- The Energy Mix - https://theenergymix.com -

No Business Case for Trans Mountain, Ex-Cabinet Minister Warns, as Decision Day Nears

btr/Wikimedia Commons

With the Trudeau government widely expected to announce re-approval of the Trans Mountain pipeline expansion tomorrow, news reports have excitement building in Calgary, and a former Liberal cabinet minister warning there’s no business case for the project.

The critical analysis comes from David Anderson, who served 10 years in various portfolios under prime ministers Jean Chrétien and Paul Martin and has since emerged as a Trans Mountain opponent. “There is no credible evidence to suggest that Asia is likely to be a reliable or a significant market for Alberta bitumen,” Anderson told six present-day cabinet ministers in a letter dated June 11.

Like this story? Subscribe to The Energy Mix and never miss an edition of our free e-digest.

The missive questions the “perceived need for a pipeline connection with tidewater in order to sell Alberta bitumen in Asian markets, where, so it is claimed, it would find new purchasers.” Anderson adds that, “with respect, you and other government ministers have yet to provide evidence in support of that hope.”

Background: See the Energy Mix Special Report, Alberta’s Bitumen Pipe Dream [2].

Anderson “wrote that Asian refineries have better supply options than Alberta. Compared with conventional light and medium crude oil from Nigeria and the Middle East, Alberta bitumen is expensive to produce, hard to handle, and provides no security of supply advantages,” The Canadian Press states.

“Further, he said despite access to tidewater through unused pipeline capacity in the existing system and through American Gulf of Mexico ports, Alberta’s bitumen has not found or developed any significant offshore market in Asia or anywhere else.”

“Why? Because buyers are few and far between,” Anderson wrote. “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.”

He told CP he’d sent the letter as a member of the Liberal party, concerned that the government hadn’t made a business case for the project. “You’d think the people who own the pipeline, the Canadian taxpayers, should be informed of what their asset is likely to bring in,” he told reporter Laura Kane.

The CP coverage includes counter-arguments from University of Calgary economist Trevor Tombe and IHS Markit analyst Kevin Birn, both of whom believe there will be a market for Canadian bitumen if the Trans Mountain expansion is built.

Meanwhile with the federal announcement expected June 18 and Finance Minister Bill Morneau due to address the Economic Club of Canada in Calgary the following day, the London Free Press reports [3] that fossil optimism is running high.

“Something is definitely developing,” said Canoe Financial senior portfolio manager and director Rafi Tahmazian, after trainloads of pipe were spotted moving west along the CP rail line through the city.

“I believe that First Nations ownership is going to mitigate a lot of the uncertainty that is out there,” said Delbert Wapass, founder and executive chair of Project Reconciliation, an Indigenous consortium seeking a stake in the project. “Part of reconciliation is reconciling through economics.”Earlier this month, CBC reported [4] that Project Reconciliation was just one of two Indigenous groups looking to buy into the project, with the Alberta-based Iron Coalition issuing formal invitations to 47 First Nations and about 60 Métis organizations to join in.

5 Comments (Open | Close)

5 Comments To "No Business Case for Trans Mountain, Ex-Cabinet Minister Warns, as Decision Day Nears"

#1 Pingback By No Business Case for Trans Mountain, Ex-Cabinet Minister Warns, as Decision Day Nears – Enjeux énergies et environnement On June 16, 2019 @ 11:29 PM

[…] The Energy Mix [5]; via […]

#2 Comment By Derek Hill On June 17, 2019 @ 10:21 AM

The sleeping giant avoided in all these arguements is new safe ,absolutely no carbon emissions nuclear. Alternative energy is great but the huge problem is storage for more than a day. But India China ,the U.S. are all ready to build nuclear reactors that use liquid fuel that drains to stop the reaction if cooling systems fail. These systems are “fail safe” requiring no human input as opposed to all the present nuclear reactors such as Chernoble or Fukishema. Most designs can even burn the masses of partially spent stored uranium, and the production of radiation medical isotopes urgently required is simple. Most new designs can be sized small enough to be put on trucks for mass production and delivery enabling cost reduction and simplified electrical grids.
Time is critical and zero carbon emissions can be achieved if the public just realizes not all nuclear is bad and these new “safe” reactors could save the world

#3 Comment By Angela Bischoff On June 19, 2019 @ 4:00 PM

Derek, the nuke industry around the world is a dying industry. No countries are buying new nukes except India and China. Renewables are out-competing the nuke industry. As a last gasp, the nuke boys are now begging countries, including Canada, to subsidize their experimental small modular nuclear reactors. But this is just another pipe dream that will surely suck many more billions of taxpayer dollars unless citizens say no. And no, we do not need radioactivity to produce medical isotopes – linear particle accelerators are creating medical isotopes around the world much more safely and at much lower cost than nuclear technology ever did – with no dangerous radioactive waste to contend with. They’re even producing medical isotopes in SK with linear accelerators.

#4 Comment By Don Scott On June 18, 2019 @ 1:21 AM

What a joke. Draw in impoverished Indigenous bands to buy the old Kinder Morgan pipeline (Now generally called Trans Mountain) somehow makes the pipeline legitimate because of the impression that Indigenous people are inherently environmentally conscious and they would never pollute the land, water and air. Where are they getting the $4.5 billion from? Or will the Feds turn this dog of a pipeline over to the Indigenous bands as part of a reconciliation scheme, but outright giving them the pipeline or guaranteeing all the loans to buy it and invest another $8-10 billion in tripling its capacity. Of course they are betting that it would be politically incorrect to condemn an Indigenous owned pipeline.
As former Liberal Environment Minister David Andersen has noted, there is no economic (let alone environmental) case for the pipeline.
BP recent Statistical Review of World Energy just reported that 2018 saw a significant increase in energy consumption worldwide and that GHG increased by 2% last year, the fastest rate in 7 years.
Just when Canada and its Indigenous peoples should be taking the lead in showing leadership in reducing GHG’s to save the planet for future generations – now we have the Government of Canada and some bands trying to increase Canada’s contribution to increasing GHG’s well beyond current levels.
It is this kind of hypocrisy that destroys citizens trust and confidence in their governments – especially self described progressive governments. Canada is not immune.

#5 Comment By Ruth On June 19, 2019 @ 3:30 PM

Frankly, I think this ‘deal’ is a trick to further indenture impoverished Indigenous bands by ‘offering’ them the opportunity to be among the ‘big players’ in the Canadian Fossil Fuel Industry. What band members are likely to find is that well before they are able to pay off the loan to the Government, the pipeline will be completely worthless and these bands will be further indebted to the Government of Canada.
Reconciliation at its most cynical!