Canadian nation-building is meaningless to pipeline 'activists': Yager

“I want Justin Trudeau to do the right thing. If [the government] approves the Kinder Morgan Pipeline, they will see such hell-raising from British Columbia that they will feel it shake the foundation of parliament.”

This jewel was followed by “I think you will see protests on this one like you have never seen before.”

So spoke the sole Green Party member of parliament and leader, Elizabeth May, and Mayor Gregor Robertson as several thousand people protested in Vancouver on November 19 against the Trans Mountain Pipeline expansion, before Ottawa announced its approval of the project on November 29.

Regardless of the positive economic impact new pipe will have upon thousands of unemployed oilfield service workers—their fellow Canadians—they said the only acceptable answer was no.

The same day, civil disobedience against pipelines was underway in North Dakota. Protestors opposed to the Dakota Access Pipeline stormed a closed bridge and were turned back by law enforcement officials using water cannons.

While the B.C. resistance is about increased tanker traffic, North Dakota’s opposition is related to long-standing aboriginal land issues under the pretense of a potential pipeline leak under a lake. Both are attracting anti-oil crusaders from afar who see obstructing pipelines as a key tool for suppressing the production and consumption of oil.

Yes, all pipeline “activists” drive or fly to protests thanks to the miracle of petroleum, but we’ve all learned long ago the hypocrisy of consuming oil to oppose it means nothing to the devoted.

Pipelines really matter to oilfield services (OFS). Oil in the ground is worthless without economical market access. Western Canada’s landlocked hydrocarbons have always faced this challenge. Here’s how it was solved the first time.

The 1947 Leduc discovery was quickly followed by the discovery of other substantial fields, such as Redwater (1949, 780 million barrels), Golden Spike (1949, 243 million), Bonnie Glen (1952, 434 million), Pembina (1953, 1,745 million), Steelman (1954, 228 million), Weyburn (1955, 336 million), Swan Hills (1957, 926 million) and Judy Creek (1959, 487 million).

More production than pipe caused OFS to experience a material downturn in the late 1950s.

The post-Leduc boom saw drilling rise 1,000 per cent from 331 wells in 1948 to 3,282 in 1956. But the new discoveries were shut-in due to a lack of takeaway capacity, and drilling declined to only about 2,500 wells from 1958 to 1962. The problem was market access, not oil price, geology, royalties or taxes.

In 1949, Interprovincial Pipe Line Company (now Enbridge) was incorporated to take oil first to Regina then into the U.S. at Superior, Wis. In 1953 it was extended to Sarnia, Ont., but not through Canada. Alberta oil went to Detroit in 1960, Buffalo in 1963 and Chicago in 1968. The network reached one million bbls/d in 1972, but like the oilsands today, production preceded the pipe.

Central Canada imported its oil because it cost less. Supporting other Canadians has never been intuitive. In 1961, John Diefenbaker’s’ Conservative government introduced the National Oil Policy whereby Canada west of the Ottawa valley would use Canadian crude. It cost more when transportation was included, but it was good for the country.

Drilling responded quickly. By 1964, the industry was back drilling around 3,000 wells and has never looked back. The original Trans Mountain Pipeline to Vancouver that Kinder Morgan is currently trying to expand went into service in 1953.

For natural gas, the Westcoast Transmission line to the lower mainland and U.S. went west in 1957, and the TransCanada Pipeline went east in 1958. Each required federal approval, and not one occurred without controversy or debate. Decisions caused market distortions, but higher prices and exports were deemed to be in the national interest defined as jobs, wealth, taxes and opportunity.

With pipe in place, OFS thrived. Without it, OFS struggled. Nothing has changed.

Back to Kinder Morgan. Pipelines have always been controversial in Canada, but nothing like today. The nation-building of the past, supporting employment, dignity and national income equality, is interesting but meaningless. That the economic success and prosperity of so many depends on pipe means nothing to May, Robertson and other pipeline opponents in Canada and the U.S. Looking back, it never has.

Trudeau’s Kinder Morgan decision will be crucial. If yes, mass protests will surely follow. The heavy hand of the law may be required to keep the peace when it turns ugly. Which we are already assured it will. But is this about Canada or small regional voices? Should our future be decided by whoever yells the loudest?

David Yager is a long-time industry commentator and an oilfield service management consultant in Calgary.

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