Damning report on Kinder Morgan Trans Mountain pipeline says project not needed
A new damning report on the case for the Trans Mountain Pipeline expansion is bad timing for Kinder Morgan. It was released as Kinder Morgan tries to raise $1.75 billion through an initial public offering (IPO) on the stock market.
The new report titled "Will the Trans Mountain Pipeline and Tidewater Access Boost Prices and Save Canada's Oil Industry?" concludes arguments in favour of the project are based on faulty assumptions.
It's the result of 6 months of study by scientist and former federal government energy researcher David Hughes. He says Kinder Morgan's arguments to the National Energy Board (NEB), as well as Alberta and federal government claims, that that a pipeline to tidewater is needed to provide higher paying markets, and resulting windfall revenue to Canadian oil producers, aren't based in reality.
Hughes says oil prices internationally and in North America are now nearly identical, meaning Canadian producers most likely will receive lower prices overseas, especially when the higher transportation costs involved in transporting bitumen by pipeline then by tanker are factored in.
He also found considering both the most-recent NEB projections and the Alberta government's cap on oil sands emissions, Kinder Morgan has overestimated oil supply by 43 per cent over the next 20 years.
As well Kinder Morgan had an expectation that no other export pipelines would be built. But Ottawa has now approved Enbridge's Line 3 project and US President Trump has approved TransCanada's Keystone XL pipeline.
Hughes says those projects would create a 13% surplus of export pipeline capacity -- even without the Trans Mountain Pipeline expansion.
The report concludes the Trans Mountain pipeline isn't needed and would place unnecessary risks on BC's Lower Mainland and sensitive marine environments and urges the BC government to withdraw provincial approval for the project.
Hughes' report also points out increasing oil and gas production, while at the same time trying to reduce carbon emissions, are conflicting priorities. And criticizes Canada for having no energy strategy beyond liquidating its remaining resources as fast as possible when the country really needs a comprehensive energy strategy to address future energy security and commitments on climate change.
The report -- titled "Will the Trans Mountain Pipeline and Tidewater Access Boost Prices and Save Canada's Oil Industry?" -- was undertaken as part of the Corporate Mapping Project (CMP). The CMP is a six-year research and public engagement initiative jointly led by the University of Victoria, the Canadian Centre for Policy Alternatives BC and Saskatchewan Offices, and the Alberta-based Parkland Institute. The research was supported by the Social Sciences and Humanities Research Council of Canada (SSHRC).