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.
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.
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 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 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.