The last section of pipeline is assembled on the Trans Mountain pipeline expansion project before operations are expected to begin in the second quarter of 2024, near Laidlaw, B.C., on Feb. 18.Chris Helgren/Reuters
The Trans Mountain oil pipeline expansion is making Canadians collectively richer.
After years of delay and massive cost increases, the $34-billion project which twinned an existing pipeline between Edmonton and Burnaby, B.C., finally became operational in May.
The pipeline expansion – which nearly tripled capacity to 890,000 barrels a day – is already enabling foreign buyers to purchase more Alberta crude oil.
Statistics Canada reported this week that the country’s surprise trade surplus in June was partly fuelled by a 13.3-per-cent increase in exports of crude oil, mostly to Asian countries, thanks to the Trans Mountain pipeline’s expanded capacity.
The U.S. Energy Information Administration, meanwhile, reported on Aug. 1 that American refineries are increasingly reliant on Canadian crude oil. In 2023, 60 per cent of crude oil imports were from Canada – and that was before the Trans Mountain twinning was even complete.
“The expansion project aims to increase Canada’s crude oil producers’ access to global markets, alleviating bottlenecks and driving higher oil production in Canada,” the EIA stated in its report.
As the world’s fourth-largest crude oil producer, Canada should build on this success. The Trans Mountain pipeline expansion should mark the beginning – not end – of the country’s energy aspirations.
Like it or not, fossil fuels are still in high demand. Geopolitical risks, including the current conflicts in Ukraine and the Middle East, are also creating opportunities for Canada to increase its role as a scrupulous supplier.
Pernicious pipeline politics belong in the past. As Scott Stauth, president of Canadian Natural Resources Ltd., rightly said, the Trans Mountain pipeline expansion “represents a significant achievement” for all of Canada.
Economists are expressing cautious optimism that increased crude oil exports could buttress our country’s third-quarter gross domestic product growth.
“The effects of the Trans Mountain pipeline expansion are now flowing through the data, with strong crude oil exports expected in the coming months,” wrote Marc Ercolao of TD Economics in a report this week.
The energy sector accounts for roughly 11.8 per cent of nominal GDP, and energy stocks compose 17.88 per cent of the S&P/TSX Composite Index – meaning the industry is key to Canadian prosperity.
This is the moment for the federal government to overhaul its energy policies and resurrect pipeline projects such as Energy East. The $15.7-billion pipeline was supposed to connect Hardisty, Alta., to Saint John, but was effectively nixed because of lengthy regulatory delays.
The past five years have taught us that reliable access to energy is a matter of national security for Canada and countries around the globe.
Russia’s war in Ukraine, for instance, created an energy crisis in Europe. What’s more, Western embargoes and price caps have failed to significantly dent the Kremlin’s fortunes.
Indeed, the sale of so-called embargoed energy is still feeding Russia’s war machine. India and Turkey are among those countries importing Russian oil on the cheap, refining it into diesel, jet fuel and gasoline, and then selling those refined products to other countries. The buyers include the United States and European Union.
A loophole in the embargo rules – energy products refined in other countries cease to be considered Russian – is apparently to blame. The practice is legal, but totally unethical.
Earlier this year, Global Witness, a London-based environmental and human-rights group, reported that EU purchases of what it calls “laundered Russian oil” amounted to 130 million barrels and were worth an estimated €1.1-billion in “direct tax revenues” to the Kremlin in 2023.
In a separate analysis, Global Witness found the U.S. imported 30 million barrels of fuel from refineries using Russian oil in the first nine months of 2023. That provided an estimated US$180-million in direct tax revenue to the Kremlin’s coffers.
The Israel-Hamas war, meanwhile, could also disrupt global energy supplies if it morphs into a broader regional conflict. Tensions are running high following the killings of a top Hezbollah commander in Lebanon and a Hamas leader in Iran.
Iran, of course, is a supporter of Hamas. Earlier this week, Israeli Prime Minister Benjamin Netanyahu said his country is already in a “multi-front war” with Iran, which has threatened retaliation.
“If the war does spread beyond current borders, we cannot assume that the region’s energy supplies will be safeguarded,” wrote Helima Croft, head of global commodity strategy at RBC Capital Markets, in a recent note to clients.
“We continue to point to the events of 2019 as an indication of the region’s energy infrastructure vulnerabilities.”
In case you need a reminder of what transpired back then, Iran’s support of Yemen’s Houthi rebels resulted in attacks on oil installations inside Saudi Arabia.
That, in turn, created a supply crisis that was also felt here in Canada. Our East Coast refiners were among those left scrambling to secure crude supplies.
Reviving Energy East is an opportunity to safeguard Canada’s energy security and to ensure that our domestic producers can meet global demand over the long term.
Yes, the climate crisis is real. But until renewable energy can completely supplant fossil fuels, Canadian oil is by far the most ethical choice.