Yahoo Finance Diane Francis: The sordid history of Trans Mountain, Canada's most important infrastructure project
The controversial Trans Mountain Pipeline is almost complete. It’s a significant economic project with a sordid back story that amplifies Canada’s political and economic dysfunction.
It is strategically and financially important because it opens up international markets and higher prices to Canadian oil. This will allow producers to get out from under being nearly reliant on American customers, who have paid below-world prices for decades.
A headline in the Wall Street Journal noted the economic significance of the project: The U.S. Is Spoiled by Cheap Canadian Oil. That’s About to Change.
The story quoted Kevin Birn, an analyst with S&P Global Commodity Insights, who said: “This is a big deal that’s been 10 years in coming.… It does allow Canada, for the first time in its history, as the fourth-largest oil producer in the world, direct access to international markets.”
Canada produces around 4.8-million barrels per day, compared to America’s 12.9 million, Russia’s 9.5 million and Saudi Arabia’s nine million. The pipeline to Vancouver’s port has existed since the 1950s, to supply oil to refineries in the Lower Mainland, but this project nearly triples its capacity to 890,000 barrels a day, which will mostly be transported to Asia.
In 2018, the pipeline had to be rescued by Ottawa after its original American developer, Kinder Morgan, was driven away by Canada’s anti-resource policies, regulatory harassment and massive amounts of litigation and other obstructions.
Trudeau was dragged, kicking and screaming, into taking on the project because of its importance. He was criticized, but did almost nothing to protect the pipeline from intense opposition. The project has since seen staggering cost overruns, and became a rallying cry for global environmentalists. Its difficulties have permanently deterred resource development throughout the country.
When Ottawa took over the unfinished expansion project, it was estimated that it would cost $5.4 billion. But actual costs have increased by “a factor of six, according to a Global New analysis, to $30.9 billion.
Delays and court cases escalated costs as environmental groups, many of them foreign-funded, declared war on the pipeline, and Canada’s resource-based economy in general. In 2021, a public inquiry found that between 2003 and 2019, a collection of foreign entities spent $1.28 billion on “Canadian-based environmental initiatives” that included work to impede Canadian energy development.
Despite this opposition, however, the Trans Mountain Pipeline is expected to be fully operational in the second quarter of this year, which is expected to improve the price of Canadian crude. The project has employed thousands and provided benefits to Indigenous communities during its construction, and will provide ongoing benefits from its operations. Canada’s exports will increase and production will provide significant tax revenues for all levels of government.
It’s a saga with a bittersweet ending. An important project finally getting completed that will make the country stronger, but the price paid — in tax dollars, bad-mouthing by the green movement and damage to Canada’s reputation as a place to do business — has been excessive and will hurt the country until the Trudeau government is replaced with one that places Canada’s best interests first.
No matter what the government or environmentalists say, Canada has nothing to be ashamed of. It is a resource giant that has built world-class fossil fuel, mining and agricultural industries. These are all targets of the green radicals at home and abroad. But the reality is that the resources needed to make everything from solar panels, to electric vehicles, to wind turbines need to be mined.
That’s what Canada does best, and what it does ethically.
