Edmonton, Sept. 27th, Day 15
Leanne Chahley of the Alberta Federation of Labour notes that her client’s interest is creating jobs in Alberta. This morning her questioning of Harold York and Christopher Holly, experts for the Government of Alberta, led directly to that concern.
Dr. York’s Wood Mackenzie netbacks report stated that synthetic crude oil (SCO) can be processed in any market, maintaining its value. It’s not the case for Western Canadian heavy crude oil which can only be processed for optimal value in a limited number of refineries.
Ms. Chahley wondered why more upgraders were not being built in Alberta. Dr. York said that at the current price of SCO and the high capital costs of new upgraders, they are not commercially viable.
Heavy crude fetches its highest value in the limited number of refineries that have the capability of processing it for optimal value. But once that capacity in those refineries is fully utilized, heavy crude loses some of its value, and the netback for heavy crude drops by $8.
According to Dr. York, this $8 discount can be avoided by the Northern Gateway – but for only one year, its first year. After that, increases in supply will overwhelm the effect of Northern Gateway and the volume of heavy crude will trigger the discount. And things will be back to where they were.
The first person to question the Haisla Nation’s panel of Matthias Ruth and Rebecca Gasper was Bernard Roth from Northern Gateway Pipelines.
Mr. Roth began by questioning the qualifications of the witnesses, though Dr. Ruth, a specialist in ecological economics, has degrees in geography and economics, and is a professor in engineering and public policy.
The interesting information to come out of Mr. Roth’s questioning was actually about the Pacific Trails natural gas pipeline (PTP), and Kitimat LNG, rather than Northern Gateway. Routes for the two pipelines are very close together in much of their western right-of-way. Crossing Hunter Creek, PTP is cutting into the stream bed in an open cut to lay the pipeline, whereas NGP will be drilling under the stream.
Mr. Roth also filed an aid to questioning about a new Australian LNG project that will release 41 million tonnes of CO2 equivalent into the environment annually.
The implications for British Columbia are ominous. Kitimat LNG and other LNG projects may be significant generators of greenhouse gases. Mr. Roth suggested that it could be a revealed preference of the Province of British Columbia to undertake LNG projects notwithstanding their significant greenhouse gas emissions.