CALGARY—Politicians and business leaders alike tout the Trans Mountain pipeline expansion project as a catalyst for thousands of well-paying Canadian jobs and an additional conduit to Asian markets thirsty for Alberta’s crude oil.
Trans Mountain Corporation says construction on the twinning of the existing 66-year-old pipeline between Edmonton and Burnaby, B.C., would create “15,000 equivalent jobs” each year, citing Conference Board of Canada estimates. Another 37,000 “direct, indirect and induced” jobs are anticipated for each year of pipeline operations.
Tripling the system’s capacity would boost market access to Asia, a region the International Energy Agency expects to consume far more oil over the next several decades. Both Alberta’s current and former premiers claim the project would diversify export markets and lessen the overwhelming reliance on oil sales to the United States.
Yet the project’s job figures are misleading, say two economists, and Canada’s oil-and-gas industry hasn’t used tidewater access available through the existing Trans Mountain pipeline for over a decade.
Kinder Morgan’s own socio-economic report filed as part of its original December 2013 application to the National Energy Board estimated just 90 positions — 40 in Alberta and 50 in B.C. — would be needed to operate the pipeline. As for construction, the project’s former owners expected to have roughly 4,500 workers on it during the peak season.
To put the Conference Board of Canada’s estimate into perspective, the entire U.S. pipeline transportation sector directly employed 47,900 workers in May 2019, according to U.S. Department of Labor statistics.
The real economic gains from a pipeline are found in corporate profits, higher wages for workers and government revenue for royalty-dependent Alberta, Tombe added. He criticized the economic modelling cited by Trans Mountain Corporation, saying the Conference Board of Canada estimates suggest workers are simply appearing out of thin air to fill jobs.
This isn’t the case, he said. Plenty of workers who’ll be involved with Trans Mountain will be leaving their old positions — or simply moving with their company from a different project to TMX itself.
“What are the long-run implications for total employment at Trans Mountain? Zero, plus or minus a little bit here and there,” Tombe said.
In an email Monday afternoon, a spokesperson for Trans Mountain Corporation said the TMX job estimates “reflect the most recent economic impact numbers available based on the latest project cost estimate and scope.” They did not immediately respond to a followup question about the number of jobs Trans Mountain would need to directly support the pipeline’s operations.
Over the past several years, Alberta politicians and oil-and-gas industry leaders have also claimed TMX would be a boon for oil producers looking to sell more crude oil to Asian markets, particularly China and India. During her premiership, NDP Leader Rachel Notley frequently referred to Asia while describing the need to find new international buyers. Premier Jason Kenney toured India’s massive Jamnagar oil refinery last September during a visit as Official Opposition leader.
Despite international concerns about greenhouse gas emissions from fossil fuels, developing countries could see an increase in consumption. According to this year’s crude oil market report from the Canadian Association of Petroleum Producers — a lobby group for the oil-and-gas industry — China and India will need 8.2 million more barrels per day (bpd) in 2040, compared to their consumption in 2017. Together the two counties are expected to account for roughly 70 per cent of the global increase in oil demand over that period. Both imported staggering amounts of oil from Russia, Saudi Arabia and other major producers in the Middle East last year.
In spite of industry complaints about a lack of pipeline capacity to the West Coast, Alberta’s oil production is expected to increase. Robert Skinner, an executive fellow at the University of Calgary’s School of Public Policy, believes there is a strong business case to be made for shipping Alberta heavy crude to Asia.
Not only is there huge demand for it, he said, particularly for jet fuel and diesel, but major suppliers in the area such as Russia and Saudi Arabia are prone to geopolitical uncertainties. Canada could easily fill that gap — and oil companies here bought space in TMX because they’re confident in the business case.
“I don’t think they base it on hope,” he said of their decision. “They base it on a rational examination of the markets and have made commitments to that pipeline capacity based on what they commercially perceive as a good business venture.”
But Robyn Allan, an independent economist who acted as an expert witness for the Alberta Federation of Labour at the National Energy Board hearings on TMX, is skeptical Canadian heavy crude will satisfy Asian markets.
Contrary to the industry’s assertions, she says there’s no indication that Asian markets are gearing up to process Alberta’s heavy crude — an oil that’s relatively difficult to upgrade.
“I have seen no evidence that suggests they’re making the investments in the refineries that would allow for what we’re being told is 540,000 barrels a day of diluted bitumen,” Allan said.
Former Liberal environment minister David Anderson also recently argued there isn’t a business case for TMX. In a June 11 letter to Prime Minister Justin Trudeau’s cabinet, he wrote the federal government has “yet to provide evidence in support” of the project.
He wrote that Asian refineries have better supply options than Alberta and that Canadian bitumen hasn’t developed a significant offshore market — in Asia or anywhere else — despite access to tidewater through unused pipeline capacity in the existing system, as well as through U.S. ports in the Gulf of Mexico.
“Why?” Anderson wrote. “Because buyers are few and far between. That remains the situation today, and there is little to suggest it will change in the future. Building a new pipeline will not change the market.”
Past and present exports don’t suggest a significant Asian interest in Canadian crude oil, according to David Huntley, a professor emeritus of physics at Simon Fraser University who studies tanker activity at Westridge Terminal.
His observations show a total of 151 tankers have loaded at Westridge since 2014, but only 19 went to China. Ten of those tankers shipped out in late 2018, which Huntley explained as the Chinese taking advantage of very low bitumen prices at the time.
“If a higher price were available in China, most or all 151 would have gone there,” he wrote in an email to Star Calgary.
Two loaded tankers went to South Korea from Westridge in 2018, his report shows, but Port of Vancouver reports don’t show any crude exports to the country between 2008 and 2017. India saw a small shipment of around 60,301 tonnes in 2013.
At B.C.’s Westridge Terminal, where tankers are loaded with oil from the existing Trans Mountain pipeline, space on the dock for overseas shipments has far exceeded the supply of oil for the last 13 years.
A pipeline’s capacity can fluctuate depending on the type of oil it’s moving and other factors, such as maintenance. National Energy Board data shows that Trans Mountain was capable of sending as little as 176,000 bpd to the terminal in January 2009 or as much as 346,000 bpd in September 2017. But in terms of the actual amount transported, the largest monthly transmission of heavy crude during that time was just 120,000 bpd in April 2010.
Allan argued this shows companies who want to move their heavy crude abroad do have access to tidewater; they just aren’t using it.
“It’s not as much demand as we think for new markets,” she said.
With files from the Canadian Press
Brennan Doherty is a work and wealth reporter with Star Calgary. Follow him on Twitter: @bren_doherty