TMXL: Alberta is getting a new pipeline but who's going to pay for it?
Publicly-owned Alberta Petroleum Marketing Commission and Trans Mountain Corporation to build pipeline to the Pacific Coast
The path already taken might be the easiest way to get a new oil pipeline built from Alberta through British Columbia to Canada’s Pacific Coast.
That’s what Prime Minister Mark Carney and Alberta Premier Danielle Smith are betting on as they announced a proposal for a new pipeline to follow the route near the Trans Mountain and Trans Mountain Expansion (TMX) pipelines to BC’s Lower Mainland. So let’s call it TMXL.
After months of speculation, rumours, and political jostling over the proposed route of the new pipeline — Smith’s government is believed to have preferred the much more politically fraught northern route to Kitimat or Prince Rupert — the southern proposal was announced in Calgary by Carney and Smith.
The pipeline announcement comes days after Carney visited BC Premier David Eby to announce a new Memorandum of Understanding that reaffirms the North Coast tanker ban and includes $3 billion in federal funding to replace the aging Massey Tunnel and other investments — smoothing over any expected opposition from the NDP government on the Left Coast.
It also coincides with the start of Calgary Stampede, one of the largest events and networking opportunities in Canada’s political calendar. Dozens of Liberal MPs and cabinet ministers are expected to descend upon the city over the next two weeks at the encouragement of Calgary Confederation MP Corey Hogan, the city’s sole Liberal MP.
The big unanswered question is who is going to pay for the new oil pipeline?
The estimated cost of the TMXL project, according to the Alberta government's submission to the Major Projects Office, would be $35.2 billion to $43.7 billion.
Governments desperate to get pipelines built have already proven they will spend billions in public dollars to make it happen so there is little incentive for private corporations to jump to cover the costs (and I’m sure Smith’s separation referendum isn’t helping).
The Alberta government’s submission to the Major Projects Office proposes the Alberta Petroleum Marketing Commission and Trans Mountain Corporation lead the design, development, permitting, construction and operation of the TMXL pipeline.
The Alberta Petroleum Marketing Commission is a public agency of Alberta government and the Trans Mountain Corporation is a federal crown corporation. The submission names publicly traded company Pembina Pipeline as a “strategic advisor” for the pipeline project.
The TMXL pipeline was described as a public-private partnership, but it’s almost certain that the public will end up being the biggest investor in this project.
The pipeline debate has taken up a lot of oxygen in Alberta politics and it is clear that Smith wants to have this pipeline project underway before a possible provincial election in October 2027.
Peter Nicholson shared some thoughts about the pipeline in anticipation of this announcement. Nicholson is a former Deputy Chief of Staff for Policy in the Office of the Prime Minister of Canada and currently serves as Chair of the Board of the Canadian Climate Institute.
Reaction to the TMXL pipeline announcement:
Alberta NDP leader Naheed Nenshi:
“Today’s news is welcome.
“Alberta needs pipelines to safely get our product to markets in Asia. Alberta’s NDP has long advocated for a southern pipeline route while the UCP wasted time and money on a non-feasible Northern route. We are very pleased to see the southern line progress.
“We are also pleased to see progress on Pathways after so many years. It’s a critical step to future-proof our oil sands production.
“Canada works best when we work together and we are pleased the federal government is working to get projects done even as Danielle Smith actively tries to undermine the country with her referendum on separation.”
Pembina Institute executive director Chris Severson-Baker:
“After months of speculation, it is now clear: there is no business case for a new west coast pipeline in Canada. If this was a smart economic venture; if there was any kind of reasonable return on investment to be made, a private company or companies would have put up the cash. Instead, Albertan and Canadian taxpayers will now shoulder the cost of 90% of this project – which will likely run into the tens of billions of dollars. Let there be no doubt: the Trans Mountain Corporation and the Alberta Marketing Petroleum Commission are not private proponents. They are wholly taxpayer-funded Crown Corporations.
