As the feds tried to rescue the mangled National Energy Board hearings into the Energy East pipeline last week, a new report says the oil industry is duping Canadians by insisting it needs new pipelines.
Oil Change International (OCI), a research and advocacy organization based in Washington, DC, says in its latest briefing that, despite industry claims, there’s enough excess capacity in the current pipeline network to move almost 500,000 barrels a day – enough to accommodate all tar sands projects under construction and in the cue.
“The industry has manipulated its forecasts… to perpetuate an ongoing myth of pipeline constraints in order to advocate for unnecessary new pipeline construction,” says OCI in a statement and video released October 18.
The Canadian Association of Petroleum Producers (CAPP) has been warning since 2012 that the country is running out of capacity to export oil. It’s predicting it needs to make room for 850,000 barrels a day coming on stream between now and 2021, and an additional 700,000 barrels per day between 2021 and 2030. CAPP has been lobbying aggressively for federal approval of expansions to Kinder Morgan’s Trans Mountain and Enbridge’s Energy East pipelines, among others, stating in its June 2016 forecast report that “new major oil pipelines are urgently needed.”
CAPP’s VP of pipeline regulation, Nick Schultz, says, “We’ve been bumping up against the available capacity for six or seven years now.” The existing Trans Mountain pipeline, he says, has been “in apportionment” – industry speak for rationing out capacity – since 2010.
That wouldn’t be the case, he says, “if there were half a million barrels of pipeline capacity out there to move Canadian crude oil.”
Schultz tells NOW, “Even if you don’t believe our report, there’s an external measure for the need for pipeline capacity: when pipelines are in apportionment, it means they need to expand.”
OCI counters that CAPP’s been wrongly forecasting that oil production would exceed capacity since 2012. OCI report author Adam Scott says in an interview, “They’ve been doing the math wrong.”
For one, Scott says, CAPP is underestimating how much oil is refined in Alberta and Saskatchewan – oil that doesn’t need a new pipeline to get to market. Also, rail shipments aren’t factored into CAPP’s 2016 modelling graphs at all, he says.
Faced with growing opposition to megaprojects, CAPP is essentially asking the federal government to ignore its promises to fight climate change, he says, so oil producers can build pipelines to fuel a major expansion of the tar sands.
Scott, formerly of Environmental Defence, adds, “The reason why the existing Trans Mountain pipeline has had such high apportionment is [because] it has slightly cheaper tolls for producers to export their products (mainly to the U.S.) than the pipeline routes directly south. The high apportionment for that one pipeline is not related to overall shortages of capacity across the system.”
If shortages were real, Scott reasons, the price differential between tar sands crude and North American crude would spike (it’s remained flat), as would oil shipments by rail (their price has actually declined over the past six months).
OCI isn’t alone in suggesting new pipelines aren’t necessary. An internal Department of Finance memo released to the CBC through a freedom-of-information request in March suggests no new pipelines will be needed for at least another decade.
“The low price environment has led to oil production forecasts being revised downward meaning that sufficient capacity (from both rail and pipelines) is projected to exist to transport oil until at least 2025,” reads the memo.
A report published in June by the Alberta-based Parkland Institute also argues that new pipelines aren’t needed if the feds are serious about meeting their climate commitments.
“It’s pretty unbelievable that the oil industry continues to intentionally mislead Canadians about the need for these pipelines,” says Scott. “Energy East would only be used if there were a massive and long-term expansion in tar sands production extending well into 2030. In order for that to happen, Canada would have to completely ignore its climate obligations.”
The industry argues it can crank out 1.5 million barrels more per day under Alberta’s new 100-megaton cap on greenhouse gas emissions. Perhaps, but the bigger question is, can the industry churn out all those barrels and still ensure the world stays as close to 1.5° warming as Canada lobbied for back in Paris last December?
Schultz’s response is a little evasive on that count.
“Well, we have pointed out repeatedly, and many people have as well, that if you want to stop producing Alberta oil, there’s still a global demand out there, and someone else is going to produce it.”
Schultz says that “demonizing” the tar sands “is utterly misguided” and that “it’s misleading to suggest to folks that somehow doing this [stopping expansion] is going to be the -silver bullet for climate change.”
Even supporters of Alberta’s cap on tar sands expansion admit that, while it’s a good interim measure, it won’t get us where we need to be to meet Canada’s Paris commitments.
If the Pembina Institute is right that Big Oil can’t even get a grip on reducing emissions per barrel – it says emissions intensity per barrel has actually climbed 10 per cent over the last decade, in large part because new in-situ oil drills are more energy-intensive than open pit mines – then industry demands are even more off-base. Hopefully, the feds are double-checking the math.
ecoholic@nowtoronto.com | @ecoholicnation
