From the Fraser Institute

By Kenneth P. Green

The latest war of words over a pipeline in Canada is between Alberta Premier Danielle Smith, who seeks the construction of a pipeline from Alberta’s oilsands to export facilities on the Pacific coast, and British Columbia Premier David Eby who is foursquare against it.

Smith argues the pipeline is needed to break the U.S. market-lock on Alberta oil, which the United States buys at a discount compared to world prices. Smith argues that increased trade in oil and gas—at higher prices—would be good for Alberta’s economy and Canada’s national economy, and can be done while protecting the environment in both provinces. Eby denies virtually all these claims.

More specifically, Premier Eby makes four arguments against a new pipeline, and all are incorrect.

First, he argues, any pipeline would pose unmitigated risks to B.C.’s coastal environment. But in reality, the data are clear—oil transport off Canada’s coasts is very safe (since the mid-1990s there has not been a single major spill from oil tankers or other vessels in Canadian waters). He also simultaneously argues that it’s pointless to build a new pipeline from Alberta because B.C.’s waters are protected by Bill C-48, the “tanker ban” bill enacted by the Trudeau government in 2017. But in fact, because Bill C-48 only applies to Canadian tankers, a regular stream of oil tankers and large fuel-capacity ships cruise up and down the B.C. coast (between Alaska and other U.S. ports) with stupendous safety records.

Second, Eby argues that B.C.’s First Nations oppose any such pipeline. But in reality, such opposition is quite contingent. The Trans Mountain pipeline expansion project (TMX), which has increased shipping capacity from Alberta to the west coast, has signed agreements with 81 Indigenous community groups (in both provinces) worth $657 million and produced more than $4.8 billion in contracts with Indigenous businesses.

Third, Eby claims that Smith’s proposal is not “real” because no private-sector companies have proposed to build the pipeline. And he’s partly right—no rational investor would look at the regulatory barricade facing pipeline construction and spend the time and money to propose a project. Those applications cost money and lots of it. In 2017, according to TC Energy,before it retracted its Energy East/Eastern proposals due largely to regulatory barriers, the company had spent more than C$1 billion trying to get permits. In a 2016 report, Enbridge listed pre-construction expenditures (which include crafting proposals) of up to US$1.5 billion to build its three proposed pipeline projects. These costs will not have gotten cheaper since then. But even so, the Alberta government’s pipeline proposal has the backing of an advisory group, which includes energy companies Enbridge, Trans Mountain and South Bow—likely because they want to invest in the project after there’s some assurance it will survive the regulatory blockade.

Finally, Eby’s claim that there’s no market demand for new pipelines (which implies there will be no investors) is unsubstantiated. According to S&P Global, Canadian oilsands production will reach a record annual average of 3.5 million barrels of oil per day (b/d) in 2025, five per cent higher than 2024. By 2030, production could top 3.9 million b/d, 500,000 b/d higher than 2024 (although this assumes the federal cap on emissions, imposed by the Trudeau government, does not curtail production as predicted). This profit potential will almost certainly attract investors, if they can overcome the regulatory blockade.

It’s fine, of course, for Premier Eby to look out for the people of B.C. as best he sees fit—that’s his job, after all. But it’s also his job to recognize the limits of his authority. When looking at the TMX project, the Supreme Court of Canada has already ruled that B.C. does not have the authority to block infrastructure of national importance, including pipelines.

But as the saying goes, you’re entitled to your own opinion but not entitled to your own facts. Premier Eby’s objections to another Alberta pipeline are rooted in fallacy, not fact. The Carney government should recognize this fact and decide whether or not another pipeline to B.C. waters is in the “national interest,” which is apparently how you get a permit to build major projects in Canada these days.

Kenneth P. Green

Senior Fellow, Fraser Institute