Canada Is Ready to Pay Big Oil to Stick With Controversial Pipeline

Canada Finance Minister Bill Morneau
Canada Finance Minister Bill Morneau
Photo: AP

The Canadian government is in a race against the clock to secure the expansion of the Trans Mountain Pipeline. They’re gunning so hard for this archaic crude oil project that Finance Minister Bill Morneau promised Wednesday in a press conference the federal government would cover the dollars developer Kinder Morgan has lost during the current construction suspension due to a local province that just won’t let the pipeline in.

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Good job, British Columbia. Shame on you, Canada.

The federal and provincial government have been bumping heads over this proposed 715-mile long pipeline since the federal government approved it in 2016. British Columbia wasn’t so keen on having a pipeline carrying bitumen, a highly toxic crude oil whose thick consistency makes it difficult to clean up, run through its communities. So both the province itself and local First Nations, who worry about environmental impacts like spills, have unified with protests and several lawsuits aimed at stopping the project.

Two protestors, Black Wolf (left) and Xenoa Skinieth, stand among protest signs near the Kinder Morgan oil facility in Vancouver, Canada.
Two protestors, Black Wolf (left) and Xenoa Skinieth, stand among protest signs near the Kinder Morgan oil facility in Vancouver, Canada.
Photo: AP

The drama’s gotten so real that Kinder Morgan gave both parties a deadline of May 31 to get their shit together, before the company pulls the project altogether. This came after the province of Alberta, the exporter of this oil, imposed a ban on wine from British Columbia. Yes, wine that people drink. These are the times we live in.

Anyway, that end of May deadline? It’s good news for the indigenous activists who’ve been actively halting construction. It could be their only hope to stop the project from running through their lands once and for all. The looming deadline has become an apparent cause of distress for the Canadian government, however, which hopes to keep Kinder Morgan on board past this date. Even if the company decides to leave the project behind, Morneau said Kinder Morgan would be properly compensated, which goes to show the government’s support of this type of development.

The irony of it all is that Prime Minister Justin Trudeau has championed himself as both a leader in the fight against climate change and a staunch supporter of indigenous rights. Yet he’s ignoring the pleas of First Nations in favor of further fossil fuel development.

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Seriously, bro?

[h/t CBC]

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Yessenia Funes is climate editor at Atmos Magazine. She loves Earther forever.

DISCUSSION

yttruim
Yttrium

As a resident of Alberta, this whole mess is out of control.

We have a government (NDP) who campaigned on being responsible environmentally, now trying everything they can to get this pipeline built. This has more to do with short-term optics and politics i believe than anything else. This province has become dependant on the oil industry to the point where people are openly verbally attacked and attacked in effigy (see: the last provincial election when hard-line oil supporters attacked multiple images of Rachel Notley, or just look to the replies on any of her tweets) It is a big industry in this province and for year there has been an active propaganda machine in place to get people to throw unconditional support behind anything they do. Even though the NDP campaigned on getting the province to diversify away to better protect ourselves they have been forced to get inline with big oil.

Far too many people in this province view the oil industry and the mass money generated from it as an entitlement. Anyone saying anything negative or trying to restrict the flow of oil out of this province is seen as a threat to the province and the country. People have become too dependant on the industry and the cash crop that it is, they cannot imagine or comprehend not having the cushy position they are in. The people in the industry, love to hate on the government for regulations and taking this taxes (if you want a real WTF moment look at the debate over transfer payments, and how heated that can get. People lose their minds over paying the same federal tax rates as the rest of the country, and in a province with higher wages and more income cant seem to grasp that transfer payments are just federal taxes and that if you are making more, of course, you are going to be paying more) taking issue with “government handouts” and people seeming to take their hard earned money. There is a large percentage that spends everything they bring in, because in an up and down industry they never learn and think the good times will last forever, then when things turn bad they are out of cash and cannot afford their lifestyles and then run to the government seeking support (America like you, our conservative populace is also hypocritical)

There is not a single voice of “should we really be doing this” in our politics here anymore. Everyone is focused on the “jobs” and “money” because people have also been lead to believe that these pipelines will mean tens of thousands of new jobs and that if the big corporations get more money they will share it with the workers, which is wrong on both counts. People have become blind when it comes to oil in this province.

