Few Canadians understand the detrimental impact blocking oil exports will have on them personally
Every day in Canada some 100,000 kilometres of pipelines carry three million barrels of oil to domestic and export markets.
Yet in the midst of publicity campaigns by proponents and opponents, most Canadians lack a broader perspective from which to measure the risk/reward balance of this crucial oil export conduit.
And even though controversy over the safety of oil pipelines has coalesced around the Northern Gateway project, its advanced technology would place it among the safest ever to be built in the world.
At tidewater in Prince Rupert, the crude would be transferred into tankers for shipment to Asian markets. Opponents have campaigned to convince wary British Columbians that a tanker disaster is “inevitable”. Here again, perspective is important.
Each day, more than 2,000 oil tankers transport 60 million barrels to global markets. Tanker safety has improved dramatically since the infamous Exxon Valdez disaster. Industry statistics show that while global oil shipments have almost doubled, the frequency of significant spills has dropped from an average of nine per year in the 1980’s to just two per year in the 2010-13 period. The average size of spills has also dropped dramatically, to less than one tenth the size of the Exxon Valdez. This vastly improved record has come despite the fact the global fleet still includes large numbers of single-hulled tankers, many of which are decades old.
By contrast, Northern Gateway tankers will be double-hulled employing the latest construction and safety technology. A study by researchers at Hong Kong Polytechnic University concluded that spillage volume from accidents involving double hulled tankers averaged 60 per cent less than single hulled tankers of the same size.
The bottom line is that Northern Gateway’s tankers will be among the safest in the global oil tanker fleet and having them tethered to powerful tugboats while traversing Douglas Channel further reduces spillage risk to a miniscule level.
After a dozen years of planning, consultation and regulatory hearings costing over half a billion dollars, Northern Gateway has finally received conditional approval from the federal government. But opponents remain determined to stop it.
Unfortunately, few Canadians understand how much the final result will impact them personally. Energy exports contributed some $64 billion to Canada’s balance of payments last year, while non-energy exports continued their decade-long decline to a negative $73 billion. And now that Ontario has mismanaged itself into “have-not” status under the federal equalization program, the four oil and gas producing provinces (Alberta, British Columbia, Saskatchewan and Newfoundland and Labrador) have become the sole contributors to the $15 billion in 2013-14 fiscal year equalization payments.
These payments provide vital support to social programs in provinces representing more than 70 per cent of Canada’s population. In addition, the industry pays over $20 billion per year in taxes and other levies directly into the coffers of the federal and provincial governments. Annual capital investment of some $55 billion flows to manufacturers and contractors from coast to coast, making the oil and gas industry a major job creator, employing more than half a million Canadians.
A good news story indeed, but now those economic benefits are seriously threatened by lack of access to vital Asian growth markets. This lack of access has already provided a huge transfer of wealth from Canadians to Americans who have been able to buy our oil for billions of dollars less than its international value. And American politicization of the Keystone XL proposal makes it crystal clear that we can no longer depend upon the U.S. as our sole buyer.
Given that the industry supports balance of payments, equalization grants, tax revenues and capital spending totalling some $160 billion per year, one would think the new export infrastructure needed to sustain this wealth generation would garner support from coast to coast. Yet even if Enbridge manages to convince the National Energy Board that it has satisfied its 209 approval conditions, there’s a very real chance that opponents will stop the project.
This would not only be an economic tragedy for our country, but also a signal that Canadian resource companies can no longer count on due process under the laws of the land. The implications of that to our national prosperity would be even more destructive than the loss of Northern Gateway.
By Gwyn Morgan
Gwyn Morgan is a retired Canadian business leader who has been a director of five global corporations.