British Columbians have been presented with a "false dichotomy" about the Northern Gateway project, according to economist Robyn Allan.
The $6 billion project backed by Calgary-based Enbridge has been touted as a balancing act between benefits to the provincial and national economies against environmental risks. The proposed pipeline would connect Alberta's oilsands with the port of Kitimat.
Proponents believe that the bitumen can be shipped safely and that once complete the pipeline will allow Canadian oilsands producers to get more money for their product as its shipped to Asian markets. Opponents contend that the risk of a spill, either over land or in the ocean, is too great and that the environmental impact would be catastrophic.
Allan, who was an expert witness for the Alberta Federation of Labour at the National Energy Board hearings into the project, said during a visit to Prince George on Tuesday that the environmental risks exist, but that the economic benefits are overstated.
"What they have argued is that the price of crude oil in Canada, on every barrel, every year for 30 years, will go up by an average of $2-$3 US," Allan said of Enbridge. "What that represents is a 3 1/2 per cent increase at the pumps in prices."
She said the higher fuel prices would drive up the costs of other goods and services and those increases would drive inflation and harm the Canadian economy. She also argues by shipping out unprocessed oil, Canada loses the economic potential of upgrading or refining more of the oil domestically.
Enbridge spokesman Todd Nogier disputed Allan's findings. He said the company believes the $2-$3 price increase is a one-time event, not something that would be compounded each year for 30 years. He also said Enbridge believes there won't be any impact on the price consumers see at the pump.
"There were strong opinions raised in the hearings by our expert panel that the net benefit to Canada is compelling," he said, adding the company calculates the Canadian GDP would increase by at least $270 billion over 30 years as a result of the pipeline.
Rather than build the Northern Gateway pipeline, Allan suggested three other ways Canadian producers could get a higher price for their product: upgrade the oil in Alberta before it's shipped to refineries in North America; get more Canadian oil to refineries in Eastern Canada; and leave more oil in the ground now and extract when it's worth more money.
Allan said any of these options would have fewer economic drawbacks and would be better for Alberta's oil industry in the long run, including the ability for Canada to no longer need to import condensate - which is used to dilute bitumen for pipeline transport.
"By understanding that Northern Gateway is not an economic opportunity, it's an economic cost and having B.C. show Alberta some tough love in the sense we say, 'We don't think this is a good idea,' in the long run we're actually doing Alberta a favour economically," Allan said.
Nogier said from his perspective it's just the opposite. By leaving more oil in the ground, it would hurt Alberta's economy.
"That presupposes that economic activity in Alberta should slow down and I wonder if there would be a lot of workers in Alberta who might disagree with that. I'll leave it up to them to make those judgments," Nogier said.
He also said it's up to the market to determine whether increased upgrading or refining capacity is viable and that Northern Gateway isn't being designed to ship bitumen exclusively. If more value-added oil is produced in Alberta, it could also be shipped through the pipeline for export.
Newspaper mogul David Black introduced a plan this summer to build a refinery near Kitimat to upgrade the oil shipped through the pipeline which would allow gasoline and diesel to be exported. Although Allan supports the concept of adding value in Canada, she said Black's project doesn't make economic sense because it still requires condensate to be imported, piped from Kitimat to Alberta, added to the bitumen and then piped right back to Kitimat for upgrading and refining.
"I really think, unfortunately, Mr. Black's proposal was not thought through as it pertains to Canada's energy situation and the product we're talking about," she said.
Allan also has concerns that the oilsands don't have the production capacity at the moment to send bitumen both through the Northern Gateway pipeline and through other existing North American pipelines. Enbridge also disputes this fact, claiming there is enough supply to satisfy all the markets.
Allan spoke Tuesday night at UNBC and will make a presentation on Wednesday night in Mackenzie, both events sponsored by the Stand Up for the North group. She felt the need to speak out in the region, because she doesn't think all the economic information has been presented clearly.
"The lack of accountability and transparency has resulted in information that hasn't been forthcoming that I think is very useful for people to make a good, informed decision," she said.
