Energy East is a low-risk opportunity

Contributed to Telegraph Journal
Tim McMillan
President and CEO
Canadian Association of Petroleum Producers
March 01, 2016
Canada is blessed with an abundance of natural resources, including the third-largest oil reserves in the world. Despite producing more than enough Canadian oil to meet all of our domestic needs, we continue to import about 75 per cent of the oil in Atlantic Canada at a cost of about 
$4 billion annually. Imports of foreign oil from countries that have less stringent environmental standards is not ideal.  

It doesn’t have to be this way.  

Energy East is nationally important infrastructure that would make New Brunswick and all of Canada stronger. It is a pipeline that will transport more than one million barrels of Canadian oil per day to refineries in Eastern and Atlantic Canada and a proposed marine terminal in New Brunswick. Building it would reduce Atlantic Canada’s dependence on foreign oil and allow our country access to world markets – and better prices for our natural resources. 

Access to global markets is important, because the United States, our top customer for oil, is fast becoming our top competitor. Transporting more oil to more markets at home and abroad, through projects such as Energy East, is critical to ensure the success of Canada’s oil industry and the substantial benefits that flow from it. Canada’s oil industry praises the New Brunswick government’s support of Energy East as they clearly recognize their role in diversifying Canada’s energy exports and the role they can play in reaching new global markets.

The New Brunswick government made clear in its throne speech that it is committed to creating jobs. Energy East is economic stimulus New Brunswick needs to create jobs at a time when the provincial unemployment rate is 9.3 per cent.  Energy East will create jobs to support families and generate more public revenue.

The Conference Board of Canada estimates the tax revenue from Energy East to New Brunswick would be in excess of $850 million and that New Brunswick would gain more than 3,700 direct and indirect jobs annually during construction and an additional 260 jobs during operations over the first 20 years of operation. These tax revenues are in addition to an estimated GDP growth of $6.5 billion during the first 20 years of the project. Imagine what the province could do with the additional tax revenue while creating more jobs. The estimated annual tax revenue from Energy East is equivalent to about one-third of the provincial budget for health care, which at $2.6 billion represents the largest part of the 2016-2017 budget.  

This is in addition to the benefits from oil sands development New Brunswick already enjoys. Almost $20 million was spent with local companies supplying goods and services to the oil sands sector in 2014.  Companies from Saint John to Miramichi, from Moncton to Belledune and Sackville, and places in between, supply good and services, such as engineering, transportation and health and safety services, to the oil sands sector.

While the economic benefits of Energy East are evident, it is equally important that the public is confident that environmental impacts are addressed. In my view, economic growth from pipeline projects and the development of Canada’s oil sands, can be achieved with high standards of environmental protection. 

So, how do we accomplish this?

We ensure that pipelines are safe. Currently, Canada’s 117,000 kilometres of pipelines crisscross the country to deliver 1.2 billion barrels of oil and 5.3 trillion cubic feet of natural gas each year.  Canadian Energy Pipeline Association data shows that between 2002 and 2013 pipelines transported oil with a 99.999 per cent safety record. Canadians should know that moving oil by pipeline is the safest method of transportation.  

Some say the environmental risks of building Energy East outweigh the economic benefits. I believe we can have both environmental protection and economic growth. Canada’s oil sands companies are committed to action on climate change and the environment. Progress in environmental performance is evident in the 30 per cent reduction in emissions per barrel of oil produced since 1990 levels, as reported by Environment Canada. Pilot projects underway in the oil sands, such as the use of solvents for in situ projects, will reduce emissions even further.  Through the Canada’s Oil Sands Innovation Alliance, industry has shared more than 800 distinct technologies and innovations at a cost of $1.3 billion to reduce the impacts of oil sands development on land, air and water. 

Recent changes to the federal environmental review process are designed to enhance the public’s trust in the federal regulatory system. This, combined with rigorous environmental reviews already in place at the provincial level, will ensure that all energy projects are assessed fairly based on science, traditional knowledge and fact. 

When all is said and done, building Energy East, and producing and transporting oil safely and responsibly, will make New Brunswick and Canada stronger.