Economist questions financial benefits of Alberta oil sands
There are a few things that economist Robyn Allan wants people to know about oil pipelines proposed for British Columbia.
For starters, that Canada, and even Alberta—where the heavy crude oil that will feed those pipelines is mined—has relatively little to gain from projects such the Enbridge Northern Gateway and Kinder Morgan Trans Mountain pipelines.
Another point that might surprise many: according to Allan, the development of the Athabasca oil sands (also called tar sands) could actually increase Canada’s dependence on questionable trade partners in the Middle East.
“The economic case that has been presented is one of glowing support,” she told the Straight in a telephone interview. “That perspective is biased, it misrepresents the fact, and, in some cases, it’s bogus.”
Allan, an expert witness at the Northern Gateway hearings, will present those arguments (among others) and the economics behind them at a forum in Burnaby scheduled for tomorrow (March 27).
Ahead of the event, she discussed the alleged misconceptions described above.
First, that oil sands bitumen—the technical term for the heavy crude Alberta wants to export through B.C. ports—is a boon for the country’s economy too great to miss.
Allan suggested that if the priority of oil sands development is to strengthen the economy, there are better ways to go about it.
“The oil sector in Alberta primarily plans to extract bitumen from the oil sands and export it raw—diluted with imported condensate—to other countries,” she explained, “where they will do the upgrading and refining, and where they capture the real economic wealth from the product.”
According to Allan, if the goal was to strengthen Canada’s economy, bitumen would be upgraded at facilities in Alberta (creating jobs and adding value to the petroleum product), and then moved east where there is a domestic demand in Ontario and Quebec.
“Eastern Canada needs about 775,000 barrels of oil a day and there is not enough oil to go around,” she said. “We cannot meet the energy security needs of Asia at the same time as meeting our own.”
A second claim that Allan challenged is that the development of the oil sands is about minimizing dependence on oil-rich nations with questionable records on human rights.
Allan explained that because much of Athabasca bitumen is slated for export, eastern Canada will have to continue to import oil from foreign sources.
She also called attention to the issue of condensate, a mixture of hydrocarbons that the industry uses to dilute bitumen to a point where it is light enough to flow through pipelines.
Canada does not have enough condensate to meet the oil sand's needs, Allan noted, which is why the Northern Gateway proposal is for a twin pipeline. Diluted bitumen will flow west from Alberta, and condensate will move east from B.C. ports.
Where will that condensate come from? The same trade partners in the Middle East that oil sands advocates argue they are helping buyers move away from, Allan emphasized.
“We’ll have a situation where we’re importing oil in eastern Canada,” she said, “and where we’re importing condensate, increasingly from the Middle East, in western Canada.”
The only long-term benefactors will be “a handful of multinational corporations and national oil companies owned by foreign governments,” Allan added.
“These pipelines should not be built,” she said. “There is no economic benefit.”
Allan’s presentation, “The Economics of Oil Pipelines and Tankers,” is scheduled for 6:30 p.m. on Wednesday (March 27) at Confederation Centre (4585 Albert Street) in Burnaby.
Comments
14 Comments
devils advocate
Mar 26, 2013 at 1:21pm
her talk should be truthfully titled "the leftist view of oil industry'
she is just another leftist ideologue spouting off...glad these types of people don't run the country
PJ
Mar 26, 2013 at 1:32pm
And how much is Robyn getting paid by the Greens ?
Eastern Canada dose not want the Dirty Alberta oil,they would rather import it from the Clean Middel East.
The oil cos.tried to build 3 refineries in AB.but were not approved as they would couse too much crbon,So they were built in the USA with thousands of jobslost to AB.
Now that causes less global carbon.
Big Oily Bully
Mar 26, 2013 at 1:37pm
How much of the risk in regards to the pipelines and tankers in BC belongs to China?
Randall
Mar 26, 2013 at 2:40pm
It is no real surprise that 'devils advocate' really has nothing to add to the conversation and can only toss around labels in some childish attempt to change the conversation away from the facts. Allan brings up a few of the specific issues and flaws with these projects. It is clear that the advocates for these projects know the facts are against them so they can only engage in pathetic spin and personal attacks. Perhaps those like 'devils advocate' could find something more useful to do with their time. What about a bit of exercise? How about a nice long swim in a tar sand tailings pond to help clear their minds of their misconceptions and distortions. Please take some of the people running the country with you. A few laps would do Harper, Baird, and cronies some good.
Da spike
Mar 26, 2013 at 2:49pm
PJ and devils advocate ---you should read the article before commenting
DavidH
Mar 26, 2013 at 3:11pm
One of the arguments being used by government pipeline supporters is that supplying China with oil will actually benefit the environment, because it will reduce China's dependence on coal.
Sadly, this argument only appeals to conservative non-thinkers.
Because, at the same time that they're pushing for Dilbit pipelines, they're also in the process of turning Vancouver into the largest coal exporting facility in North America.
To repeat: Vancouver will soon become the largest coal exporting facility in North America.
And in case you missed it - Vancouver is being turned into the largest coal exporting facility in North America.
Yep, that's the conservative power of reasoning for ya: More dilbit to reduce reliance on coal, complemented by more coal exports.
Lordy, them conservatives are dilbits.
Bill
Mar 27, 2013 at 11:02am
Her comments are somewhat biased in that she really doesn't seem to understand the business - a key requirement in order to provide a quality economic analysis. Some body seems to be feeding her misinformation.
Saying that Canada and Alberta have relatively little to gain suggests she knows very little about incremental economics; As for upgrading the bitumen here, the economics do not justify such a move. Refineries are very low margin - hence to be economic they need high volumes - volumes that cannot be absorbed by the Canadian economy;
Canada consumers 2.3m bopd but produces over 3.5m bopd so we do have a surplus above what our needs are; condensate will be recycled hence the return pipeline where it will then be mixed with bitumen for shipment to the west coast - how she missed this one I don't know; As for the supply, condensate is obtained from conventional oil and gas production in Alberta - there is no need to go off shore to acquire this; The pipeline debate is not an either/or one - the oil sands is able to handle multiple pipelines - one to the west coast and another to the east and a third to the south, all while meeting domestic demand. For an economist to state " there is no economic benefit" is shocking!! There is always some benefit - royalties, construction jobs, source of capital for reinvestment; I could go on and on.
Bill
Mar 27, 2013 at 11:04am
To David H - coal from both Alberta and BC is high quality coal used in steel making and not power generation. Oil can be used to replace the dirty coal used in power plants but not in steel making.
Bill
Mar 27, 2013 at 11:10am
To PJ - get your facts straight. First the Canadian economy does not have the capacity to absorb new refineries - none were turned down by any government; the capacity in the US is available as the Gulf Coast refineries are designed to handle heavy crude form Mexico and Venezuela - hence there is no need to reinvest in those plants in order to accommodate heavy crude from Canada
Pete
Mar 27, 2013 at 2:43pm
Where would you have us sell our coal to make mony for BC if not to China ,etc.If we dont sell them someone else will then we are stuck with it as Suzuki dose not like it.
China is building 1 coal power plant per week to a total of 145 I belive so we will get most of the corbon back as the winds chage.