BC stands to lose tens of billions in economic spinoffs and an opportunity to further broaden its economic base if Alberta’s oil is prevented from passing through B.C. to oil-thirsty buyers in Asia.
If approved, B.C. could gain at least $4.7 billion in GDP from the construction and operation of Enbridge’s Northern Gateway pipeline project over the next 25 years, according to the Canadian Energy Research Institute (CERI).
That’s more than half of the $8.9 billion in additional GDP the project would generate for the country during that time.
While Enbridge estimates Northern Gateway would generate more than $1.2 billion in tax revenue for B.C. over a 30-year period, CERI estimates B.C.’s regional and provincial governments would net $545 million, or approximately $22 million a year, over the next 25 years.
The federal government would be a key tax beneficiary. It would receive $1.45 billion of the total $2.3 billion estimated over the next quarter century.
Without the Northern Gateway project, however, B.C. would lose about $14 billion in additional GDP associated with Alberta’s continued development of its oilsands. Another CERI report suggested B.C. stands to gain about $29 billion in GDP without taking into account Northern Gateway or Kinder Morgan’s Trans Mountain pipeline projects.
The loss in economic growth from the Northern Gateway project would be relatively small compared with the economy overall. But it would still represent a doubling in GDP of support activities for the mining and oil and gas sector in B.C. and lost growth opportunities in northern B.C.
The CERI report noted the Nechako and North Coast regions would lose about $50 million in GDP a year if the project doesn’t go ahead. That lost opportunity would mean future economic growth in B.C. would hinge on the province’s success in creating and tapping nascent Asian demand for B.C.-sourced liquefied natural gas (LNG), which faces increasing competition in the next decade and uncertainty over longer-term LNG prices.
Warren Jestin, Scotiabank’s chief economist, noted that the building of the pipeline will have a “material impact on the province” in the years to come. If the pipeline is not built, he remained optimistic that LNG will become a key economic driver.
According to year-end media reports, B.C. Premier Christy Clark said liquefied natural gas will be to B.C.’s economy what oil has been to Alberta’s since the 1970s.
