Will lead to a loss of full-time, well-paying jobs, shrunken energy industry supply chains across the country, and diminished revenues for governments
VANCOUVER, B.C. / Troy Media/ – When it comes to reaching new energy markets, Canada lags dangerously behind the Americans, who have aggressively expanded their oil and gas industry and built the infrastructure necessary to support it.
There are approximately 840,000 km of pipelines in Canada – 25,000 km of feeder lines, 250,000 km of gathering lines, 450,000 km of distribution lines, and 117,000 km of transmission lines. They carry oil, refined petroleum products, and natural gas. The National Energy Board directly regulates about 73,000 km of this pipeline network; the provinces are largely responsible for everything else.
The United States had 4.3 million km of pipelines as of 2015 – 510,331 km of gathering lines, 3,505,077 km of distribution lines, and 332,760 km of crude transmission lines. A national agency, the Federal Energy Regulatory Commission, regulates the transportation of oil and gas by pipeline in interstate commerce, while state public utility commissions oversee the construction of pipelines within their jurisdictions.
As the table below shows, there has been a 25 per cent jump in U.S. hazardous liquid pipelines (HLP), measured in kilometres, in the last decade. Most of this growth occurred under U.S. President Barack Obama’s watch. Of the total kilometres of hazardous liquid pipelines in the United States, two-thirds transport refined petroleum products or crude oil. The U.S. added 8,600 km of pipeline capacity between 2014 and 2015 – equivalent to 7.5 Trans Mountain pipelines! Canada’s pipeline additions during this period totalled zero. In fact, no major oil pipeline has been constructed in this country in many years.
U.S. hazardous liquid pipelines including crude oil and refined petroleum products (km)
2015 | 332,760 |
2014 | 319,454 |
2014-2015 % change | 4.17 |
2012 | 297,954 |
2012-2015 % change | 11.68 |
2006 | 266,750 |
2006-2015 % change | 24.7 |
The lack of additional Canadian pipeline capacity matters. Our only foreign market for crude oil and natural gas is the United States. A one-customer business model is obviously risky for any supplier.
What’s the problem?
As a major player in the global energy business and with large and diverse natural resources, Canada must find ways to get our products to market. This is a task we’re failing to do.
As Canada dithers and the volume of our oil and natural gas available for export expands, constrained pipeline capacity inevitably means price discounting (as well as more oil being shipped by rail). Revenues for Canadian oil producers decrease as shipping costs rise and other suppliers make inroads in the markets where energy demand is growing.
The collateral damage is a loss of full-time, well-paying jobs in Canada, shrunken energy industry supply chains across the country, and diminished revenues for our governments. Continuing down this path will have dire implications for Canada’s future prosperity.
The Americans have shown an impressive ability to expand their oil and gas industry, and to build the infrastructure necessary to support this. Shouldn’t Canada be following their example?
Jock Finlayson is executive vice-president and Denise Mullen is Director, Environment and Sustainability at the Business Council of British Columbia.