PIPELINE CRISIS’ COST,

With the deadline for the Trans Mountain expansion days away, a new report estimates the pipeline crisis has cost the Canadian oilpatch $12 billion in forgone revenues during the past five years.

“We estimate that a widening of the (heavy oil benchmark Western Canada Select) discount has cost the energy sector north of $12 billion in forgone revenues over the past five years — on top of the actual cost of increased reliance on expensive rail transportation and reduced investment,” CIBC Capital Markets’ economists Benjamin Tal, Andrew Grantham and Katerine Judge wrote in the report published Monday.

CIBC’s report quantifies the level of dismay in the oilpatch thus far, where tensions are mounting ahead of Finance Minister Bill Morneau’s sold-out speech in Calgary on Wednesday, at which many executives hope he will announce a resolution to the fight over Kinder Morgan’s $7.4-billion Trans Mountain project.

The CIBC report also highlighted that “wider spreads and transportation uncertainty have been holding back investment in the energy sector recently, and by extension real economic activity” in Canada.

While capital expenditures related to oil and gas in the U.S. began to rebound in the middle of 2016 following the oil price crash that began in 2014, in Canada capital expenditures have continued to languish and could continue to fall without new pipeline capacity, the bank noted.

“Thanks to fairly stable growth and politics (in contrast to the populist wave in other countries), Canada has been perceived as a good place to invest recently,” CIBC’s economists wrote, warning “that reputation could, however, be dented by further delays in major projects and impact business investment, not just within the energy sector, but within the wider economy as well.”

Morneau’s visit has elicited extraordinary interest, with The Calgary Chamber of Commerce confirming the event, set for May 30, sold out within hours.

Morneau, who has been negotiating with Houston-based Kinder Morgan Inc., for the federal government, will be speaking the day before the company’s Thursday deadline to resolve the pipeline dispute that has ignited a trade war between Alberta and British Columbia.