Rob Breakenridge: A new pipeline would be welcome — but it won't be easy
Political opposition, an untested Major Projects Office and economic reality are all problems facing Alberta's proposed new pipeline to the Pacific
By: Rob Breakenridge
It wasn’t exactly a new pipeline proposal announced Wednesday by Alberta’s premier, but it wasn’t not a pipeline proposal, either.
Basically, the Alberta government intends to get the ball rolling on a possible new pipeline in the hope that the federal government and private industry will eventually play ball and tag along. Alberta will be the main proponent in an application, but the specific details — and backers — are TBD. The hope is to have something concrete in front of the federal Major Projects Office by May of next year.
It’s no secret that the idea of a new oil pipeline to the west coast has taken on immense political significance and there are considerable economic hopes and aspirations now pinned to such a megaproject. As Premier Danielle Smith put it, this “is about more than a pipeline; it’s about unlocking Canada’s full economic potential.” There are also going to be very real obstacles to the plan; B.C. premier David Eby, for example, has angrily rejected the notion of a new pipeline to the B.C. coast. One can’t help but suspect that Smith’s announcement counted on that, and Alberta is poking the bear to see how Prime Minister Mark Carney will respond.
Lord knows our economy could use the jolt. Arguably, maybe even federalists in Alberta could, too.
We should not discount the potential economic activity and government revenue that a major new pipeline could spawn. At the same time, however, we need to be cautious in our assumptions about what kind of a jobs bonanza this might represent. This might not be the silver bullet for our current unemployment woes.
Wednesday’s big announcement came on the heels of a much more sobering and disheartening bit of news from the energy sector news earlier in the week.
Imperial Oil announced on Monday that they’d be eliminating 20 per cent of the company’s workforce, which will include the loss of almost 900 jobs in Calgary alone. Imperial says the intention is to “further consolidate activities to its operating sites and most of the remaining Calgary positions will be relocated to the Strathcona Refinery in Edmonton.”
And it’s not as though this company is in dire straits. Their latest earnings report showed that overall production came in at the highest level for the second quarter in over 30 years. Their Kearl oil sands operation posted its highest-ever second quarter production level.
This is representative of what’s become a broader and significant trend in the industry: higher production, but with fewer workers.
Overall, oil production in Canada is up significantly over the last decade — now at record levels, in fact. But total employment is down from where it was in 2014.
It’s not just Canada, either. As The New York Times recently reported, the U.S. “is pumping more oil than ever and near-record amounts of gas. But the companies that extract, transport and process these fossil fuels employ roughly 25 percent fewer workers than they did a decade earlier.”
Much of that employment was lost in the price crash of 2014. But as companies were forced to get leaner and more efficient, many of those lost jobs simply never came back.
On top of that, companies have become more aggressive in adopting automation and digitization technology. Artificial intelligence is the latest frontier in this realm, and the trend toward leaner workforces may only accelerate.
It’s hardly surprising to see industry utilizing technology to become more efficient, especially given all the wild swings of this sector over the last decade and continued geopolitical uncertainty hanging over major decisions moving forward.
Amid all the finger-pointing over Imperial Oil’s announcement, Premier Smith had to acknowledge this uncomfortable fact. As she stated on Tuesday, “it seems like they’ve been able to increase production, but that doesn’t necessarily have the same amount of jobs as it used to in the past. I mean, some of the big oilsands operations are able to dramatically increase production using the same workforce.”
The premier, though, still expressed her hope that if we can get real movement on policies and infrastructure that will allow further production increases, those jobs will come.
Look, clearly the oil and gas industry remains and will remain a major source of employment in the Canadian economy. This is not an existential threat we’re talking about, but nor is it something we can pretend isn’t happening or wish away.
But the timing isn’t great, to say the least. With a slowing economy — and real fears of what may be yet to come — we’ve now got a serious joblessness problem on our hands. The national unemployment rate jumped up in August to 7.1 per cent — the highest since 2016, excluding the pandemic years. In Alberta, the rate has shot up to 8.4 per cent.
That certainly shouldn’t dissuade us from pursuing a new pipeline. There is an economic case for one, and the construction of such a project will definitely require the participation (i.e., employment) of many actual humans.
The premier also has a point when she notes the need to improve the investment climate and regulatory burden. The need for a Major Projects Office in the first place could be seen as an indictment of our status quo. An actual jobs and economic strategy that encourages investment would be helpful — not just from Ottawa, but Alberta, too.
We can still pop the corks if we do indeed see a new pipeline approved. But if we’re going to put a dent in our burgeoning unemployment crisis, we need more eggs in more baskets.
Rob Breakenridge is a Calgary-based podcaster and writer and host of The Line: Alberta Podcast. He can be found at robbreakenridge.ca and and reached at rob.breakenridge@gmail.com.
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For oil and gas explorers/ developers, everything is evaluated on a political risk factor. When the Liberals got into power that factor went way up and exploration/ development cratered. Production is a smaller part of the whole business cycle and therefore you need a lot fewer people so employment was always going to fall. The reserves are still huge but nobody is going to risk a lot of capital.
To get rid of the political risk discount, we have to get back to a clearly structured regulatory framework which is sustainable and not a political football every time an election comes around. Carney's idea to speed up projects based on the government du jour doesn't cut it and he appears to be reluctant to actually fix the process problem.
Why would Danielle Smith think that a federal government will invest in a province that is openly courting separating! What Alberta needs is to demonstrate a solid plan for the building of the cities infrastructure and encouraging the building of more affordable housing for its increasing population, First order of business being to invest in public education and settle the teachers strike, improve the minimum wage and invest heavily in healthcare instead of ‘pipe dreams”. The money talked about here would be far better spent on any of these necessities.