Will the Trans Mountain Pipeline and Tidewater Access Boost Prices and Save Canada’s Oil Industry? /
Industry and the federal and Alberta governments argue that a pipeline to tidewater will unlock new mar- kets (Asia in the case of the TMEP) where Canadian oil can command a better price than in the US, where the majority of Canadian oil is currently exported. [...] This paper examines the tidewater argument and other problematic as- sumptions that led to the pipeline’s approval, including overly optimistic projections of future oil supply given the latest National Energy Board (NEB) projections and the Alberta government’s cap on oil sands emissions, and the failure to consider alternative export pipelines given the federal gov- ernment’s and Trump Administr [...] A review of the TMEP documentation provided by Kinder Morgan (KM, the project’s proponent) to the National Energy Board (NEB), and of the political events since the NEB’s authorization of the pipeline in May 2016, reveals that some of the assumptions that led to the pipeline’s approval were questionable in the first place and others have been superseded by recent events. [...] The quality discount between Maya at the US Gulf Coast and the international Brent price is comparable to the quality discount between WCS and WTI at Houston.20 The average discount of WCS at Hardisty from WTI over 2015 and 2016 was US$13.52 per barrel (an average of 2015 and the first ten months of 2016, Table 2), which is a quality discount (US$8.12 — using the Brent-Maya price as a proxy for wh [...] Given that the quality discount for heavy oil is essentially the same in Asia as on the US Gulf Coast, the amount of lost revenue from transporting oil to Asia compared to the Gulf Coast and Midwest markets can be calcu- lated using the toll assumptions for TMEP and the tanker voyage in the Muse report.
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