EDMONTON – Under fire from Alberta unions, Enbridge said Tuesday its proposed Northern Gateway pipeline will not cause job losses in the refining sector though it will be affected by higher prices for crude oil that will result if the pipeline goes ahead.

As the federal hearing on the project entered its final stages, the Alberta Federation of Labour questioned the company’s panel of well known energy economists about the impact of exporting 585,000 barrels of bitumen a day to China rather than upgrading and refining it in Canada.

Calgary economist Bob Mansell, a consultant speaking for the company, said the proposed $6-billion pipeline could carry a range of refined petroleum products, along with diluted bitumen, if conditions changed to make refining and upgrading profitable here.

“But no shipper is asking for that,” they want to move bitumen, Mansell said.

Refineries that turn the heavy oil or upgraded bitumen into gasoline, jet fuel and other products usually set up near major consumer markets, so “it is not realistic to think of Alberta as a base for large- scale refining.”

The federal joint review panel also heard that oil producers operating in Western Canada will benefit by $5 billion in 2019 if the pipeline goes ahead because they will get closer to world price for their bitumen. The current difference can be as much as $20 a barrel.

“Higher crude prices increase the revenue of Canadian crude producers but they also increase the feedstock cost to Canadian refiners” that use western crude, says an Enbridge report to the joint review panel submitted by Muse Consultants. “The adjustment for the effect on Canadian refiners acts to reduce the benefits by about 25 per cent,” says the report.

Without the pipeline, oil companies producing bitumen risk losing up to $40 million a day — $14 billion a year — if they can’t find way to ship their product, said Mansell, a University of Calgary economics professor.

But AFL president Gil McGowan later dismissed that figure as fearmongering.

A report for the Conference Board of Canada, also tabled at the hearing, noted that Canada’s refining industry has lost thousands in the last decades and faces a troubled future.

Oilsands will be an expanding industry for the next 20 years and pipeline has to be expanded, said the panel of economists speaking for Enbridge.

“I”m not saying we should give up on the refining industry,” said Mansell.

But it’s hard to justify investing millions in refining when the price of bitumen rises to par with crude oil, he added.

About three thousand to four thousands construction jobs will be created and 1,150 permanent jobs if the pipeline is approved from Bruderheim, northeast of Edmonton, to Kitimat on the British Columbia Coast, the company says.

The Edmonton-area Alexander First Nation and the B.C. government are next to cross-examine the company at the hearings this week.

Calgary Herald, Wednesday September 5 2012

Byline: Sheila Spratt, Edmonton Journal