Those darned economists... always the joy killers
Proposed West Coast oil pipeline faces harder questions than just approval
Economists warn the biggest risk is not politics or protests, but whether Alberta can attract enough investment to fill a new pipeline to Prince Rupert
Prime Minister Mark Carney was in B.C. last week speaking with Coastal First Nations to clear a path for new energy projects, including a West Coast oil pipeline to Prince Rupert.
That path is littered with political, legal and environmental landmines, not the least of which is opposition by Coastal First Nations.
But the biggest challenge to a new oil pipeline may be economic and financial, not political.
"I think there's a very strong case that Canada could be competitive for shipping oil to Asia,” said economist Jack Mintz.
“The big issue to me isn't the pipeline. The question is: will the pipeline get filled up? Will there be enough investment in Canada to fill the pipelines?"
A new element of urgency was introduced into the pipeline debate at the beginning of the year with U.S. President Donald Trump’s interventions in Venezuela.
The fear is that Venezuela’s decrepit oil sector could make a comeback and begin supplanting Alberta oil at Gulf Coast heavy oil refineries.
Energy experts are downplaying that risk, noting that it would take billions in investment and up to a decade to bring Venezuela’s oil production back to what it was in the late 1990s.
The greater risk is that the U.S. under Trump is proving to be an increasingly capricious and hostile trade partner, creating an imperative to diversify markets for Canadian commodities, especially oil.
"We already knew there was unreliability building there," said energy analyst Rory Johnston of Commodity Context. "This just adds to that."
A memorandum of understanding signed by Alberta and Ottawa sets the political and regulatory stage for a new West Coast pipeline, which the Carney government has determined to be a national priority.
It is likely to be a revised version of the Northern Gateway project that the Trudeau government killed with the implementation of a northwest coast oil tanker moratorium.
The question now is not so much whether a new pipeline to the West Coast could be built, or whether there is a demand for Alberta oil in Asia, but who would pay for it and where it would terminate.