Home' Trinidad and Tobago Guardian : May 30th 2013 Contents MAY 2013 • WEEK FIVE www.guardian.co.tt BUSINESS GUARDIAN
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Oil pipelines, under attack from environ-
mentalists, are essential to Canada s eco-
nomic growth just as railroads were in the
1880s, Enbridge Inc chief executive officer
Al Monaco said.
"Pipelines are very similar to railroads," Monaco said
yesterday at the Bloomberg Canada Economic Summit
in Toronto. "When you really get down to it, Canada is
an export-driven resource economy. This is our foun-
Pipelines already carry 15 per cent of Canadian exports
in the form of crude, mostly to US markets. Plans by
Enbridge and TransCanada Corporation (TRP) to spend
more than a combined C$50 billion (US$48 billion) to
expand networks to the Pacific and Atlantic coasts, are
opposed by environmental groups such as ForestEthics.
The nation s oil trade rose seven per rcent to about C$73
billion last year, according to Statistics Canada, and is set
to grow faster than the total economy.
The completion of a transnational railroad line in 1885
opened up much of what is now Alberta, Saskatchewan
and Manitoba for settlement, helping to establish Canada
as one of the world s largest agricultural exporters. Pipeline
companies are proposing conduits that would help transport
millions of barrels of new production from oil-sands proj-
ects in Alberta to refineries in eastern Canada, markets
in the US and export facilities in Western Canada.
Building pipelines that will move crude from Canada
to new markets is the most important driver for the econ-
omy, according to Toronto-based consultancy En-Pro
International Inc. The gap between Canadian crude prices
and US and global benchmarks has widened in the past
year as production overwhelms existing pipeline capacity,
depressing energy stocks and reducing government royalties
and taxes on oil exports.
Production of bitumen, which is refined into fuels, is
poised to double from last year to 3.8 million barrels a
day by 2022, according to Alberta s Energy Resources
"Oil is the commodity driving the economy," Roger
McKnight, senior petroleum analyst at En-Pro, said in
a May 16 phone interview. "We re a commodity producing
country and we can t hide from that. Pipelines define
who we are as an economy."
Enbridge s proposed Northern Gateway conduit that
will terminate in Kitimat, British Columbia, risks polluting
fisheries and coastal habitat, Alphonse Gagnon, a hereditary
chief of the Wet suwet en aboriginal group, said in a May
Canada exported C$100 billion of oil and natural gas
last year, Monaco said. That figure will grow at a faster
pace than the nation s economy as production of bitumen
continues to expand, Doug Porter, chief economist for
BMO Capital Markets, said in an interview in Toronto on
Pipelines may become "symbols of unity" like the
cross-Canada railroad that enabled Western grain farmers
to get their wheat to market, Frank McKenna, deputy
chairman at Toronto-Dominion Bank, said on May 22 at
the summit. New oil conduits "would create a national
network of energy."
Enbridge has proposed to increase oil transportation
capacity through projects including the C$6 billion North-
ern Gateway from Alberta to Canada s Pacific Coast.
TransCanada is lobbying for approval of the Keystone XL
pipeline from the oil sands to the US Gulf Coast and pro-
posing to convert part of an existing gas line to carry oil
to Canada s Atlantic Coast.
Kinder Morgan Energy Partners LP, based in Houston,
is considering more than doubling capacity to 890,000
barrels a day on its existing Trans Mountain line from Alberta to Van-
New pipelines will cost more and take longer to build as operators
including Enbridge put more effort into winning public support rather
than focusing solely on regulatory approval, Monaco said.
The current lack of pipelines is depressing Canadian crude prices and
energy stocks. Western Canadian Select was US$21.50 a barrel less than
the US benchmark West Texas Intermediate yesterday, according to data
compiled by Bloomberg.
"This is C$25 billion a year in value destruction," McKenna said. There
is also C$1 trillion in foregone gross domestic product over the next 20
years and C$300 billion in lost tax revenue during the same period.
Meanwhile, Canadian energy stocks have underperformed US peers
by almost 14 percentage points in the year through to May 22, data
compiled by Bloomberg show.
Rail continues to play a role moving Canada s natural resources, with
crude shipments increasing from the oil sands and shale formations as
proposed pipelines are delayed.
The pipeline miracle also may not deliver all its promises, as production
in the US increases, said Michal Moore, a professor of energy economics
at the University of Calgary.
"Doubling output from the oil sands is not realistic," Moore said in
Oil pipelines to drive Canada
economy like 1880s railroad
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