Trudeau is playing an interesting game, as he is playing both sides, supporting but not pushing for the pipeline, supporting but not backing the protestors. It feels more like he is stalling any action in a hope the KML expansion goes away.

This is dangerous because you have two provinces -three with Saskatchewan feeling they also need to be in this fight- having very open hostilities towards each other with renewed voices calling for separation (Alberta’s) with no one to calm both sides.

The province and now the federal government has come forward saying they are willing to cover some of the cost of this pipeline, yet they are already giving this industry billions in subsidies every year, all the while having a ridiculously low royalty rate (6% only in the most percent of conditions) when the break-even for the large established operations is in the $20-30 range, with some estimates out there saying some operations are breaking even at ~$10.

They are willing to pay the corporations money so they can make more money when those funds should be spent on re-educating the workforce still without jobs for other industries.

This is before getting into the fact that all the big multinationals pulled out of the oil sands starting 4 years ago (back when the Conservatives were in power both federally and provincially) because there was no long-term future for the sands. They took the money from the sales of their operations and directed it towards renewable projects.

For how big oil is in this province next to know one know what the breakdown of a barrel of oil is, and why that played into the multinationals getting out. ~50% goes to gasoline, the industry is reliant on the automobile industry, as it goes so goes the need for oil production. So let’s look at what has been happening in the auto industry in the last 5 years. Every manufacturer is going electric, with some (at least 5) going full EV or hybrid by 2019 and 2022 (see: Jaguar, Land Rover, Volvo ... http://jalopnik.com/all-new-jaguars-and-land-rovers-will-go-hybrid-or-elect-1801752740) to the point that we could see 50% of new vehicles coming to market be EV or hybrid by 2022-2025. City buses are on a path to full electrification, this alone could signal a collapse of oil prices https://www.bloomberg.com/news/articles/2018-04-23/electric-buses-are-hurting-the-oil-industry China has a mandate of 12% of sales be EV’s by 2020 and if anything is only speeding up https://phys.org/news/2018-04-china-auto-highlights-industry-electric.html The reduction in need of production will destroy the Oil Sands as there is no need to keep them open when conventional oil can produce more than enough for the need and is ~$5 for break even.

Next comes diesel and jet fuel at ~25-30% with long-haul electric vehicles starting to come into production as well as by sea shipping vessels and NASA and Boeing developing EV options for the airline industry, with Norway already aiming for short-haul fights to be fully EV by 2040. https://phys.org/news/2018-04-global-aviation-aims-green.html https://techxplore.com/news/2018-01-norway-aims-short-haul-flights-electric.html

Next, you start to get into small fuels like propane, heating fuels, then plastics, lubricants, and consumption oils. All of which are such a small piece of the pie that they are not enough to sustain an entire industry. But wait, technologies like the Algae to crude oil conversion can start to replace their need to conventional oil. https://www.pnnl.gov/news/release.aspx?id=1029

There is no long-term, and by that, i mean 10 years (2030) outlook for the oil sands. Yet instead of looking at the trends and where things are headed everyone in this province have their heads in the sand and are doubling down on oil. There is already an issue with abandoned wells that the government will have to clean up to the tune of tens of billions of dollar and the tailing ponds which will again be left for the government to clean up and foot the bill for. The governments should not be spending the cash to support these money sinks, but should be putting those funds back into the people to get the retraining they need so there is not an even worse situation when it comes to people being out of work.

I work in the oil industry here, at it amazes me how many people think that outside of the borders of the province to no matter, that the industry internally can be self-sustaining at the numbers they are at. Trying to tell people to save and plan for a future that is coming like it or not (i like it and love it) because it is going to hit them like a train and if they thought things were bad before they have not seen anything yet.

The provincial and federal backing of the pipelines and industry often remind me of the Asbestos industry and if in the dying years they were to still be funding and support it, ignoring the changing world around them. While that industries rightful collapse was smaller, the lessons learned about the people being out of work after should be warning for what not to do with the oil industry in this province.

If you read all of that, thank you for sticking around. If you are curious to see the toxic atmosphere the oil industry and KML debate have turned into or more of the issues facing the province i would direct you towards the #ableg tag on twitter. Be warned though you will also be exposed to our own little mini-trump in Jason Kenney and the hard-line conservatives that go along with him.