Trans Mountain will cost Canadians $6.4 billion: study

A new cost-benefit analysis of Kinder Morgan[s proposed Trans Mountain pipeline expansion concludes the project would cost Canadians more than $6.4 billion during its first 30 years of operation.

The Simon Fraser University study, commissioned by the Living Oceans Society for a National Energy Board-led review, is the latest report by opponents of the project to argue shortcomings of the pipeline that would carry bitumen from the Alberta oilsands to Burnaby for export to Asia or the U.S.

The latest study, whose lead author is SFU resource and environmental planning professor Tom Gunton, an adviser to former NDP premier Glen Clark in the late 1990s, found benefits were outweighed by costs attributed to the unnecessary investment in new pipeline capacity and environmental effects.

It’s a stark contrast to Kinder Morgan’s assessment of the project, which argues enormous economic benefits from the project, and for which it says environmental risks, particularly from oil tankers, will be mitigated by increased tug escorts in inland waters and beefed-up spillresponse capacity.

For example, Kinder Morgan said the $5.4-billion Trans Mountain project, which will triple capacity of its existing pipeline by twinning the pipeline to reach markets in Asia and the U.S., will provide $45 billion in increased revenues to producers over 20 years and $14.7 billion in additional revenue for government.

It is only one of several major oil pipeline projects facing resistance. The others include Enbridge’s Northern Gateway to the B.C. northwest coast and TransCanada’s Keystone XL to the U.S. and its Energy East project to Eastern Canada.

In particular, the SFU study found that the cost of unnecessary investment in pipeline projects could exceed $15 billion — and produce a cost of $3.1 billion.

The study points out that approved and proposed pipeline projects will create more than 1.8 million barrels per day of empty pipeline space by 2020.

The study said the problem is that if new pipelines are built they will take oil away from existing pipelines that will then have empty space. Ultimately, the cost of this empty space will get pushed back to oil producers and to the Canadian taxpayer in the form of reduced royalties and taxes. The study also estimates environmental costs of more than $3 billion for the risk of pipeline spills and for the cost of the general risk to the state of the environment. Greenhouse-gas emissions would cost an additional $290 million.

The SFU study is meant to provide an analysis of the full cost to society, said Living Oceans executive director Karen Wristen.