TORONTO – A new report by the Centre for International Governance Innovation is questioning the need for new pipelines to carry oilsands production to tidewater for export.
Jeff Rubin, a senior fellow at the centre and a former chief economist at CIBC, says in the report that the claim that additional pipeline capacity to tidewater will unlock higher prices is not corroborated by either past or current market conditions.
Rubin says overseas markets pay even lower prices for bitumen than in North America, so there is no economic case for additional pipeline capacity to tidewater or expanded oilsands production. He says international commitments to reduce global carbon emissions over the next three decades will also reduce the size of future oil markets.
The report follows a move by TransCanada to ask the National Energy Board to put its application for the 4,500-kilometre Energy East pipeline on hold after the regulator said it would consider indirect greenhouse gas emissions in evaluating the pipeline.
Rubin recommends the National Energy Board consider a rapidly decarbonizing global economy as the base case when modelling future oil demand and use the heavy oil price benchmark Western Canadian Select when evaluating projects.
His report also noted that pension plans need to stress test their long-term investments in the oilsands against expected declines in global consumption.