In June 2014, TGG, in collaboration with Équiterre and Greenpeace Canada, released a report refuting the oil industry’s claims regarding the economic benefits for Quebec of moving and refining tar sands crudes. The report, entitled Economics of Transporting and Processing Tar Sands Crudes in Quebec, demonstrated that the benefits for Quebec would be insignificant while the costs and risks were very high. TGG also concluded that a major pipeline accident could be catastrophic with billions of dollars in damages and loss of human life.
When the report was released, there were no tar sands crudes being transported or processed in Quebec. However two major pipeline projects were being proposed to transport tar sands crudes to and through Quebec: Enbridge’s Line 9B Reversal and Line 9 Capacity Expansion (300,000 barrels per day at full capacity) and TransCanada’s Energy East (1.1 million barrels per day at full capacity). The TGG Report also emphasized that pipelines are industry’s preferred option for crude transport (especially for tar sands), because pipelines have relatively low costs and high capacity. However, rail could also be used to move tar sands to (and through) Quebec.
The public debate and media coverage had been characterized by significant misinformation and misunderstanding concerning the economic impacts of tar sands in Quebec. TGG’s Expert Report addressed the misinformation and sought to improve public understanding of these impacts. The Report started with an overview of (a) the key players (proponents, refineries, governments and the public); (b) the main proposed projects to transport tar sands crudes to and through Quebec; and (c) available refining capacity in Quebec. We then discussed and quantified (a) the minuscule benefits to Quebec of increasing the province’s involvement with tar sands crudes; and (b) the significant risks and costs to Quebec associated with tar sands crudes. Our report also emphasized that while most of the benefits would accrue to tar sands proponents, the risks and costs would be borne by the Quebec public.
Background: The Alberta tar sands are in a remote landlocked location, which is particularly disadvantageous from a crude market perspective. Massive and unrestricted expansion of the tar sands in this remote location led to pipeline constraints for producers by 2012. In part due to these constraints, producers were facing considerable discounts in selling their products. Claiming that “access to tidewater” would allow them to sell their crude at world prices, tar sands producers strongly supported large pipeline projects.
However, by 2014, there was significant public opposition to tar sands and related pipelines. And prospects were uncertain for all of the major proposed pipeline projects to transport tar sands crudes:
- Northern Gateway and Trans Mountain Expansion (to transport tar sands crudes through British Columbia to refineries and ports on the West Coast) and
- Keystone XL (to transport tar sands crudes south through the US to refineries and ports on the Gulf Coast).
As this opposition grew, tar sands proponents stepped up their efforts to transport crude east − to and through Quebec − to refineries and ports on the East Coast (particularly via Line 9 and Energy East). As the TGG Report emphasized, tar sands promoters probably underestimated the level of Quebec opposition to tar sands.
Update: Despite significant opposition in Quebec (and Ontario), the National Energy Board (NEB, the Canadian FERC) approved the Line 9B Reversal and Line 9 Capacity Expansion in March 2014 with 30 conditions. The flow of Line 9B was reversed starting in December 2015.
TheIn October 2014, TransCanada submitted its application to the NEB for the proposed 4,600-km Energy East pipeline, the biggest pipeline proposed in North America to date. Over the next three years, the NEB review process was repeatedly delayed.
One of the key factors in these delays was vigorous public opposition to tar sands and pipelines in Quebec (and elsewhere). A related factor was the loss of public confidence in the impartiality of the NEB. This was exacerbated by a scandal involving members of the Energy East NEB Panel seeking political advice from a former Quebec premier then under contract with TransCanada on how to better engage Quebecois on Energy East.
In October 2017, TransCanada withdrew its application for Energy East. TransCanada cited a change in NEB criteria, requiring accounting for upstream GHGs. But TGG (and other energy experts) attribute the cancellation to market conditions that have become increasingly challenging for tar sands producers. Since 2014, crude prices have been significantly lower; tar sands production growth has slowed and continues to be much lower than forecast. See also Keystone XL Market Analysis for more discussion of the shifting and challenging market conditions for Alberta tar sands.
The Canada Energy Regulator (the NEB’s successor for energy regulation) released a report in late November 2020 projecting that if Canada strengthens its climate policies, there will be no need for Keystone XL or the Trans Mountain Expansion Project to export tar sands crude. This implies that there will also be no need for the capacity that would have provided by Energy East.