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Blocking pipelines to B.C. would entail loss of billions: study

Native protestors demonstrate in Vancouver against the proposed Northern Gateway pipeline.

Simon Hayter/The Globe and Mail

Canada will forgo billions of dollars in gross domestic product and government revenue if oil companies are unable to access markets off the Pacific coast, according to a new study.

Moving Canadian heavy oil to the West Coast, where it can be shipped to markets in California and Asia, could add up to $131-billion (U.S) to Canada's GDP between 2016 and 2030, according to a new study prepared by researchers at the School of Public Policy at the University of Calgary. This translates to $27-billion in federal, provincial and municipal tax receipts, the academics calculated.

Politicians, the energy industry, and others supporting pipelines to the West Coast continually point to the predicted economic benefits for Canada if more infrastructure designed to carry oil westward were built. However, precise numbers have been scarce. The university's report will give pipeline proponents tangible, independent, numbers they can use to support their arguments. But at the same time, price scenarios and forecasts are notoriously difficult to nail down.

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The study expects 649,000 person-years of employment would be created if greater access to Pacific tidewaters materialized. It predicts Canadian heavy oil will be worth $6.65 more per barrel in 2016 in California, and up to $8.77 more per barrel in 2013, compared to oil sold in certain other markets. Oil reaching Asia will put an extra $10.30 per barrel in producers' pockets in 2016, minus transportation costs, and $13.60 per barrel by 2030.

"Those higher prices for Canadian heavy oil would translate into massive increases in profits, jobs and government revenues. With the necessary governmental backing for new pipelines, oil producers with easy access to international markets could add up to $131-billion (U.S.) to Canada's GDP between 2016 and 2030," the report said. "Every single province and territory will realize fiscal and economic gains by supporting a healthy, globally focused national oil industry."

The report adds: "The outcome in terms of GDP throughout the Canadian economy of exploiting the full range of this differential is non-trivial, approaching 1 per cent annually in an economy currently estimated at $1.57-trillion dollars."

Two main projects are focused on shipping Canadian crude to the West Coast: expansion of Kinder Morgan Inc.'s existing Trans Mountain pipeline; and construction of Enbridge Inc. 's controversial Northern Gateway pipeline.

The federal government is a strong supporter of shipping to the West Coast, but opponents argue the potential for pipeline leaks and tanker spills make the projects unworthy. Further, green groups are pushing to block the pipelines in hopes that this will slow oil sands production, which is expected to double to three million barrels per day by 2020. At Canada's forecast rate of oil production growth, existing pipelines in all directions could reach capacity as early as 2014, the industry calculates.

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