I have written a lot about pipelines at this blog and last night while watching Denis Coderre attempt to hijack the Energy East pipeline discussion I said to myself: enough is enough I want to write a blog post to express how I feel about the subject. For people new to my blog a quick background, I am a pragmatic environmentalist, a Professional Chemist and a Professional Biologist and have spent my career cleaning up the messes made by our industrial society including those from oil and gas spills. This blog is chock full of articles on oil, pipelines and renewable energy alternatives. I do not deny climate change and recognize the need to meet our Paris Agreement commitments. I also love my country and its ecological heritage and work hard to protect both.
That being said let’s start with the basis of this discussion: the Energy East pipeline proposal (Energy East). For those of you not familiar with the project, Energy East is a 4,600-kilometre pipeline designed to carry 1.1-million barrels of crude oil per day from Alberta and Saskatchewan to refineries in Eastern Canada. Its entire length remains within Canadian boundaries (does not cross the US border) and would thus not be affected by US political concerns. Backers of Energy East point out that Quebec and New Brunswick currently import more than 700,000 barrels of oil every day (b/d) – or 86 percent of their refinery needs – from countries such as Algeria, Iraq, Saudi Arabia and Nigeria. For a full breakdown of the countries of origin of Canadian oil imports see Table 7.2a of the CAPP Stats Handbook. As indicated in the Handbook, the direction is swinging towards the U.S. but it still represents imports and that U.S. oil will be imported by rail (more on that later). While the supporters of the pipeline are predicting over 700,000 b/d, CAPP reports that refineries in Québec and Atlantic Canada currently import 90 per cent of their requirements. This translates to a potential 640,000 b/d domestic market opportunity for Canadian suppliers.
So why is this important? Well, we live in a society that like it or not, is dependent on oil and the products of oil (petroleum hydrocarbons). Our food is produced on farms that need heavy equipment to operate. That food is shipped around the world by airplane, boat and rail all of which rely on petroleum hydrocarbons to operate. Petroleum hydrocarbons aren’t just refined into fuel to run our vehicles, they also serve as the feedstock of the petrochemical industry. Petrochemicals form the basis of all the things that make our modern world work. They are the building blocks of our plastics, our computers, the tools we need to keep us healthy and the drugs we take when we are sick.
As I have written numerous times at this blog, I see a need to wean our nation off fossil fuels as an energy source. At some point if we are to avoid the serious consequences of climate change we will need eliminate fossil fuels from our energy mix (the sooner the better). However, contrary to what many say, the process of doing so will take not years but decades and in that time we will still need petroleum hydrocarbons. So the question that must be asked is where do we get those petroleum hydrocarbons from in the meantime?
I know that the concept of “Ethical Oil” has become something of a hot potato because of issues surrounding the origins of the term, but I do believe in the concept behind the term. I want my personal gasoline purchases to go towards subsidizing Medicare and not subsidizing a despot or paying for a tyrant to bomb his neighbour. I want to know that the oil used in my car was not generated using slave labour in a country without a free press and where environmental regulations are noted by their absence rather than their application. I want my oil being produced by well-paid Canadians, in a country with a demonstrably free press, strong government oversight and a strong tradition of NGOs to watch over the regulator’s shoulder.
In Canada the majority of our raw petroleum supplies are located in the interior of the continent and so must be moved somehow. The safest way known to move petroleum products (on a per barrel basis) is via double-hulled tankers but double-hulled tankers do not work on land so we are left with the options of pipelines or oil-by-rail. Some suggest that rail can’t handle the volumes produced in Canada, and they are wrong. The Canadian Association of Petroleum Producers (CAPP) report: “Crude Oil Forecasts, Markets & Transportation” indicates that current oil-by-rail capacity is around 1 million bpd and is readily expandable to 1.4 million bpd. This 1.4 million bpd greatly exceeds the Energy East capacity of 1.1 million bpd. The CAPP document only describes the Canadian situation and does not include US oil-by-rail capacity which, believe it or not, is comparable to, and will soon be greater than, our own.
Transporting oil and gas by pipeline or rail is in general quite safe, but when comparing the two methods, rail has been found to be over 4.5 times more likely to experience an occurrence than pipelines, and when it does, we get more Gogamas, Galenas and Lac Megantics. Moreover, since our railways tend to follow our river valleys any major spill will more than likely also result in serious ecological consequences. From a pragmatic perspective, pipelines represent the safest, most environmentally responsible way to transport oil over land. Even from a greenhouse gas perspective, pipelines use less energy to transport oil than rail.
Now not all pipeline projects are equal. I have written that I am against shipping bitumen from the North Coast, but would be a fan if David Black’s Kitimat refinery were brought online to refine the crude oil/dilbit prior to shipping. I agreed with Keystone because I recognized that the US Gulf Coast refineries are dependent on low API feedstock which meant either Canadian crude or oil imported from Venezuela or some other unstable country and as I noted above I believe conflict-free oil should be the preferred energy source for North American refineries. I am up and down on the Trans-Mountain expansion. I would really love to see the pipeline updated as the current pipeline is over 60 years old and is literally the lifeline for our west coast economy providing virtually all of the petroleum products we rely on. However, I am becoming less and less enamoured with the project as the proponents have worked their way through the process. Their secrecy and unwillingness to share necessary information on spill response etc…concern me deeply. The one pipeline I see as a no-brainer is Energy East as I have written numerous times on this blog.
As I discussed in my previous posts, I am strongly of the opinion that the absence of pipeline capacity is not going to be the tool needed to “strangle the oil sands”. In my opinion the only way to slow, or arrest, the growth of oil sands capacity is through some combination of government action (placing a sufficiently high price on carbon) and the market (reducing demand so that prices remain low enough to make new investment unprofitable). As I have written before, and will apparently need to repeat here, blocking Energy East does neither of these two things. All blocking the development of Energy East will do is to increase the amount of oil shipped by rail. Given this reality, the output from the Alberta and Saskatchewan oil fields is going to be transported to market by one means or another and in the absence of pipelines that load will be carried by rail.
As I have pointed out more times than I care to mention on this blog, oil-by-rail is one of the riskiest, least environmentally sound, ways of getting crude to market in a Canadian context. So as a pragmatic environmentalist I really have no choice, I have to push to ensure that the petroleum products we need are transported in the safest, most environmentally respectful method possible even as we look for ways to reduce our reliance on these products, that means Energy East.
As a Canadian I also have to point out again that Canadian oil helps support Canadian jobs, Canadian institutions and provides the funds to pay for our education and medical systems while subsidizing transfer payments. Any rent-seeker who thinks that blocking the pipeline will somehow help them is barking up the wrong tree because the Saudis, Nigerians and Americans, who are currently supplying the east coast refineries, are not paying into our Federation, they are siphoning money out of it. If you want your bridges, roads and sewage plants built/repaired then you are going to need money and blocking Energy East is exactly the wrong way to obtain those funds.