Ontario premier Doug Ford announced that his government would be launching a study about a potential new west-east pipeline, that could either head to existing refineries in Sarnia, or ports along the Great Lakes, Hudson Bay or James Bay. This sounds a lot like it’s going to be a waste of time and money because contrary to what Danielle Smith likes to think, the oil and gas industry has been irrevocably altered since 2014-15, and there is very little demand for these options. Enbridge isn’t going to want to strand its existing pipeline network running through the US, in spite of the arguments about energy security to build a (longer, more expensive) line on Canadian soil, and using northern ports makes no sense as they are only good for a few months of the year when demand its lower.
Energy economist Andrew Leach released a new paper yesterday that takes a look at the case for whether we need another pipeline, and it puts a lot of this in perspective. The oil market has changed since the major price drop in 2014, and American demand has fallen down a lot. While there might be a case for another pipeline to the Pacific, the timelines involved mean running the risk of stranding assets as global demand falls off. Keystone XL, if revived, is likely simply to be used for re-export at the Gulf Coast, while the eastern Canadian market is already well served, and would likely mean more transportation costs, and Alberta would see bigger discounts as compared to world prices. Danielle Smith says that the industry can double production, but that’s not what industry is saying, and more pipelines run the risk of eroding the value of oil, particularly as the rise of electric vehicles and heat pumps push down demand.
One of the other points that the paper makes is that for as much handwringing as there is about how long it takes projects, most of the delays that people point to were regulatory shortfalls and not structural delays. When proponents try to cut corners, or not do proper Indigenous consultations, that is what leads to court challenges and delays, not the actual regulatory system itself, but that’s an inconvenient narrative for certain players. These are things we need to be more cognisant of, and call bullshit on, as the drumbeat for “just one more pipeline” or even “a pipeline in every direction” get more intense.
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Ukraine Dispatch
Russia launched sustained drone and missile attacks on Ukraine’s power infrastructure early Thursday, and killed at least three people. Two others were killed in a bomb strike on a thermal power plant in Sloviansk. Ukrainian forces are bolstering their defences in Pokrovsk as Russian forces have entered the city.