Pipeline Memo Guiding Trudeau Gov’t ‘Riddled with Mistakes’

[Oscar]

Pipeline Memo Guiding Trudeau Gov’t ‘Riddled with Mistakes’

[ http://thetyee.ca/News/2016/10/07/Pipel ... ign=071016 ]

Economist Allan tells Natural Resources it was ‘dangerously misled’ four ways.

By Andrew Nikiforuk , | TheTyee.ca October 7, 2016

Andrew Nikiforuk is an award-winning journalist who has been writing about the energy industry for two decades and is a contributing editor to The Tyee. Find his previous stories here: [ http://thetyee.ca/Bios/Andrew_Nikiforuk/ ] .

- -

A Natural Resources memo [ http://s3.documentcloud.org/documents/2 ... elines.pdf ] extolling the economic benefits of more bitumen pipelines for Canada is “riddled with factual and analytical mistakes” that could “dangerously mislead” elected officials and the public, says an economist who has pored over its claims.

In a detailed 10-page letter, [ http://www.robynallan.com/2016/10/05/le ... ster-carr/ ] B.C. economist Robyn Allan has warned Jim Carr, minister of Natural Resources, that the memo’s conclusions are “unreliable and yet, based on recent public statements, you have adopted them to conclude new pipelines, such as Trans Mountain’s expansion, are necessary.”

Trans Mountain is one of four proposed pipeline projects, controversial for safety and climate change concerns, currently under consideration.

Allan’s letter documents a series of major errors in the February memo titled “Economic Benefits of Pipelines.” The memo wasn’t released until July due to a Freedom of Information Request. Allan, who served as president and CEO of the Insurance Corporation of British Columbia and as senior economist for B.C. Central Credit Union, analyzed the document in September.

The memo to the minister contends that Canada’s oil pipelines are currently operating at “over potential”; that they need one million barrels of new capacity by 2020; that lack of tidewater access has cost the economy billions and that Asian markets are “fast growing.”

Yet the facts support none of these claims says Allan, who has long questioned the economic argument for expanding bitumen production in an era of low and volatile oil prices.

Allan asserts these errors:

- - - SNIP - - -

‘Egregiously overstated conclusions’

In conclusion, Allan noted in her letter that “NRCan staff should have been aware of the issues to provide you with a much more sober assessment of the impact of Trans Mountain’s expansion on the Canadian economy. Instead, you were given egregiously overstated conclusions that there is an urgent need for one million barrels a day of new pipeline capacity.”

Allan sent the letter through Carr’s chief of staff on September 14. “I was told they would get back to me and I’m still waiting.”

In an interview Allan noted that neither the federal government nor the NEB in any pipeline hearing have ever fully considered what impact the approval of additional Canadian oil exports might have on global market prices.

Many oil analysts, such as Jeff Rubin and Art Berman, generally agree that increased production from extreme and high cost resources such as fracked oil from North Dakota and steamed bitumen production from the oil sands all played a significant role in the fall of oil prices over the last two years due to overproduction.

Low oil prices mean that many bitumen miners and oil frackers are losing money because current prices do not cover their high costs by as much as $30 a barrel.

After the Fort McMurray catastrophic wildfire took nearly a million barrels of bitumen production off market, the global price of oil rose significantly. [ http://www.reuters.com/article/us-globa ... SKCN0XW02M ]

“Yet, the Canadian government wants to pump this crude when it is environmentally, economically and socially unwise to do so,” added Allan.

“How can the Canadian government talk about approving the Trans Mountain pipeline without doing the public review? They promised to redo it but haven’t. They are now relying on facts and projections that don’t exist in reality.”
[Tyee]