While the legal battle concerning the anti-pipeline protests on Burnaby Mountain rages on, Doug McArthur, director of the SFU School of Public Policy, has co-authored a study examining the public policy aspects of the pipeline expansion.
The study, entitled Economic Costs and Benefits of the Trans Mountain Expansion Project (TMX) for BC and Metro Vancouver, found that Kinder Morgan has exaggerated the number of jobs that would be created by the project, both in its construction phase and operations phase, by about three times.
In McArthur’s opinion, this “changes the job profile of the project quite considerably in terms of benefits for British Columbia.”
This study comes in the midst of a political battle taking place on Burnaby Mountain. On November 14, a BC Supreme Court judge granted Kinder Morgan an injunction against protesters who have gathered on Burnaby Mountain to block work being completed by survey crews for the Trans Mountain Pipeline Expansion Project.
The protesters refused to clear the site as the Monday deadline approached, and on Thursday morning, the RCMP enforced the injunction, arresting multiple individuals.
McArthur explained that the disparity between the estimates of his study and those of Kinder Morgan may be due to the use of a different multiplier in each.
He said, “We did the same thing that they did, except we used the multiplier that is used as a standard in the pipeline industry,” while Kinder Morgan “used a multiplier that is about three times that and which creates this misleading proposition.”
Kinder Morgan’s president, Ian Anderson, told reporters from The Globe and Mail that, while he has not yet reviewed the SFU study, he believes that “the SFU study has used a different set of assumptions than what [our] work has,” and that Kinder Morgan’s estimates are based on “fair and reasonable assumptions.”
“[This] changes the job profile of the project quite considerably in terms of benefits.”
Doug McArthur, director of the SFU School of Public Policy
He continued to say that the National Energy Board (NEB) based their estimates regarding job creation on research conducted by the Conference Board of Canada, an Ottawa based think-tank. The research estimated that the pipeline construction would generate 36,000 person-years of employment.
Regarding the financial benefits to municipalities in Metro Vancouver, McArthur said that they “are quite small on the scale of things.” He continued, “Given the cost to municipalities in terms of infrastructure and other impacts, the net revenues to municipalities would be close to negligible.”
Concerning economic benefits to British Columbia as a whole, the study found that they appear to be heavily exaggerated. Kinder Morgan has stated that the project would contribute an estimated $50 million in annual tax revenue towards BC’s $44 billion budget, but has neglected to put this number in a greater context.
McArthur explained, “The proportion of the overall net financial revenues — outside of those earned by Kinder Morgan themselves — that would go to tar sands producers is in the range of about 68 per cent [while] about 31 per cent goes to Alberta and other provinces and the federal government.”
The study found that the $50 million that would go to BC is only approximately two per cent of the total revenues.
The pipeline has also generated controversy based on its environmental implications. Kinder Morgan has estimated that a “worst-case spill scenario” would cost $350 million, well within the company’s $750 million liability insurance coverage.
McArthur suggested that these estimates are not just conservative but “widely off the mark.” Based on the costs of previous onshore spills, he estimates that the cost of a “major spill” would be approximately $1 billion, whereas the cost of a “catastrophic spill” would be between $2 billion and $5 billion. He also cited costly environmental impacts, such as the loss of wildlife habitat and the deterioration of the quality of water.
Anderson rebutted claims that the cost of a major spill would exceed Kinder Morgan’s estimates, citing a 2007 incident in which a ruptured pipeline cost $21 million to clean up.
When asked under what conditions the NEB should approve such projects, McArthur outlined two: 1) it should provide a “substantial economic benefit, which this one does not,” and 2) it should not cause significant environmental damages.
In any event, he said that the NEB ought to consider whether the economic benefits exceed the cost by a significant degree. For McArthur, the answer is clear: “No they do not.”
