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Tallying Trans Mountain pipeline’s benefits
GARY PARK For Petroleum News
Tripling capacity of Kinder Morgan’s Trans Mountain pipeline from the Alberta oil sands to the Pacific Coast could pump C$73.5 billion (in 2012 dollars) over 20 years into the pockets of producers while eliminating the need to use rail to move crude out of Western Canada.
Those conclusions are contained in an 89-page report to Canada’s National Energy Board by Dallas-based consulting firm Muse Stancil and updated estimates of the project’s wider economic benefits by the Conference Board of Canada.
The Muse Stancil report replaces earlier evidence commissioned by Kinder Morgan from Steven Kelley, a consultant before he was appointed this fall to a seven-year term on the NEB, triggering conflict-of-interest accusations.
The report said the project, whose current price tag sits at C$5.4 billion to boost capacity on the pipeline to 890,000 barrels per day, would give Western Canadian producers access to previously untapped Asian markets, while reducing the volumes that are “forced” into lower-price North American markets.
During the first year of operation, the new Trans Mountain system would “largely” eliminate the need to use more expensive rail transportation, although continued production increases would again make rail a significant element of the transportation mix, Muse Stancil said.
Neil Earnest, president of the consulting firm, told reporters that the analysis is “fairly straightforward ... (connecting) a huge source of crude oil supply with a market that has growing demand and it does that in a very economically efficient basis.”
He said that the economic case is unchanged even with oil at US$45 a barrel because the pipeline is a long-life asset that would operate for decades.
Benefits to economy The Conference Board argued that the benefits of opening up new markets would ripple through the rest of the Canadian economy in tax revenues and jobs.
It estimated improved producer netbacks would tally almost C$24 billion over two decades, with C$14 billion flowing into Alberta government coffers and C$1.4 billion reaching British Columbia, while 14,000 people would be employed at the peak of construction and 3,300 direct and indirect jobs would be created annually over 20 years of operation.
The board also estimates Canada’s gross domestic product would benefit to the tune of C$12.2 billion over 20 years.
Kinder Morgan Canada President Ian Anderson welcomed the reports as reaffirming “the very real need and significant benefits the pipeline would bring to all Canadians. ...”
The NEB has until March 20, 2016, to complete its review of the Kinder Morgan application - a four month extension of the regulator’s previous deadline.
It said the delay will give itself and interveners time to respond to new information.
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