This HuffPost Canada page is maintained as part of an online archive.

The Nothern Gateway Pipeline Brings Out the Great Bear in me

We don't have to risk the destruction of one of the world's most spectacular environments to get full value from our oil sands resource. Of course, we have to put refineries in environments that can best handle them and not in areas that can't. The recent proposal to build a refinery in Kitimat is an example of building one in the wrong place. That's why I'm saying no to the proposed Northern Gateway pipeline and yes to a more sustainable future for the Great Bear region.
This post was published on the now-closed HuffPost Contributor platform. Contributors control their own work and posted freely to our site. If you need to flag this entry as abusive, send us an email.
Alamy

I've just returned from one of my favourite pastimes -- salmon fishing off the west coast of British Columbia. But even in the remote Kyuquot Sound region, off the grid and far away from the news, it's hard to get away from conversations about the proposed Northern Gateway pipeline that would bring a never-ending stream of tanker traffic to the region.

Although the particular coastline of Vancouver Island I was fishing this summer is not directly on the proposed tanker route, any sizeable oil spill along the north coast of British Columbia would have consequences here as well. But the most devastating impact would be in the Great Bear region itself. It was only two years ago that my son Jack and I had an opportunity to fish on Princess Royal Island, and witness the wonder of 300-foot trees in one of the world's last remaining coastal rainforests, shrouded in primeval mists.

Of course no one has to tell me why Alberta, and its huge oil sands industry, is so desperate to build the Northern Gateway pipeline. As I wrote over a year ago, oil sands producers have been continually getting short-changed for their oil by refineries in Cushing, Oklahoma, where most of the product from the oil sands flows. At times the gap between West Texas Intermediate (WTI), the price at Cushing and world oil prices (Brent) has exceeded $20 a barrel.

Considering that Canada exports over 2-million barrels a day to the U.S. market, getting shortchanged $20 per barrel is no trifling matter. It works out to some $1.2-billion a month or roughly $15-billion a year. That's a much bigger subsidy than the one Alberta producers were forced to give Ontario and Quebec energy consumers in the 1980s when they had to accept made-in-Canada oil prices under the still reviled National Energy Plan. Today Alberta producers have to accept even more punitive terms for their oil from made-in-USA prices.

Who exactly is getting that missing $20 per barrel? U.S. motorists certainly don't get any break at the pumps. They're paying the same price for their gasoline whether it is made from Canadian bitumen or any other feedstock. But the refinery making that gasoline is sure making a lot more money when it uses bitumen from Alberta than when it has to pay world oil prices for its crude.

Generally speaking, spreads between what refineries pay for feedstock (bitumen, crude) and what they charge for processed fuels have been razor thin. That's why a new refinery hasn't been built in decades in North America. In fact, there is a glut of refinery capacity on the Gulf Coast. But thanks to the subsidy they get from Canada, refineries in Cushing often enjoy refinery margins, or crack spreads as they're known in the industry, that have been as much as five times what refineries on the Gulf Coast, which have to pay full world oil prices for their feedstock, operate with. That's why it was so crucial to Alberta oil sands producers that the Obama Administration approve Transcanada's Keystone XL pipeline extension that would have connected them that additional 450 miles to the Gulf coast and world prices.

Maybe it's time Canadians stop simply contenting ourselves with being drawers of water and hewers of wood. That strategy has marked the approach to developing the oil sands, which the International Energy Agency pegs as the third largest oil reserve in the world. It's time those huge refinery margins that are shortchanging Alberta producers at Cushing were captured by new refinery capacity in Canada. Instead of simply exporting unprocessed bitumen, the country should export higher value-added petroleum products like gasoline and diesel.

That would be a win for both the economy and the environment. We don't have to risk the destruction of one of Canada's -- and the world's -- most spectacular environments to get full value from our oil sands resource.

Of course, we have to put refineries in environments that can best handle them and not in areas that can't. The recent proposal to build a refinery in Kitimat is an example of building one in the wrong place. It would bring the risk of both pipeline ruptures and tanker spills to the extraordinary environment and rich ecosystems of the Great Bear Rainforest. But surely refinery capacity can be built in other regions that make more environmental sense.

The export of raw bitumen is simply not in Canada's long-term economic interests. And regardless of the economics, the Great Bear is no place for oil pipelines, oil refineries, or oil tanker traffic. That's why I'm supporting Coastal First Nations and WWF as they say "No" to the proposed Northern Gateway pipeline and I will be supporting their efforts to secure a more sustainable future for the Great Bear region.

Close
This HuffPost Canada page is maintained as part of an online archive. If you have questions or concerns, please check our FAQ or contact support@huffpost.com.