Trans Mountain Pipeline Project's True Costs Remain Unclear
On July 2, Prime Minister Mark Carney and Alberta Premier Danielle Smith announced a major pipeline project from Bruderheim, Alberta to Roberts Bank in Vancouver. The $35.2-43.7 billion pipeline would transport one million barrels of oil per day along the existing Trans Mountain corridor.
The analysis of this project by Bryan Gould, a Calgary-based oil executive, reveals that the pipeline is being sold as a commercial certainty when it's actually a conditional bet. Gould argues that the proponents have declined to publish basic arithmetic on Canadian oil pricing and tolls, making it difficult to assess the project's economics.
The key issue with the Trans Mountain expansion is its ability to narrow the WCS-WTI differential, which has been misinterpreted as a guarantee of higher prices for exported oil. However, Gould notes that the Gulf Coast market is a Brent-world market, and Canadian oil earns world value minus three to five US dollars of Pacific freight.
The proponents' claim that the project will boost domestic income by up to 0.2% of GDP annually at its peak is also questionable. According to Gould's analysis, this would require applying the $3 narrowing to every barrel Western Canada exports, not just the pipeline's own capacity. The current congestion premium on the Trans Mountain line is already being drained, and the system is tightening again.