Canada is losing $28 billion annually in revenue due to Alberta’s limited access to foreign oil markets, according Pacific Economic Cooperation Council.
And according to a Senate report produced last summer, the economic losses could worsen as the U.S. moves toward energy self-sufficiency and becomes less dependent on Canadian oil.
But fears of an oil spill have created a juggernaut of opposition to pipeline proposals by Enbridge Inc. (TSX:ENB) and Kinder Morgan Inc. (NYSE:KMI) that would transport Alberta crude to Asia via the B.C. coast.
So what is Plan B, if neither Northern Gateway nor Trans Mountain twinning proposals pass the social licence test?
The Alberta government and oil producers have been looking at alternatives, including a pipeline to the Beaufort Sea via the Northwest Territories and an almost absurdly ambitious plan pitched by a B.C. company that wants to transport oil from Alberta to Valdez Alaska by rail.
Former federal environment minister David Anderson is among those who thinks the Northern Gateway proposal should not go ahead.
“I think you have alternatives that have not been explored,” Anderson said. “The obvious one is the Keystone XL, where you ship it south and export it by water from the southern gulf ports.”
He said Kinder Morgan’s Trans Mountain twinning proposal stands a better chance of proceeding because it’s an expansion of an existing pipeline, and therefore has fewer regulatory hurdles to clear.
“People are used to it,” he said. “It’s a lot easier to get something like that in place, where you’re simply upgrading a line that’s already exists.”
But the prospect of up to 34 oil tankers sailing up Burrard Inlet every month has already led the mayors of Vancouver and Burnaby and a host of First Nations and environmentalists to denounce the plan.
Currently, only five tankers per month come into Burrard Inlet on their way to the Westridge marine terminal in Burnaby. The twinning would increase the pipeline’s capacity to 890,000 barrels of oil per day from 300,000.
Anderson believes Kinder Morgan could avoid a major headache by simply avoiding Vancouver and Burnaby.
The Trans Mountain pipeline splits near Abbotsford. One line runs to Burnaby’s Westridge terminal, the other runs south to refineries in Washington state.
In an emailed statement, a Kinder Morgan spokesman said Anderson’s proposal would require a new marine facility being built in Washington state.
“While Trans Mountain has a pipeline operation to the U.S., it is a smaller line with the purpose of serving the four Washington state refineries,” wrote Michael Davies, director of marine development for the Trans Mountain expansion project. “Trans Mountain doesn’t have any marine facilities in Washington state – the docks are owned [and] operated by the refineries.”
While Anderson’s proposal would avoid increased Burrard Inlet oil tanker traffic, it wouldn’t address the concerns environmentalists would have with oil tankers passing through the San Juan Islands.
“Shipping out of Washington state would still result in increased tanker traffic in the Salish Sea,” Davies wrote, “but with fewer direct benefits to Canada.”
Driving the oil-by-rail alternative
Another alternative being pitched by B.C.-based G Seven Generations Ltd. is the UNRailCo proposal: a 2,400-kilometre, double-track, electric-powered railway from the Alberta oilsands to the marine terminal in Valdez, Alaska.
The proponents say a double-tracked railway – which would cut through northeastern B.C. – could transport 1.5 million barrels of oil per day, three times what the Northern Gateway pipeline would carry.
They say the oil-by-rail proposal has three advantages over the Northern Gateway proposal:
•it eliminates oil tankers on the B.C. coast;
•any land-based oil spill from derailments would be known instantly and easier to contain than a ruptured pipeline;
•the project has the backing of a number of First Nations.
The biggest drawback is cost: $8.4 billion to $10.4 billion. UNRailCo is currently trying to get the Alberta government to help fund a $40 million feasibility study.