Earth scientist David Hughes has become well known in specific circles as the Cassandra of the oilpatch.
Cassandra, as the classically informed will recall, was the priestess of Apollo cursed to predict the reality and never encourage anybody. A figure of Greek misconception, and a walk-on part with a few lines in Shakespeare, everybody believed she was nuts.
Back in 2016, when Alberta’s New Democrats were changing prior to our eyes into another centre-right conservative party dedicated defending pipelines, Hughes released a study that concluded there was no other way Canada might satisfy its worldwide climate dedications if it kept developing new export pipelines and ramping up oil extraction.
This seems pretty obvious, however at the time everyone who was anyone in Alberta acted like he was nuts.
Hughes likewise forecasted that “new pipelines with tidewater gain access to will not substantially increase the cost Canada gets for its oil.”
This likewise appeared obvious to anybody who paid any attention to economics. But it challenged one of the political orthodoxies of the age, that structure pipelines to tidewater and shipping ever increasing amounts of Alberta bitumen to Asia would amazingly reverse the iron law of supply and demand.
The belief that pipelines might defy economic gravity and overcome low world oil rates helped Jason Kenney’s United Conservative Party get elected and still holds sway in Alberta. Nowadays, it fuels the nutty Wexit motion along with Kenney’s UCP.
Well, there’s been a lot of oil under the bridge considering that2016 It’s 2020, oil rates are still in the deal basement, and Kenney’s pledges he might restore the “Alberta benefit” are ashes in his mouth. And ours.
Hughes has now taken a look at the brand-new realities of a world where supply surpasses demand, alternative energy sources are on the increase, international environment modification is commonly recognized, and a pandemic is reducing need much more, and he has actually reached new conclusions.
He isn’t forecasting any more that pipelines with tidewater access will not considerably increase the cost Canadian oil fetches.
No, he said in a report released yesterday by the Business Mapping Task, it will probably make them even lower
Particularly, he concluded that if the Trans Mountain growth job (TMX) is completed, it will result in a loss of a minimum of US$ 4 per barrel shipped to Asia by that route.
” Including the difference in transportation cost to the discount rate in rate selling to Asia compared to the U.S., and the netback loss per barrel to Canadian manufacturers by offering heavy oil to Asia is US$ 4 to US$ 6 per barrel or more,” he said.
” Really little heavy oil on the existing Trans Mountain pipeline is transferred to Asia,” he included. “Instead, seaborne deliveries go mainly to the West Coast of the U.S., which confirms the truth that there is no treasure trove for shippers in Asia.”
So that isn’t most likely to alter even if the TMX is finished.
” Revealed growths of existing pipelines including the Enbridge Mainline, in addition to completion of Enbridge’s Line 3 in 2021, will produce more than enough pipeline export capability for Canadian oil producers through 2030, and through 2040 and beyond if some of Western Canada’s rail capacity is used,” Hughes added.
TMX will also even more worsen Canada’s problem reducing emissions by encouraging extra oil production growth, he kept in mind.
None of this is in fact advancement stuff, anymore than it was 4 years earlier. In reality, it’s pretty ho-hum as conclusions about how things work go, although it’s great to have the numbers crunched.
Simply the exact same, it will most likely prompt some fury in UCP circles, and, like the majority of Cassandra’s forecasts, be overlooked everywhere else in this nation.
Cassandra, they say, accurately predicted the fall of Troy.
That old stuff has nothing to do with us Albertans, naturally.
Hughes’ “Reassessment of Need for the Trans Mountain Pipeline Expansion Task” was released the other day by the Canadian Centre for Policy Alternatives’ B.C. workplace on behalf of the Business Mapping Task.
The CMP is jointly led by the University of Victoria, the CCPA and the Edmonton-based Parkland Institute. It is moneyed by the Social Sciences and Liberal Arts Research Study Council of Canada.
David Climenhaga, author of the Alberta Journal blog, is a journalist, author, journalism teacher, poet and trade union communicator who has actually worked in senior writing and editing positions at The World and Mail and the Calgary Herald
Image: David J. Climenhaga
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