The economic impact of the Trans Mountain pipeline is immense and incomparable.
That’s according to Tim Pickering, President and CEO of Auspice Capital.
On Tuesday, the federal government purchased the project from Kinder Morgan for $4.5 billion – still needing to be passed by the American company’s shareholders.
The pipeline, which has been operational for over 60 years, is expected to transport around 890,000 barrels per day to tide waters, then to foreign countries, if an when it’s finished being twinned.
Pickering says we’re currently losing billions of dollars because we can’t personally send our product overseas.
“We have the oil that the world wants, we simply can’t get it to market.”
Roughly 99 per cent of our crude is sold to the United States – who then sells it to different countries.
Pickering notes because we can’t get our product to our own coasts, companies have no choice but to sell at a discount to our neighbours to the south.
“We are giving away a resource that we made a decision as a society to attract, in a safe and environmental way, and we decided to sell it at a cheap price to one buyer.”
Just recently, the discount was around $24 a barrel – which would mean a loss of around $15.5 billion for the year.
“Anytime we can get our crude to local market and help decrease that discount it’s obviously in Canada’s interest. This isn’t just in the interest in an oil company, this is in the interest of all Canadians.”
Pickering adds the United States would still be our main partner but they won’t have the leverage they once did, resulting in the discount being somewhere in the single digits.
“We’re still going to be able to supply the U.S. with wait they need but at a more competitive price and we’re going to be able to diversify that into other markets like Asia.”
The majority of oil Canada produces is known as ‘heavy sour.’
Pickering says this product is in high demand because refineries gain better margins by putting it through their systems.
The Asian market has created specific refineries for this type of crude, usually getting their product from Venezuela – a country currently facing a major crisis.
“This is an opportunity for Canada to also supply oil to a massive market in a reliable fashion while a part of the world that has all sorts of problems continues to do so,” added Pickering.
He adds the U.S. will still dominate because of the lack of options to get our product to the coast, let alone, ship overseas.
To put in perspective, Canada barely has any pipelines that access tide waters, the Trans Mountain seeing the majority of crude going through its pipeline.
However, Pickering says its mostly being used to supply the lower mainland.
‘The benefits for British Columbians is they get access to a safe, reliable, and economically cheap supply of oil to refine and supply their economy, the tourist industry, and shipping industry.”
The Trans Mountain deal is also expected to have a big impact on local businesses.
Executive Director of the Fort McMurray Chamber of Commerce Alexis Foster says the business community could once again see major growth.
“Hopefully we’ll start to see some more people come back to the oilsands region. I hope it will help people have more faith in investing in the region.”
During the boom time, Foster notes the business sector saw an annual growth of seven to 10 per cent.
“It was unsustainable and I don’t necessarily expect to see growth like that.”
She adds Fort McMurray doesn’t have the infrastructure to support such a yearly increase. However, any growth is welcomed – the chamber is just hoping to see sustainable growth moving forward.
Meanwhile, Pickering believes the price of oil could continue to rise, once again peaking at numbers before the recession hit.
“We think the good times are to come over the next few years and people should be very optimistic but disciplined and pragmatic.”
“Everything is lining up that we could see higher prices,” he added.
LISTEN: On this edition of Fort McMurray Matters, Tim Pickering, President and CEO of Auspice Capital, and Alexis Foster, Executive Director of the @ymmchamber discuss the economic impact of the Trans Mountain pipeline #ymm #rmwb https://t.co/GuLnQi5dqD
— MIX 103.7 News (@Mix1037FMNews) June 1, 2018