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A Statoil oil field worker looks at oil well heads on a well pad at the Statoil oil sands operation near Conklin, Alta., in November. (TODD KOROL/TODD KOROL/REUTERS)
A Statoil oil field worker looks at oil well heads on a well pad at the Statoil oil sands operation near Conklin, Alta., in November. (TODD KOROL/TODD KOROL/REUTERS)

Economy Lab

How the oil sands stretch all the way to New Brunswick Add to ...

David Campbell is an economic development consultant and columnist based in Moncton. He also authors a daily blog on economic issues in Atlantic Canada which can be found at www.davidwcampbell.com.



In recent weeks a number of commentators have floated the concept of bringing Alberta bitumen from the oil sands east by pipeline to be processed in eastern Canadian refineries and shipped to Asian markets via east coast ports. Former New Brunswick Premier Frank McKenna also weighed in suggesting the Irving Refinery in Saint John could be modified to upgrade bitumen from the oil sands.

This discussion prompted a colleague of mine to remark that “New Brunswick might finally be able to benefit from all that Alberta oil.”

The reality is that New Brunswick, and all the Maritime provinces, are already deriving substantial economic benefit from the Alberta oil sands.

We don’t have much recent data on how many people from the Maritime provinces are working in Alberta while maintaining their primary residence in their home province. A 2008 study cited in Chatelaine magazine suggested that “more than half of the Fort McMurray area’s 25,000 migrant workers are from Atlantic Canada”.

More recently, a September, 2011 survey of nearly 2,000 outgoing passengers from the Bathurst Airport in Northern New Brunswick found that Fort McMurray was the top destination for nearly 28 per cent of all travellers. There are four other airports in New Brunswick that transport local workers to the oil sands.

I estimate that conservatively somewhere between 2,000 and 3,000 people live in New Brunswick and commute to Alberta for employment -- with the vast majority of them working in the oil sands.

In 2010, the average wage for a worker in Alberta’s oil and gas extraction sector was $2,230 per week, or more than $116,000 on an annualized basis.

If my employment estimate is correct, the Alberta oil sands support somewhere between $230-million and $350-million worth of employment income for New Brunswick residents -- most of which finds its way back to the home province. The induced effects of this spending would support another 1,000 to 2,000 jobs across the province.

But thousands of direct and induced jobs are not the main benefit to the Maritime provinces. If all development in the oil sands was scuppered tomorrow, it would jeopardize a significant portion of fiscal equalization payments provided by the federal government to less prosperous provincial governments. According to Finance Canada, in 2011-2012, New Brunswick was slated to receive $1.5-billion in equalization, Nova Scotia gets $1.3-billion and Prince Edward Island collects $337-million.

A recent study by the Canadian Energy Research Institute estimates Alberta’s oil sands will generate $307-billion in tax revenue across the country over the next 25 years of which $187-billion will go to the federal government.

For better or worse, directly and indirectly Alberta’s oil sands are also the Maritime provinces’ oil sands.

Therefore, governments in the Maritime provinces are not disinterested bystanders in the debate over Alberta bitumen and its potential markets. The fate of the oil sands will have lasting economic implications for all parts of Canada -- in particular its eastern most provinces.

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