Lack of pipelines costing Canada tens of millions a day, report says

Employees of the Canadian Pacific Rubiales Petroleum Company.

Credits: REUTERS


CALGARY - Canada is losing out on up to $70 million a day in oil revenues for every stalled pipeline project, a think-tank's new report says.

"We were looking at the extent to which pipelines could constrain growth in oil production," said Michael Hall, senior economist with the Canada West Foundation and lead author of Pipe or Perish: Saving an Oil Industry at Risk.

"If we don't have a pipeline to get the oil out of Alberta, that oil is not going to be produced."

Unless projects like the proposed Trans Mountain, Northern Gateway and Keystone XL pipelines go ahead, Canada will miss out on $1.3 trillion in economic output, 7.4 million person-years of employment and $281 billion in tax revenue over the next two decades, Holden said.

"It takes a long time to get these things built and that's the problem."

He said Alberta could run out of export pipeline capacity within three years or even less.

Canadian oil is only exported to the U.S. and Holden said new markets will have to be found for the industry to grow properly.

"We have a transportation system that was built to serve the U.S. market and that hasn't been a problem for decades, but it's becoming more of an issue now," he said.

"We don't recommend the construction of any one pipeline, but we do need access to Asia one way or the other.

"We also need access to the U.S. Gulf Coast and Eastern Canada, whether that's to refineries in Quebec and New Brunswick or whether it's tide water access from there, or both."

Booming production south of the border combined with a drop in demand for Canada's oil because of the sluggish U.S. economy as well as Canada's lack of access to Asian markets means we're missing out on potential revenue, Holden said.

"What needs to change is government has to speed up the process for approving pipelines, and industry needs to make sure they have the social licence and public support to build these," he said.

"And that means building as safe and environmentally friendly pipeline as possible and having the oilsands produce in as environmentally way as possible."

In a statement, Federal Natural Resources Minister Joe Oliver said his department agrees with the report.

"Today's report ... reinforces what our government has said all along, reaching new markets for our natural resources is critical for Canadian jobs, economic growth and long-term prosperity across our country," he said.

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