Fittingly — or not depending on political persuasion — May 1 will mark the start of a new era for Alberta’s oil industry and by extension the entire Canadian economy.In less than 24 hours the Trans Mountain expansion will begin shipping its first barrel of Alberta crude to tidewater.And already, Chinese and American buyers are lining up to get their hands on their very own Athabasca Heavy..India’s Reliance Industries became the latest to sign up to buy about two million barrels, or four separate cargoes, for delivery in July. According to Reuters deals were done at a USD$6 differential to European Brent — not West Texas Intermediate, as is the case with land deliveries — which results in an almost equivalent price to North American benchmarks.That arbitrage — or lack of it — was the economic justification for spending nearly CAD$35 billion of taxpayer dollars to do it. And not only will it result in higher prices and royalties from Albertans, but the ripple effects are sure to be felt across the country.The Bank of Canada expects Trans Mountain alone will account for a quarter point increase in Canada’S gross domestic product. Every 10% increase in returns increases national economic output by 1%. That’s significant, in a $3 trillion economy. .“The pipeline may have been late and (far!) over budget, but it was worth every penny.”UofC economist Trevor Tombe .That’s why — despite 12 agonizing years and $25 billion in overruns — University of Calgary economist Trevor Tombe says TMX is “worth every penny” taxpayers ultimately paid.“Was it worth the high price?” he asked on his blog. “Whoever or whatever is to blame for the delays and cost overruns, the answer to that question is clear: Yes! And it’s not even close.”Despite the sticker shock, Tombe says the pipeline remains incredibly valuable as an individual asset and a key piece of infrastructure for Canada’s economy.“None of this excuses the project’s jaw-dropping cost overruns. Nor should we avoid thorough investigations to ensure future large projects don’t suffer a similar fate,” he said.“The pipeline may have been late and (far!) over budget, but it was worth every penny.”Although company officials said it is capable of offloading crude through two berths at its Burnaby terminal starting tomorrow, the Canadian Energy Regulator said Friday that a half dozen segments remain to be certified.Trans Mountain doesn’t expect that to happen until mid-month when it will begin shipping an added 600,000 barrels per day..In a joint statement, Alberta Premier Danielle Smith and Energy Minister Brian Jean said the extra barrels will help fuel Alberta’s growth. Despite differences on energy policy, they thanked both the federal government and the company for sticking it out to the end.“It’s great news for Albertans and Canadians, as this will welcome a new era of prosperity and economic growth. The completion of TMX is monumental for Alberta, since this will significantly increase our province’s output,” they said.“For Alberta this is a game-changer. The world needs more reliably and sustainably sourced Alberta energy, not less. World demand for oil and gas resources will continue in the decades ahead, and the new pipeline expansion will give us the opportunity to meet global energy demands, increase North American and global energy security, and help remove the issues of energy poverty in other parts of the world.”
Fittingly — or not depending on political persuasion — May 1 will mark the start of a new era for Alberta’s oil industry and by extension the entire Canadian economy.In less than 24 hours the Trans Mountain expansion will begin shipping its first barrel of Alberta crude to tidewater.And already, Chinese and American buyers are lining up to get their hands on their very own Athabasca Heavy..India’s Reliance Industries became the latest to sign up to buy about two million barrels, or four separate cargoes, for delivery in July. According to Reuters deals were done at a USD$6 differential to European Brent — not West Texas Intermediate, as is the case with land deliveries — which results in an almost equivalent price to North American benchmarks.That arbitrage — or lack of it — was the economic justification for spending nearly CAD$35 billion of taxpayer dollars to do it. And not only will it result in higher prices and royalties from Albertans, but the ripple effects are sure to be felt across the country.The Bank of Canada expects Trans Mountain alone will account for a quarter point increase in Canada’S gross domestic product. Every 10% increase in returns increases national economic output by 1%. That’s significant, in a $3 trillion economy. .“The pipeline may have been late and (far!) over budget, but it was worth every penny.”UofC economist Trevor Tombe .That’s why — despite 12 agonizing years and $25 billion in overruns — University of Calgary economist Trevor Tombe says TMX is “worth every penny” taxpayers ultimately paid.“Was it worth the high price?” he asked on his blog. “Whoever or whatever is to blame for the delays and cost overruns, the answer to that question is clear: Yes! And it’s not even close.”Despite the sticker shock, Tombe says the pipeline remains incredibly valuable as an individual asset and a key piece of infrastructure for Canada’s economy.“None of this excuses the project’s jaw-dropping cost overruns. Nor should we avoid thorough investigations to ensure future large projects don’t suffer a similar fate,” he said.“The pipeline may have been late and (far!) over budget, but it was worth every penny.”Although company officials said it is capable of offloading crude through two berths at its Burnaby terminal starting tomorrow, the Canadian Energy Regulator said Friday that a half dozen segments remain to be certified.Trans Mountain doesn’t expect that to happen until mid-month when it will begin shipping an added 600,000 barrels per day..In a joint statement, Alberta Premier Danielle Smith and Energy Minister Brian Jean said the extra barrels will help fuel Alberta’s growth. Despite differences on energy policy, they thanked both the federal government and the company for sticking it out to the end.“It’s great news for Albertans and Canadians, as this will welcome a new era of prosperity and economic growth. The completion of TMX is monumental for Alberta, since this will significantly increase our province’s output,” they said.“For Alberta this is a game-changer. The world needs more reliably and sustainably sourced Alberta energy, not less. World demand for oil and gas resources will continue in the decades ahead, and the new pipeline expansion will give us the opportunity to meet global energy demands, increase North American and global energy security, and help remove the issues of energy poverty in other parts of the world.”
