THE mayor of an Albertan city that has various oil pipelines running close by says the economic benefits from oil and gas development outweigh the environmental risks.
Mayor Greg Krischke of Leduc Alberta, a city of 25,000 located just south of Edmonton where one of Canada’s first oil wells was tapped in 1947, came to Terrace recently with two key messages – the economic benefits of oil and gas development flow into all of Canada and new technologies make it possible to foster the industry with low environmental risk.
Specifically, Krischke stressed the importance of diversifying Canadian markets for oil at a time when Canada’s key consumer, the United States, doesn’t need Canadian product like it used to.
Pointing to growing Asian demand, pipelines hold the key to transportation, he said, adding that’s essential to maintaining and growing government royalties and jobs in the sector.
“We believe that whatever happens has to be done in an environmental kind of way,” he said about the Pipeline Linkages Strategy Committee of which he is a member. The committee is an Alberta-based pipeline advocacy group that supports Enbridge’s Northern Gateway Pipeline project.
“And we applaud British Columbians for demanding that everything possible is done to minimize the chance of a spill.”
But with new technologies applied to pipeline construction, Krischke said pipelines can be build safely – and they’re something the city of Leduc lives with daily.
“We have one right on our border … and within 10 kilometres of Leduc there’s probably about 50 pipelines,” he said.
While not all of these transport bitumen – some ship refined oil or gas products – Krischke said because they run underground they’re presence is hardly noticed.
He added there’s currently 30,000 kilometres of pipelines in Alberta and 110,000 kilometres in all of Canada.
But, more are needed to sustain a healthy industry, he said. At their present capacity, Krischke said current lines transporting oil south are expected to reach capacity by 2016.
And that reflects in the price per barrel producers can charge, because it’s necessary to move product from one end of a pipe to the other buyers down south have an advantage that’s creating discounts.
“And unless we shut off the tap back at the originating plant, we’ve got to get rid of the stuff that’s in the line,” said Krischke. “That’s where they’re taking advantage.”
With 99 per cent of oil exports going to the U.S. at an average of 2.45 million barrels daily, and with a discount that’s hovered around $27 per barrel, that’s $6.6 billion lost in revenues to producers. The result is less money flowing to various governments and fewer jobs, said Krischke.
And the way to ensure Canada’s getting what its resources are worth is by diversifying markets, he added.
“If we can get access to tidewater, the whole world becomes our potential market, and we won’t have to sell our products at a discount,” said Krischke, stressing the importance of a pipeline transporting oil west from Alberta.
Another factor to consider is a recent International Energy Agency report which says the United States is poised to be energy self sufficient by 2035.
The prospect of losing business from Canada’s single biggest customer makes our oil industry especially vulnerable, he said.
That makes getting product to the Asian markets crucial as the energy needs of China and India grow quickly, said Krischke.
In 2011, all of the net growth in world energy consumption took place in emerging economies, with China alone accounting for 71 per cent of global energy consumption growth.
“If the oilsands are allowed to develop over the next 35 years, B.C. will see $28 billion dollars of additional economic activity and 20 some per cent of the jobs that are created outside of Alberta,” he added.
For all of Canada, Krischke said $131 billion would be added to national GDP between 2016 – 2030, citing an estimated 649,000 person years of employment and $27 billion in tax revenue nationally.
As for the skeptics in B.C. who don’t want to see Enbridge’s Northern Gateway Pipeline Project go through, Krischke pointed to the environmental regulatory process that must be satisfied prior to its development.
The federal review won’t allow the project to go through if environmental standards are not satisfied, he said.
Also, as the mayor of a town near here pipelines abound, “you don’t even notice them,” Krischke concluded.