An open letter to Justin Trudeau

An open letter to Justin Trudeau

Hello Mr.Trudeau,

I will assume that your advisors have given you a full briefing on the Burnaby Pipeline Expansion Project (BPEP) and therefore are very familiar with most of the material. The focus of this letter is to challenge stated perspectives on the forecast benefits and offer some alternatives. I feel criticism without constructive feedback is fruitless. I can’t help but feel that things are spiralling out of control and will continue to do so until someone backs down; based on the following logic I feel you should back down before someone gets killed.

Perspective

Logically the benefits accrued from the Burnaby Pipeline Expansion Project (BPEP) will be derived from pipeline construction and the additional production facilitated by a reduction in transportation costs, which in turn are supposed to make it economically feasible to sell the oil in Asia. It is likely that the benefits forecast using information provided by Kinder Morgan/TransMountain (KM/TM) which rely heavily on a report created by Steven J Kelly are grossly exaggerated for two reasons:

1. The price of crude oil likely used is $US 88.00 and their forecast Figure A10 of Mr. Kelly’s report¹ indicates they expect an inflation adjusted price of US$ 90.00; the current price is far below their forecast at $US 52.81 on December 19, 2016; on pages 13 – 15 of a recent World Bank Commodity Markets outlook they predict that 2017 crude oil prices will average $US 55.00. Mr. Kelly’s report also did not account for accelerating automation of the oil industry or inevitable adoption of renewable energy                                               Another thorough and realistic forecast can be found on pages 8-25 of a Simon Fraser report².

2. “The KM/TMP TMX jobs multipliers are substantially higher than those estimated in studies for other crude pipeline projects. Enbridge estimates that developing and constructing the Northern Gateway project would result in only 5.5 person-years of BC employment per $1 million project costs.19 The BC jobs multiplier estimated by Enbridge for Northern Gateway is less than half the multiplier estimated by KM/TMP for TMX (5.5 vs. 11.3 person-years of BC employment per $1 million project costs)”³

All the talk of creating access to Asian markets in order to increase the number of customers and obtain higher crude prices does not add up, it is highly unlikely that consumers will switch to an inferior product. According to Figure 23 on Page 303 of the National Energy Board’s (NEB)⁴ report only China will be looking for more product to fill growing demand. While it may be possible to win over some additional Asian business by offering discounts to all customers; there is no accounting for the intensified competition, from US and expanding global operations (offering superior products). The growing supply will increasingly put pressure on global oil prices as overall demand eventually starts to decline. Only supply disruptions from the Middle East are likely to generate renewed interest in our crude oil.

On page 15 of Robyn Allan’s report¹ she lists a whole host of projects that have been cancelled or deferred due to deteriorating market conditions. As the migration toward green energy continues the dirtiest forms of fossil fuel will disappear; why are we investing in a dying industry? Overall we can see that coal² is being phased out around the world (despite Trump’s planned crosscurrent manipulation); next in line to be phased out will be the lowest grade crude oil (bitumen and heavy crude). Given that Northern Alberta and Saskatchewan primarily produce bitumen and heavy crude, this needs to be accounted for. Even if we improve our efficiency, realistically, we cannot compete with producers having lower costs of production with better grades of oil.

Suggestions

1. My personal favourite! Offer to build renewable energy sources on First Nations land for First Nations
2. Geothermal energy is expensive and under utilized worldwide; we could become world leaders and export the technology
3. Identify high yield sites (hot springs perhaps) and build geothermal power-plants. Geothermal is cheaper than hydro³ and is a win/win scenario creating: lots of jobs, baseline energy, and requires very little land
4. Find out why the Naikun offshore wind project has not been built yet and build it
5. Deregulate the solar industy
6. Build Solar farms on non-arable land and export the electricity
7. Investigate the possibility of building electric vehicles
8. The city of Victoria BC seems incapable of building a sewage treatment plant, charge them and build one
9. Rename provincial utilities replacing “Hydro” with “Energy” example; BC Hydro to BC Energy and Manitoba Hydro to Manitoba Energy etc.
10. Fix the NEB or rename it the National Oil Board
11. Create departments for applicable renewable energy production
12. The Climate Centre for Policy Alternatives has dedicated an entire website to providing alternatives on topics such as this.

        “How can we afford the leap?“⁴ is dedicated to providing alternatives for making that leap to a fossil fuel free           environment.

        “All that is lacking is the political will and determination.”⁵

In summary, we have the choice between:

     A – known short term gains associated with little cost but limited, questionable long term gains that are                    associated with significant environmental and economic risk

or

     B – known short term gains associated with significant costs; with the unlimited long term gains associated with:          a healthier environment, less reliance on others, and some resource loss on any venture that may not work

I hope that clarifies just how awful this deal is for Canada.

We can do so much better for Canadians and our environment, there is no need pander to a dying industry. Whether or not the demand for low grade crude oil lasts another 5 or 20 years should only be important to those Canadians still in the industry (hopefully it lasts long enough for them to retire). What is of paramount importance is that we recognize that this party is over. I totally agree with your statement, “Ultimately, this is about leaving a better country for our kids than the one we inherited from our parents.”. I believe your sincerity and hope that you can see that my structural suggestions, coupled with Mr. Campbell and company’s taxation suggestions, could be the foundation for a cleaner economy.

Sincerely,

 

 

Rene Dansereau

rene234@hotmail.com

www.rened.co

cc: Rona Ambrose, Dwight Ball, Terry Beech, Perry Bellegarde, Christy Clark, Derek Corrigan, Philippe Coullard, Brian Gallant, the Internet, Wade MacLauchlan, Melanie Mark, Bob McLeod, Stephen McNeil, Tom Mulcair, Rachel Notley, Brian Pallister, Stewart Phillip, Gregor Robertson, Sandy Silver, Kennedy Stewart, Peter Taptuna, Brad Wall, Kathleen Wynne

UPDATE:  Today the British Columbia provincial government approved the pipeline expansion, allowing construction to begin; the same day I mailed the letters and posted it online.  While I am not surprised, I am disappointed.  I hope some of the suggestions and alternatives mentioned above are seriously considered.  Hopefully no one gets killed in the coming confrontations.

Update #2

On January 13, 2017

“You can’t make a choice between what’s good for the environment and what’s good for the economy,” Trudeau said. “We can’t shut down the oilsands tomorrow. We need to phase them out. We need to manage the transition off of our dependence on fossil fuels.

“That is going to take time. And in the meantime, we have to manage that transition.” Justin Trudeau

This is two days after I posted and mailed my research.

Update #3

The Alberta oil industry is now looking for a further subsidy to clean up their own mess.

Be seeing you

footnotes:

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