Journal of Commerce | by DAVE BASPALY | Dec 12, 2016
COCA supports the decision of the Government of Canada to approve the two pipeline projects of Kinder Morgan and Enbridge, Inc. The approval from Prime Minister Justin Trudeau follows a three-year study by the National Energy Board (NEB) that completed a detailed, scientific, social and environmental examination of the issues surrounding the pipelines.
Dave Baspaly
The approval is conditional upon 157 requirements set forth by the NEB within its 533-page report. The Province of B.C. has also set five conditions that it says must be met.
The NEB concluded that: “On the whole, taking into account all of the evidence in the hearing, considering all relevant factors, and given that there are considerable benefits nationally, regionally and to some degree locally, the board found that the benefits of the project would outweigh the residual burdens. Accordingly, the board concludes that the project is in the Canadian public interest.”
The two pipelines would help to alleviate existing transportation bottlenecks and provide the safest alternative for moving the product to market. Not building the pipelines would mean that more oil would be moved by the higher risk and more expensive rail option.
The projects, both during construction and when complete, would provide significant economic benefits for B.C. and Canada as a whole.
The benefits will come from the expanded capacity to send crude oil to Asian markets and increase prices for Canadian crude oil.
The increase in the price per barrel would result in more taxes being collected from the sales.
Kinder Morgan’s project would essentially twin an existing pipeline and nearly triple its total capacity to 890,000 barrels per day.
The Enbridge project would replace a pipeline from Alberta to Wisconsin and would double export capacity to 760,000 barrels per day. It would span 1,659 kilometres and cost an estimated $7.5 billion.
In both pipelines, the new standards for design and construction would be higher, resulting in a greater measure of safe operation.
The Kinder Morgan Trans Mountain Project is currently estimated to cost $6.8 billion to essentially twin the 1,150-kilometre existing pipeline.
Kinder Morgan estimates that 15,000 construction jobs would be created with an additional 37,000 jobs that would be directly and indirectly associated with the project.
In total, over 20 years of operations, about $47 billion would be generated in provincial and federal taxes.
In addition, the NEB concluded that the project would create “diverse markets for Canadian oil,” much needed to achieve the best price for the product. More buyers would mean higher prices.
The NEB identified additional benefits in the form of the “development of capacity of local and indigenous individuals, communities and businesses” and “considerable benefit from direct spending on pipeline materials in Canada.”
Throughout its report, the NEB emphasized environmental, operational and construction safety: “The Board requires NEB-regulated pipeline companies to consider thoroughly all of the hazards and potential hazards that are associated with their pipeline systems, and demonstrate to the board that the appropriate safety and risk management plans and measures are in place.
The board provides considerable regulatory oversight throughout the pipeline lifecycle to verify that companies comply with regulatory requirements, and adequately and effectively anticipate, prevent, manage and mitigate risks to people and the environment.”
COCA endorses this careful and thoughtful approach.