Edmonton, Sept. 24th, Day 12
The Alberta Federation of Labour panel of AFL President Gil McGowan and economist Robyn Allan were questioned today by Richard Neufeld, counsel for Northern Gateway Pipelines (NGP) whose project is under review.
A question to Gil McGowan was intended to demonstrate that there is no restriction on bitumen that would inhibit construction of a new upgrader. Instead, Mr. McGowan said that “construction and operation costs have essentially priced Alberta out of the market in terms of upgrading and refining,” and that NGP would exacerbate that problem.
To underscore his point, Mr. McGowan referred to a Raymond James report which found that “basically every project that has been developed since 2008 has been at least 100 percent over budget and, in some cases, as much as 260 percent over budget.
Raymond James’ conclusion was that there were simply too many projects going on at the same time. Mr. McGowan said the AFL agrees with former Premier Peter Lougheed that we should set a more reasonable pace for development in the oil sands.
Ms. Allan stated that the expansion potential of NGP should be part of the consideration of this review. She said that the oil pipeline can go from 525,000 barrels a day to 850,000 barrels a day. And the condensate pipeline can go from 193,000 barrels a day to 274,000 barrels a day, with only the addition of pumping stations and pumps.”
”If you’re going to expand 60 percent in pipeline and 40 percent in condensate, you actually increase tanker traffic by over 50 percent and you also increase the amount of activity in the marine terminal. Risk is not additive; it’s exponential,” she said.
Joint Review Panel member Kenneth Bateman asked Ms. Allan about the value of a “parental guarantee” – the idea that Enbridge will backstop or guarantee all the costs of a major spill – Ms. Allan replied that “Enbridge won’t entertain that”. Mr. Bateman replied, “It’s not the Applicant who makes these decisions.”
In questioning the witness panel put up by five shippers on the NGP, Leanne Chahley, counsel for the Alberta Federation of Labour, exposed a concern for oil sands producers that has not received a lot of attention: competition in the traditional US markets.
John Van Heyst of Suncor noted that two US oil fields, Bakken and Eagleford, produced barely more than 100,000 barrels three years ago. “Production from those two fields alone is in excess of a million barrels today. So we’re having to compete in our traditional markets with growing U.S. production.”
For a more detailed summary, please see the document below or download the PDF (91Kb)