TOUCHING A NERVE
Flurry of reader comments on the future of pipelines suggests Canada is deeply split on this issue.
Whew! My column on the future of pipelines in Canada certainly touched a nerve. I received many reader comments, pro and con, which suggests that we as a country are deeply divided on the issue. Here are a few of them, edited for space and clarity. Comment: I grew up in Smooth Rock Falls, a small, one-industry (pulp & paper) town in northern Ontario. The population reached approximately 2,200 at its peak. Unfortunately, the plant became unprofitable and was razed to the ground a few years ago, resulting in the job loss. I’m sure this scenario has been played out in many other natural resource industry towns.
The oil industry, as you mention, could very well go the same way because of the short-sightedness of politicians and the influence of environmentalists on a newly elected Federal government that is sympathetic to pollution controls . . .
The rosy economy predicted by the Liberals’ infusion of some $30 billion will not increase the sale of oil unless Ontario, Quebec, the environmentalists, the natives, and all other protesting groups are overcome by NEB rulings and the life blood of Canadian resources is restored. — Ivan Desilets, Milton Comment: I’m trying to figure out how you can justify promoting oil pipelines for Canada. Do you not believe in climate change? If so, then how do you think that the Canadian tarsands will fare when governments take the necessary steps to transition to a post-carbon economy? It strikes me that in a world where people use less and less oil, the most expensive oil will be the first to get frozen out of the market. And isn’t that the non-conventional oil, such as the tarsands? — Bill Hulet, Guelph, Ont. (and author of Walking the Talk: Engaging the Public to Build a Sustainable World) Comment: We released a brief recently that questions whether new access to markets is needed anymore. Key assumptions that underlie the argument that pipelines to tidewater will help the oil industry have changed dramatically. For example, the price spread that once existed between the Canadian oil benchmark (WTI) vs. the global benchmark crude (Brent) has all but disappeared in recent months.
In fact, WTI crude was more expensive than Brent in January this year. The value of the benchmark for lower quality oilsands crude (WCS) would no longer be increased if there were new access to tidewater. Crude sent to Europe or Asia would likely fetch lower prices for Canadian producers than they currently receive at U.S. refineries. The best price available for Canadi- an heavy crude is at the world’s largest heavy oil refining hubs in the U.S., to which producers currently enjoy full access.
There are no longer pipeline constraints on the horizon in the medium-term. Low oil prices have slowed the expansion of oil production in western Canada. A recent analysis shows there is now more than 500,000 barrels per day in extra take-away capacity from western Canada to U.S. refining markets.
Low global oil prices are causing the Alberta oil sector’s woes, not the price differential. New pipeline capacity and tidewater access would not solve this problem. — Adam Scott, Climate & Energy program manager, Environmental Defence (a Canadian environmental charity based in Toronto) Comment: Canada needs to build pipelines quickly to help in the reduction of green house gas (GHG) emissions. I am not saying Canada shouldn’t make its contribution as part of an overall reduction strategy — all I’m saying is: let’s look at the real global numbers.
The common enemy is coal . . . and it is everywhere in the world. According to the World Resources Institute, 1,200 new coal-fired plants with a total installed capacity of about 1.4 million megawatts are being built or proposed globally. Once they are built, they will be in production for 20 years. So for decades, more GHG will be released. The forecast is to increase capacity from coal by 40 per cent by 2030. What can we do? This may sound crazy, but a coal-fired plant emits three million tons of GHG per year. Natural gas fired plants are 45 per cent more efficient. Coal-fired electric power generation emits around 2,000 pounds of carbon dioxide for every megawatt-hour generated, which is almost double the approxi- mately 1,100 pounds of carbon dioxide released by a natural gas-fired electric plant per megawatt-hour generated. So if we could find a way to replace just half of the proposed coal-fired plants with liquefied natural gas (LNG), we would reduce the global GHG production by 810 million tonnes annually.
Canada should be exporting as much LNG and oil as possible; we should not be leaving it in the ground. We need to replace coal! — Stewart Beatty, P.Eng., Toronto Comment: Alternative power will generate vast employment, a lot of it community-based. The new economy of alternative energy will yield more people employed than is currently the case with fossil fuels. Decentralization will also help with security concerns. There is now a town in the heart of Texas conservative/oil country that will be 100 per cent renewable. The technology exists to take Toronto off the grid . . . Costs will come down dramatically over time. Therein lies great investment potential for those who are patient. — Kevin Conway, Niagaraon-the-Lake, Ont.
As you can see, there is no consensus on this issue. But it’s a debate we need to have. The implications for our national well-being can’t be ignored. Gordon Pape’s column appears every second Saturday. Contact him at gpape@rogers.com. Follow him on Twitter at twitter.com/GPUpdates