As unemployment in Calgary soars, it's time for Canada to approve a pipeline
Like a pat on the back delivered with a punch to the gut, Canada’s new jobless figures show just how stomach-churning Alberta’s employment picture is today.
Statistics Canada reported Friday that 10,000 new jobs were created in the country’s natural resource sector in October, mainly in Alberta.
Yet, Calgary’s unemployment rate jumped above 10 per cent for the first time in 23 years.
So what’s the long-term solution to an immediate problem?
Well, here’s some free advice to Prime Minister Justin Trudeau from Alberta employers and the unemployed in the oilpatch: Approve a pipeline.
Philip Howard, a father of two who was designing oil and gas facilities with computer models before being downsized about a year ago, believes approving a new pipeline would create jobs for Albertans like him who need work.
“That Kinder Morgan (line) has to get through,” he told Postmedia on Friday.
“That’s going to be a huge boost for us as a province and a country. It just makes so much sense that it’s unbelievable that people would go against it.”
A similar view is held in downtown office towers, where petroleum producers and service operators are reviewing investment plans for the coming year.
“If someone wants to increase their (oil production) capacity, they’ve got to get it into a pipeline. If there’s no pipeline, it doesn’t go anywhere, simple as that,” said Bob Geddes, president of Ensign Energy Services Inc., a large Calgary-based driller.
“So we need more take-away capacity if we’re going to grow business in Canada. Otherwise we become a maintenance business.”
The conversation over building pipelines has become a national battle royal, with many players scrapping over two important projects: the Trans Mountain expansion and proposed Energy East development.
Trans Mountain, a $6.8-billion project by Kinder Morgan, would move Alberta oil to Burnaby, B.C., for export. It has already been approved by the National Energy Board with 157 conditions, but needs federal cabinet approval.
A decision is expected by mid-December.
Energy East, a $15.7-billion proposal from TransCanada, would move Western Canadian oil to New Brunswick, but it remains in the regulatory process.
Both face staunch opposition from an array of municipal politicians, First Nations and environmental groups. Critics worry about the potential for spills, increased tanker traffic and the impact on greenhouse gas emissions.
Mike Hudema of Greenpeace Canada said a project like Trans Mountain will face significant resistance from citizens in local communities, even if it receives federal endorsement.
“It’s definitely not going to be a short-term job creator,” he said.
Provincial governments in Alberta and Saskatchewan — along with companies, industry groups and workers — are pushing for pipelines to proceed, contending environmental and economic issues can be properly balanced.
The Notley government believes it’s taking steps to achieve that equilibrium by moving ahead with a carbon tax and capping oilsands emissions. The premier contends such action should help the province gain traction in its case for approving energy infrastructure.
Earlier this week, an internal analysis on the impact of Alberta’s new carbon tax gave some hint of what’s at stake for the province. Approving at least one major pipeline would increase the province’s GDP by about one per cent by 2022.
Whether Alberta’s carbon tax will actually help in the pipeline push will only be known once Ottawa makes a firm decision.
“In terms of pipelines, every project is determined on its own merits,” federal Environment Minister Catherine McKenna said in Calgary this week. “Our government will be considering pipelines as they come forward based on their environmental impact.”
Would a new pipeline, by extension, create many jobs? A report by the Conference Board of Canada certainly thinks so.
The think-tank estimated Canadian petroleum producers would collect an extra $49.8 billion in after-tax profits between 2019 and 2038 if Trans Mountain was approved because companies would receive higher netbacks for their oil.
A report it completed for Kinder Morgan estimated the expansion project would create 28,000 person years of direct employment in Alberta over a 26-year period.
Another 413,000 additional person-years of work would occur from spinoff activity, such as increased investment from companies that will receive higher prices for their oil.
“There is a pretty clear economic benefit associated with this,” said Michael Burt of the Conference Board of Canada.
No one is saying building a pipeline and creating new jobs would happen overnight. Any project will face a battery of legal challenges, even with a positive federal ruling.
Over time, though, it should help buttress the economy as more oilsands production comes on stream and needs to get to market.
Without new pipelines, producers will become more reluctant to drill in the future, Geddes cautioned.
“Why increase your production if you can’t get it into a pipeline?” he said. “If they can get a pipeline, take-away capacity increases and you need more wells — and we do more drilling.”
So if Ottawa is looking for ways to assist Alberta with its job woes, take some advice from the jobless and the job creators on the front lines.
Approve a pipeline and get private-sector investment flowing. It will eventually get more Albertans back to work, and won’t cost governments a dime.
Chris Varcoe is a Calgary Herald columnist.
Story: Calgary Herald