Alberta Warns of $72-Billion Loss If Oil Pipeline Not Built

Strategic Insights -

A report commissioned by the Alberta government predicts that oil sands producers could lose up to $72-billion if a pipeline is not built to ship heavy crude to the British Columbia coast. The report, conducted by consultants Wood Mackenzie, warns that without such a pipeline, oil sands companies would be unable to access growing Asian markets, particularly China. As a result, more bitumen would have to be shipped to U.S. refineries at a lower price, resulting in a significant loss of revenue.

Key Takeaways:

  • The report estimates that oil sands producers could lose up to $72-billion if a pipeline is not built to ship heavy crude to the British Columbia coast.
  • Without access to Asian markets, oil sands companies would be forced to ship more bitumen to U.S. refineries at a lower price.
  • The report suggests that oil sands production could lead to a shortage of condensate, a toxic material used to thin heavy oil.
  • Over 4,000 people have signed up to speak at the review panel hearings in two dozen communities in B.C. and Alberta.
  • Alberta's Energy Department plans to present the report and make other submissions to the federal panel reviewing Enbridge Inc.'s proposed Northern Gateway project.
  • Environmental groups, including ForestEthics, plan to submit their own reports questioning the project's economics.

Statistics:

  • The report estimates that oil sands producers could lose $8-billion per year for 2017 to 2025 due to lack of access to Asian markets.
  • The proposed Northern Gateway project would create two 1,170-kilometre-long pipelines from Bruderheim, Alta., to an oil tanker port to be built near Kitimat, B.C.
  • The pipelines would be used to ship up to 525,000 barrels of oil sands bitumen per day and 193,000 barrels of light oily material daily.
  • Over 4,000 people have registered to speak at the review panel hearings.

Sources:

  • A report commissioned by the Alberta government, conducted by consultants Wood Mackenzie (exact date not specified)
  • A report by ForestEthics (exact date not specified)
  • The Canadian Press (exact date not specified)