How Trans Mountain Benefits Canada

After Prime Minister Justin Trudeau’s recent pipeline decisions, this post looks at how Trans Mountain benefits Canada.

A New Road Begins

It is not surprising that PM Trudeau’s cabinet made a carefully calculated decision to approve Kinder Morgan’s expansion of the Trans Mountain Pipeline project. Despite mixed reactions from Canadians over the building of oil pipelines, more and more people are supportive of Trudeau’s attempts to balance environmental and economic concerns in Canada.

November 29, PM Trudeau announce that his government had approved the Trans Mountain expansion project to move forward. The project was conditionally approved by the National Energy Board (NEB) early in 2016 but required final approval from the Trudeau Government. The pipeline still must meet the 157 special conditions identified by the NEB.

Export Outlet

Perhaps the clearest economic incentive of this pipeline expansion is providing an export outlet for Canadian oil. According to the project’s website, Trans Mountain Pipeline expansion “will create a twinned pipeline increasing the nominal capacity of the system from 300,000 barrels per day to 890,000 barrels per day.” When combined with the also recently approved Enbridge Line 3 project, Canada will add over one million barrels a day of crude oil transportation capacity. Read more about that in this CBC article.

Experts suggests that Trans Mountain can improve the competitiveness of oil and gas industry in Canada which is responsible for buying millions in goods and services from various companies across the nation.

Although project approval was a significant hurdle, those supporting the project are getting ready to see the project through.
Transmountain Map

A World Leader

Being one of the world’s leading oil producers, Canada can benefit greatly from Trans Mountain Expansion through taxes, investment and jobs. It is estimated that this pipeline can inject approximately $6.8 billion (CAD) in the economy.

Increasing Canada’s oil exposure to the market can also produce a $73.5 billion dollar increase in revenue over 20 years. Both federal and provincial governments are expected to gain benefits in the form of additional construction taxes and royalties and the numbers are going to increase with every passing year.

Trans Mountain benefits the country in a number of ways. The Conference Board of Canada estimates that the approval of Trans Mountain project can create almost 15,000 construction jobs. In addition, the workforce would also involve indirect jobs once it gets into action.

The approval of Trans Mountain is beneficial for everyone involved. The construction workers can benefit from the additional jobs created. Oil producers in Canada will be able to earn more profits for their products. For much of the last decade, Canadian oil was unable to reach the wider audience or international markets. The simple truth is that expanding the existing pipeline can help Canadian oil producers fetch better prices for their oil barriers by delivering them to customers existing outside the Canada and the US.

Trans Mountain Benefits Canada
Anchor Loop construction + workers. Photo courtesy

Trans Mountain Benefits

The Conference Board of Canada released its Summary of Economic impact of this expansion project in 2015. This publication estimates that $46.7 billion will be injected into government revenue stores in the forms of taxes and royalties.

Here’s a breakdown of tax benefits to help you get a better idea:

  1. $3.3 billion from project operation
  2. $1.2 billion from project development
  3. $23.7 billion from access to worldwide audience i.e. global oil market
  4. $13.7 billion from oil and gas investment

It is also estimated that the rest of Canada will benefit from the approval of the expansion project along with Alberta and British Columbia. Right now Trans Mountain expansion looks promising, but it will take more than a simple completion for the benefits to show.

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