Report: Province’s Revenue Losing Billions Due to Lack of Pipelines

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Report: Province’s Revenue Losing Billions Due to Lack of Pipelines

A lack of pipelines could be costing the province billions of dollars in revenue annually.

According to a report released on Tuesday by the University of Calgary, Alberta is losing on average $7.2 billion due to the lack of capacity in its pipes.

Research Associate at the School of Public Policy Kent Fellows tells Fort McMurray News this is resulting in price benchmarks being very much in favor of the U.S.

“We find in periods where these pipelines were not at capacity, where there was still some access room in the line, we had much lower differentials and a lot of that is due to the fact that we have the capacity restraint which limits our ability to get the oil to the market.”

Fellows says before 2013 people buying Alberta crude got a discount between 9 and 13 per cent compared to West Texas Intermediate. Since February 2, 2018, local prices are 47 per cent lower – meaning less revenue.

This is also resulting in the province losing around $6.60 on every barrel exported to the United States.

“Because our export partners know we’re having trouble getting it to market they can deal at a lower price. We’re suffering on that one, they’re getting a good deal, we’re not getting as good a deal.”

The federal government is also losing around $800 million and private companies $5.3 billion annually.

Need for Pipelines

Fellows notes the report shows the importance of adding pipelines.

He says crude-by-rail and other substitutes are too costly and aren’t benefitting the province.

“Partial-upgrading technologies that have just been discussed would allow for a little more efficiency in the transportation, a little more use of the capacity we have now – those will help but there really isn’t a substitute.”

Though it wasn’t mentioned directly, Fellows adds the Trans Mountain Pipeline was the direct catalyst for the report being written.
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