Busting myths about the Trans Mountain Expansion
Project benefiting Indigenous communities and promises opportunity for Canada
by Deborah Jaremko
This summer is peak construction for the Trans Mountain expansion project (TMX), with more than 13,500 people working on the pipeline across Alberta and B.C.
False narratives continue to shadow this critical infrastructure project. Here’s a look at four of the main myths that get repeated, and why they are wrong.
Myth: TMX is not needed.
Fact: It is.
The case for the Trans Mountain Expansion was strong before Russia’s invasion of Ukraine, and now it’s even stronger.
The existing pipeline has been overbooked on a regular basis for the last decade, debunking the claim that there is no world demand for Canadian oil.
And despite all the talk of energy transition, global oil demand is rising. The International Energy Agency (IEA) expects it to reach 101.3 million barrels per day next year, rising above consumption levels before the COVID-19 pandemic.
The IEA projects that oil demand will continue rising, to 103 million barrels per day in 2030, and stay at that level through 2050.
Canada’s allies are looking for solutions as they work to reduce reliance on Russian oil and gas. This includes President Joe Biden’s unsuccessful recent request for Saudi Arabia to increase production to help reduce U.S. gas prices.
When the Trans Mountain Expansion comes online in 2023 it will add about 590,000 barrels per day of capacity for Canadian oil to reach global markets, helping relieve an increasingly tight supply/demand balance.
Myth: TMX is not supported by Indigenous people
Fact: It is benefitting Indigenous communities.
The Trans Mountain Expansion has reached mutual benefit agreements with 69 Indigenous communities along the pipeline route.
These agreements, which can include financial compensation, contracting, employment, training, and environmental protection, are valued at over $600 million.
So far more than 2,100 Indigenous people have worked on the project, or about 11 per cent of the total workforce. More than $3.2 billion has been awarded to Indigenous businesses through more than 4,700 contracts – $1.3 billion of that in 2021 alone.
Multiple Indigenous groups including Nesika Services, Project Reconciliation, and Chinook Pathways are also seeking equity ownership stakes in the project once the expansion is up and running.
Myth: TMX is harming Indigenous cultural resources.
Fact: Indigenous communities are guiding and monitoring development.
Indigenous monitors are working with Trans Mountain to ensure that traditional knowledge is incorporated into construction oversight, and to help minimize impacts to traditional land use and resources.
There were 45 Indigenous monitors employed with the expansion at the end of 2021.
The operating pipeline and the expansion are also guided by the Indigenous Advisory and Monitoring Committee (IAMC), a group of 13 Indigenous and six senior federal representatives that regularly participate in oversight with the Canada Energy Regulator, Fisheries and Oceans Canada, and Parks Canada.
Meanwhile, the expansion project is conducting the largest archeological program in Canadian history, informed by Indigenous communities.
Since 2012, more than 98 Indigenous groups have participated in archaeological fieldwork or have provided traditional use information and traditional knowledge as part of the program, valued at $40 million so far.
Myth: TMX will be a financial loser
Fact: Access to global markets will increase revenue for Canada.
Even with increased construction costs, the project will result in higher revenues for producers and the Canadian government because global customers will pay more for Canadian oil, says B.C.-based environmental scientist Blair King.
“It is simply getting paid more for the same product because you can now get it to a market that values it more,” King says. “It is pure cream which requires no further effort once the pipeline is built.”
According to Canada’s Parliamentary Budget Office (PBO), an increase of US$5 per barrel for Canadian heavy oil would add $6 billion to Canada’s economy over the course of one year.
On the global market, the Canadian heavy oil grade WCS is comparable to Dubai Fateh medium heavy from the Middle East, according to Phil Skolnick, analyst with Eight Capital. In June 2022, Dubai Fateh sold for an average of US$116 per barrel, about US$15 more than WCS.
Using the PBO estimate, that means that if the project were up and running and current prices were sustained for a year, the Trans Mountain Expansion could help add up to $18 billion to the Canadian economy.
The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd.