The Fraser Institute

The Fraser Institute

July 17, 2012 07:02 ET

The Fraser Institute: Building Infrastructure to Ship Oil to Asia Could Add at Least $10.5 Billion to Canadian GDP, Provide Jobs for First Nations and Boost Returns of Canadian Pension Plans

CALGARY, ALBERTA--(Marketwire - July 17, 2012) - Expanding Canadian pipeline capacity to allow oil exports to Asia will pour billions of dollars into government coffers, create thousands of jobs, and bring substantial benefits to First Nations and pensioners, concludes a new study from the Fraser Institute, Canada's leading public policy think-tank.

"The Alberta oilsands present Canadians with a unique nation-building opportunity. As both a country and as individuals, we already have a substantial investment in the oilsands and we can take greater advantage of this resource if we can reduce our reliance on the United States and open new markets for Canadian oil in the Asia-Pacific," said Gerry Angevine, Fraser Institute senior economist and co-author of Ensuring Canadian Access to Oil Markets in the Asia-Pacific Region.

Angevine calculates that Canada would add at least $10.5 billion to its GDP and gain up to 104,400 person years of employment with the construction of the Northern Gateway project, which would transport oil from the Alberta oilsands as well as conventional crude oil from Bruderheim near Edmonton to a marine terminal at Kitimat, B.C., and subsequent expansions of that facility and TransMountain Pipeline.

Ensuring Canadian Access to Oil Markets in the Asia-Pacific Region examines the economic attractiveness and feasibility of exporting Canadian oil to the Asia-Pacific region rather than relying only on the U.S. market, and how such a move would affect Canada. The study also catalogues the regulatory and other barriers standing in the way of building oil pipelines, storage and shipping infrastructure to enable Canadian oil to be transported to countries such as China, India, Japan and South Korea.

The question of 'who benefits' from building and operating new transportation infrastructure that would allow Canadian oil to be shipped to Asia is one of the central issues of the debate around Enbridge's proposed Northern Gateway project.

The bulk of the construction-related jobs would occur in Alberta and British Columbia, with many of those occurring in rural areas, thereby providing employment opportunities for First Nations communities. Benefits from supplying steel, equipment and other supplies would flow primarily to Ontario and Quebec's manufacturing sector.

Angevine also notes that Canadian pension plans, which are heavily invested in the oilsands, would see greater returns if oilsands producers could sell Canadian oil for higher prices to Asia-Pacific countries. As an example, the report highlights the $1.8 billion investment the Canada Pension Plan has in the oilsands, along with the $1 billion oilsands investment made by the Ontario Teachers' Pension Plan.

"Shipping Canadian oil to Asia-Pacific nations will boost the returns for the Canada Pension Plan and could improve investment income for virtually every Canadian collecting a pension," Angevine said.

But the opportunity to use Alberta's oilsands to increase Canadian prosperity and generate new economic opportunities is at risk of regulatory paralysis, stymied by a raft of unnecessary and inefficient rules and processes that could leave new pipeline projects in limbo, he added.

The study concludes that Canada is saddled with many outdated regulatory processes and procedures that result in long, drawn-out hearings and reviews that serve only to delay and add to the costs of new energy infrastructure projects. Opposition to projects by First Nations and environmental concerns are also areas that need to be dealt with in a more proactive manner.

"Canadians need to ask if we want to keep a system that sees major projects studied to death. The National Energy Board took more than six years to reach a decision on the MacKenzie Valley Gas Project, which now stands as a stark example of a missed opportunity," Angevine said.

"The regulations and review processes need to be updated to meet the needs of people living in the 21st century."

Angevine and his co-author, Vanadis Oveido, suggest a number of changes governments could make if they want to improve and update the regulatory and review process for energy infrastructure projects. Additionally, they suggest new measures for consultation with First Nations to address their concerns. Among the suggestions:

  1. Restrict the scope of the National Energy Board to matters necessary to protect the public interest such as construction and operational standards and environmental impacts;
  2. Place limits on the time the National Energy Board or a Joint Review Panel may take to arrive at a decision;
  3. Require the National Energy Board to convene generic hearings if two or more similar project applications are likely to be brought forward during the next 10 to 20 years;
  4. Establish joint federal-provincial environmental review processes for projects that require approvals from both levels of government;
  5. Bring federal and provincial government officials together with First Nations and industry representatives to identify transportation corridors;
  6. Encourage discussions between project proponents and First Nations well before applications are filed with the regulatory authority;
  7. Require First Nations' environmental concerns to be addressed under and in accordance with the Canadian Environmental Assessment Act; and
  8. Consider legislation and regulations to provide for mandatory settlement mechanisms to resolve compensation disputes with First Nations groups.

"The oilsands are a resource that should be developed as market conditions allow with an eye on legitimate environmental concerns and global investment opportunities," Angevine said.

"In turn, this will enable Canadians across the land to prosper as much as possible from continued, responsible development of those resources."

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 80 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit

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