The Energy East Pipeline: Separating Fact from Fiction

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About the author:

Rebekka Bond is a Mindfirst blogger and a Masters Of Global Affairs candidate at the Munk School of Global Affairs, University of Toronto, 2016.

 

The Energy East pipeline proposal has quickly become a contentious issue both in Ontario and across the country. If approved, the project would transport approximately 1.1 million barrels of oil per day from Western to Eastern Canada. The 4500km pipeline would cross 6 provinces, and affect millions of Canadians in the process. With so many stakeholders involved, it will come as no surprise that the debate is heated and that emotions run high for proponents and opponents alike.

For The Energy East Pipeline: Separating Fact from Fiction event, Mindfirst invited Stefan Baranski of TransCanada, Richard Carlson of the Mowat Centre, Nicole Swerhun of Swerhun Facilitation, and David Sword of the Canadian Association of Petroleum Producers to have an open, frank, and honest discussion about the risks and benefits associated with the proposed pipeline.

The panel began by discussing what is driving the Energy East proposal forward – the growing global demand for oil.  As energy demand grows in emerging markets, the world will continue to rely on fossil fuels both now and in the future.

In addition to global demand, there is also a strong domestic demand for oil. Every day, Canada imports approximately 700,000 barrels of oil from the United States, Saudi Arabia and Nigeria. The Energy East pipeline would not only facilitate the export of Canadian oil, but would help to to satiate some domestic demand as well.

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David Sword shows that oil and water don’t mix.

While proponents have focused on promoting the benefits of the project, the pipeline is not without its risks. In early 2014, the Ontario Energy Board (OEB) commissioned a series of public consultations to facilitate informed, objective discussion amongst constituents, and to help the province better understand the potential long-term impacts of the project.

The overarching sentiment that emerged from these consultations was that the risks and concerns regarding the proposed pipeline outweighed the benefits. The most prevalent concerns revolved around water – How many sources of water will be crossed? How long does it take for this water to get places? How many shut off valves will there be along the pipeline? Stakeholders also aired concerns related to environmental degradation, climate change, and employment.

Having a nuanced understanding of these risks is crucial, because Ontario’s interests are different from those of hydrocarbon developing provinces such as Alberta and Saskatchewan. To date, there have been three major economic impact reports that have been prepared on the Energy East pipeline project. All three of the reports use the same model (Input/Output), and all three reports come to similar conclusions. However, these models rely on some weak assumptions – namely that the future will be like the past and that capital and labour are idle. While Ontario has traditionally been supportive of pipelines, the province should be cautious about lauding the long-term benefits of the Energy East pipeline before the true risks and benefits of the project are better understood.  

Yet, despite these criticisms, the world will continue to rely on fossil fuels for the foreseeable future. A National Energy Board (NEB) Outlook paper published in January 2016 projects that in the next 4 years oil sand production will increase by approximately 900,000 barrels of oil per day. This production is already on-stream, and the oil will find it’s way to market one way or another. Without pipeline capacity, the oil will likely be transported by rail. Canada is no stranger to the risks associated with shipping oil by rail, especially in light of the 2013 Lac-Mégantic disaster.

TransCanada attests that they have been acting on the concerns expressed by the public throughout their consultations. For example, the company has incorporated 28 new shut off valves into its design and has invested in new technologies to ensure the structure and integrity of the pipeline. Furthermore, TransCanada forecasts that during the construction phase the pipeline will create 3900 jobs in Ontario, and that Ontario is the single biggest GDP beneficiary of the Energy East pipeline project.

So what is the next step in the Energy East pipeline process? TransCanada submitted their consolidated application to the NEB at the beginning of May 2016, and is expecting that final hearings will begin in June. The NEB will then deliver their final report to the Federal Cabinet by March 2018. As Canada’s governments, industries and stakeholders continue to wrestle with the realities of climate change and their continued dependence on fossil fuels, it will be fascinating to watch this process unfold. Be sure to keep an eye on future developments to see what the future holds in store for the Energy East pipeline in Canada.

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