“Clearly, this is not what either Premier Smith or Prime Minister Carney promised Canadians. Since last summer, both have repeatedly said a pipeline will only move forward if a private company paid for it. Indeed, both went to great lengths to induce a private company to do so. In Alberta’s case, this has so far included the unprecedented steps of taking barrels of oil as ‘in-kind’ payments from oilsands companies (as opposed to cash royalties); providing the Alberta Petroleum Marketing Commission a loan of almost a billion dollars to go to Asia in search of buyers for those barrels; and finally contemplating using Albertans’ tax dollars to retool refineries in Japan to process the oilsands’ variety of heavy crude. These are all examples of Alberta taxpayer dollars and royalty revenue being used to artificially create market demand for Alberta’s oil, instead of being spent on vital public services. Still, none of it worked to get a private proponent to lead this project.
Calgary Chamber of Commerce President & CEO Deborah Yedlin:
“The Calgary Chamber of Commerce welcomes today’s announcement of a plan for a new Alberta pipeline to the west coast, in partnership with Trans Mountain and Pembina Pipeline Corporation, along with the final agreement on the terms of the Pathways project. We commend the federal and provincial governments for their ongoing collaboration to advance projects and build Canadian prosperity.
“Amid geopolitical uncertainty, Canada has a once-in-a-generation opportunity to strengthen its economic future by advancing critical energy infrastructure, and the proposed southern route will help accelerate pipeline construction by reducing regulatory barriers. Alberta – and Canada – have a critical role to play in supplying the energy the world needs, and this marks a significant step toward fulfilling that responsibility and becoming an energy superpower. By leveraging Trans Mountain’s existing route, this is both an expeditious and pragmatic approach that will generate significant economic growth for the province and the country.
“Today’s announcement shows what this federal government will protect above all else: the profits of Big Oil.
As we mark the five-year anniversary of a heat dome that killed 619 people in British Columbia – and as many communities across the country are facing extreme weather right now – Canadians deserve leadership that protects us. Instead, this government is doubling down on yesterday’s failed solutions and dragging us into further danger, risk and insecurity.
The opaque and confusing public-private partnership ownership structure means it’s very likely that we, the public, will not only bear the risks and the damages, but also the lion’s share of the costs.
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I’m taking a short break from writing over the next week to enjoy the summer weather as much as possible (and the break in the rain in Edmonton!). I will be back with new columns in mid-July.
Thanks again,
Dave
Well, there is still a long way to go before the pipe gets laid. For example, the oil sands producers have to increase production hugely to justify the pipeline. This they have been unwilling to do BECAUSE THEY KNOW THERE IS NO MARKET. Smith cant control this. Don't panic. Yet.
Mr. Carney is the guy to lead Canada on the fight against the threats we face from without. As far as those who would destroy Canada from within, with assistance from without, he is either very naive or has some secret plan to deal with western alienation issues. BC wins with this route and the promised toll sharing. Pundits are saying Carney has calmed the waters. BC and Alberta agree. Well, as with all past cease fire agreements Alberta has signed, next week Smith will be at it again, whining about how Ottawa actually sold Alberta down the river, because THEY gave BC part of the toll for shipping things in the pipeline. Mr. Carney, for some reason seems to believe that Smith can be trusted to come on board the Team Canada parade float. Not a chance. The Conservatives did not joing the team, even with the TMX deal. Now we have Mr. Carney, seeming to think this puts to bed this fight over the pipeline. It does not because the interprovincial rivalry has little to do with the actual pipeline as much as provincial power, and in Alberta's case SOVEREIGNTY. That Mr. Carney was not settled by the TMX and this will not stifle the separatists nor the separatist UCP government from holding their referenda to overthrow Canada. I am truly hoping that deep down you know that and actually have a plan. The fact that any move toward separtion or even continued whining about Confederation is deep routed must surely be in the back of your mind. That it would take decades or perhaps never reach a full agreement only further exaserbates the tensions already there.
As I said, I trust Mr. Carney when it comes to world economics and relations. Domestic, it is not that I do not trust him, just that he has not actually shown an intestinal fortitude he shows on the international fron.