The mismatch between the level of oil production in Canada and the pipeline capacity to get it to markets is causing a "staggering" blow to the Canadian economy, Toronto Dominion Bank deputy chairman and former New Brunswick Premier Frank McKenna said Tuesday.
Mr. McKenna, speaking at a Bloomberg conference in Toronto, said the country's entire economy is being damaged by the delays in getting new pipelines built, yet the people who would benefit from higher investments in health care and transportation "are not part of the [pipeline] debate at all."
"The value destruction in Canada is staggering," he said. "The amount of money that we are vaporizing every day in this country is staggering."
Mr. McKenna said the country could lose as much as $1-trillion in GDP over the next 20 years, and $30-billion in tax revenue over that same period, if new pipelines are not built and the gap between domestic prices and world prices is not closed.
Eastern Canada has as much to gain as the West, he noted, because refineries in Eastern Canada are currently playing the higher world price for their crude, a situation that could be altered if Western crude could be shipped across the country.
Mr. McKenna said one reason it is more difficult to get pipelines built today than in decades past is that social media makes it easier to organize opposition to them.
He also said that pipelines essentially have to fight a "proxy war" to get built. "Fighting pipelines is a proxy for fighting the oil sands, it's a proxy for fighting elections….and it could be a proxy for First Nations' claims, and possibly even nationalism in Quebec."
As a result, pipelines companies are in a "very uncomfortable spot" of trying to fix issues that have very little to do with their actual business.
Enbridge Inc. chief executive officer Al Monaco, who was on the panel with Mr. McKenna, said that the current pipeline debate is, in essence, "informed by [the] opposition to fossil fuels." Pipelines have become a target, he said, because they are no longer seen as a mundane part of the oil industry value chain, but the "enablers" that get oil and gas from production to the downstream markets.
Enbridge's proposed Northern Gateway pipeline would take Alberta crude through British Columbia to the west coast, but it has met with fierce opposition from environmentalists and many First Nations leaders.
The Liberal government in British Columbia has also expressed reservations about Northern Gateway and set a number of conditions for its approval. In an interview, Mr. Monaco said the re-election of the Liberal government in B.C. shows that "there needs to be a balance between economic development and ensuring safety and environmental protection. I think B.C. wants both of those."
He said the Liberal government's "road map" for discussions about the pipeline is useful. "We think we can work with them."
A review panel looking into the Northern Gateway project is scheduled to deliver its recommendation by the end of this year.