Bloomberg News

Canada’s Economy $131 Billion Bigger With Asian Oil Markets

December 15, 2011

Dec. 15 (Bloomberg) -- Pipelines from Canada’s oil sands to the Pacific coast, including Enbridge Inc.’s proposed Northern Gateway route to tap markets in Asia, will raise the price received by producers by $13.60 a barrel by 2030, a university study said.

The extra profit would mean an additional C$131 billion ($127 billion) for Canada’s economy between 2016 and 2030, according to a study by the University of Calgary’s School of Public Policy. It would also add 649,000 person years of employment and generate tax revenue for provincial and federal governments, the report said.

Without access to markets in Asia, where fuel demand is growing faster than in the U.S., Canada is not able to earn world market prices, the study said. Currently, about 99 percent of Canadian crude exports is shipped to its largest trading partner, with most of it ending up in the Midwest and resulting in “substantially” lower prices than crude varieties such as Louisiana Light Sweet.

“Given Canada’s proximity and long history of supplying the U.S. with crude oil products, natural gas and electricity, the design and demand characteristics of U.S. energy markets largely dictate price levels,” the study said. “The opportunity to achieve these new price and processing levels produces substantial returns for Canadian resources.”

Enbridge, based in Calgary, is proposing to build a twin pipeline system between Alberta and the coast of British Columbia to help bring crude from oil-sands projects to market. Further south, Kinder Morgan Inc. aims to expand capacity on its TransMountain pipeline that ends in Vancouver.

Spill Risk

Opposition to the Northern Gateway pipeline from native and environmental groups has focused on the risk of a spill along the route or on the British Columbian coastline, which is home to killer whales, sea otters and other marine life.

The Northern Gateway system would cross more than 785 streams and rivers, putting at risk commercial and recreational salmon fishing industries with a combined C$800 million in annual revenue, the Natural Resources Defense Council, Pembina Institute and Living Oceans Society said in a joint report on Nov. 29.

--Editors: Paul Badertscher, Vince Golle

To contact the reporter on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Susan Warren at susanwarren@bloomberg.net


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