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Finlayson & Mullen Op-Ed: Without pipelines, Canada's prosperity is on the line (Troy Media & Vancouver Sun)

When it comes to reaching new energy markets, Canada lags dangerously behind the Americans, who have aggressively expanded their oil and gas industry and built the infrastructure necessary to support it. 

There are approximately 840,000 kilometers (km) of pipelines in Canada — 25,000 km of feeder lines, 250,000 km of gathering lines, 450,000 km of distribution lines, and 117,000 km of transmission lines.  They carry oil, refined petroleum products, and natural gas. The National Energy Board directly regulates ~73,000 km of this pipeline network; the provinces are largely responsible for everything else.

To compare, the United States had 4.3 million kilometers of pipelines as of 2015 — 510,331 km of gathering lines, 3,505,077 km of distribution lines, and 332,760 km of crude transmission lines. Much like in Canada, a national agency, the U.S. Federal Energy Regulatory, Commission regulates the transportation of oil (and gas) by pipeline in interstate commerce, while state public utility commissions oversee the construction of pipelines within their own jurisdictions.               

As shown in the table below, there has been a 25 per cent jump in U.S. hazardous liquid pipelines (HLP), measured in kilometers, in the last decade.  Most of this growth occurred under President Obama’s watch.  Of the total kilometers of hazardous liquid pipelines in the United States, two-thirds transport refined petroleum products or crude oil.  The U.S. added 8,600 km of pipeline capacity between 2014 and 2015 — equivalent to 7.5 TransMountain pipelines!  Canada’s pipeline additions during this period totalled zero. In fact, no major oil pipeline has been constructed in this country in many years.

U.S. Hazardous Liquid Pipelines Including Crude Oil and Refined Petroleum Products (kms)





2014-2015 % change




2012-2015 % change




2006-2015 % change


The lack of additional Canadian pipeline capacity matters.  Today, our only foreign market for both crude oil (and natural gas) is the United States.  One doesn’t need an MBA to realize that a one-customer business model is risky for any supplier.  What is the problem?  

  1. First, the United States is transitioning from being a net importer of energy to a net exporter.  In 2015, U.S. crude oil production was the highest since 1972, with further growth expected in the coming decade. There is a risk of Canadian exports of oil being squeezed by rising U.S. domestic production.
  2. The recent American election could lead to a more inward-looking policy approach, and a heightened pre-occupation with energy security. Alternatively, the new U.S. administration and the Republican-controlled Congress might be open to treating Canada as a “reliable” and “friendly” source of energy, as they seek to lessen America’s dependence on Middle Eastern and other offshore oil suppliers.  This is the argument that Canadian governments should be advancing in discussions with American policymakers.  If it proves persuasive, Canada may have considerable scope to increase the volume of energy shipped to the U.S. in the next 5-10 years.
  3. The world as a whole still needs petroleum products. Projections from the International Energy Agency (IEA) indicate that petroleum will continue to meet a sizeable portion of global energy needs for the foreseeable future, even as most governments act to address climate change.  The latest IEA data show China becoming the world’s largest oil importer by 2020, with India emerging as the second-largest importer by 2035. Both of these big offshore markets represent growth opportunities for energy producers in Canada. One thing is certain: if Canada fails to develop the capacity to export oil and other energy products to Asian markets, other suppliers (including the United States) will happily step in to fill the void. The notion that the global environment will be in better shape if Canada abandons plans to sell oil and gas to customers abroad is wholly unconvincing.

As a major player in the global energy business and with a large and diverse endowment of natural resources, Canada must find ways to get our products to market.  This is a task we presently are failing to do.  As Canada dithers and the volume of Canadian oil (and natural gas) available for export expands, constrained pipeline capacity inevitably means price discounting (as well as more oil being shipped by rail).  Revenues for Canadian oil producers decrease, as shipping costs rise and suppliers from other jurisdictions make inroads in the markets where energy demand is growing. The collateral damage is a loss of full-time, well-paying jobs in Canada, shrunken energy industry supply chains across the country, and diminished revenues for our governments.  Continuing down this path will have dire implications for Canada’s future prosperity.

The Americans have shown an impressive ability to expand their oil and gas industry and to build the infrastructure necessary to support this.  Shouldn’t Canada be following their example? 

Jock Finlayson is Executive Vice-President and Denise Mullen is Director, Environment and Sustainability at the Business Council of British Columbia. 

As published by Troy Media  and the Vancouver Sun.