-calculated moves that reflect the limits of current infrastructure and confidence in long-term demand.

The window is closing to build a pipeline before capacity maxes out again.

Over the weekend, Prime Minister Mark Carney said it is “highly, highly likely” that an oil pipeline will make the cut for expedited regulatory review under his new Building Canada Act.

But even if an oil pipeline is fast-tracked, it would take at least two years to clear regulatory hurdles and secure financing – and at least as long for building and more permits, said Heather Exner-Pirot of the Macdonald-Laurier Institute. “If everything went well and we made the decision this summer, then it would be 2030. It would be just on time.”

Barring that optimistic outcome, Canada’s oil exports will instead hit a bottleneck – triggering lost revenue, weaker western Canadian oil prices, stalled growth, and a drag on the national economy. (British Columbia included.)

In all their criticisms, pipeline opponents are exploiting this country’s endemic lack of ambition – an affliction we’ll explore more tomorrow.

Those willing to invest are the people who should decide whether to shoulder the risk – whether there is a business case. Those are the people who will weigh whether Canada is able to get necessary – and profitable – investments to “yes.”

There is the concern, for example, that Ottawa should not again subsidize a new pipeline – a proposal being made by no one. Alberta is offering royalty-in-kind arrangements, in which it takes oil instead of cash, to give private investors the security they need. Ms. Smith recently voiced confidence that the private sector will table a pipeline proposal “very soon.” Here’s hoping.

Pipeline opponents have also argued that demand for fossil fuels is peaking and that new infrastructure will end up being a stranded asset.

As BMO Capital Markets recently observed, many oil sands projects break even at prices below US$50 per barrel, offering producers attractive long-term returns that remain attractive even in volatile markets. That cost profile is a key advantage at a time when other major producers are frequently cited in IEA and OPEC data as facing structural decline.

Every year that passes without another pipeline, Canada will be failing to build meaningful buffers against U.S. tariffs. It will be failing to champion an industry that will be vital to the country’s economic growth for decades. It will also be failing to become the “energy superpower” Mr. Carney invoked on the campaign trail.

Mr. Eby has said he would rather Canada focus on projects “in the here and now.” Such myopia is precisely the problem, as this country struggles to adapt to a fast-flowing world.