Pipelines Don’t Upgrade

Energy East no solution on its own, but creates opportunity for upgrading in Canada

EDMONTON – The Energy East pipeline is a two-edged sword warns the Alberta Federation of Labour.

Although the Energy East pipeline could help create good jobs in Canada, it will only do so if it is part of a national energy strategy that includes in-country upgrading and refining. Otherwise, it will only be the first leg of a journey that exports good-paying jobs to upgraders and refineries abroad.

“The Energy East pipeline has a capacity to ship 1.1 million barrels per day of raw bitumen,” Alberta Federation of Labour president Gil McGowan said, noting that there are two Eastern Canadian refineries that might be able to work with raw bitumen, the one in Sarnia and the one in St. John, which would require improvements before taking the bitumen. “At best they could only have taken a fraction of what the Energy East pipeline will carry – and they’re already near capacity. Unless there are more upgraders being built, this is going to be an export pipeline.”

The Alberta Federation of Labour has consistently called for the creation of more upgraders in Alberta. According to the Government of Alberta’s testimony at the Northern Gateway hearings, Alberta is expected to lose $8 billion/year in refining value as we ship bitumen overseas rather than upgrading it here.

Several times over the past decade, and under the leadership of three premiers, the Government of Alberta has promised to ensure at least 2/3 of Alberta’s bitumen is upgraded in the province. At present, barely half of our bitumen is upgraded in-province, and the percentage is decreasing.

“This is the wrong infrastructure for Alberta because pipelines don’t upgrade,” McGowan said. “We need a strategy to ensure Albertans get the maximum value out of the resources they own. Doing so creates more jobs and wealth. We get more for synthetic crude. Synthetic crude is easier to transport. It just makes sense for us as a province, and for us as a country.”

Almost immediately after the pipeline approval was announced, TransCanada and Irving Oil said they would build a $300 million export terminal in Saint John that would ship raw bitumen to world markets. Ironically, this export terminal will be immediately adjacent to the existing import terminal.

“We’ll be shipping a low-cost commodity to the United States or China, and then we’ll have to buy it back from them at a premium. When you fill up your car, 40 cents of every liter will be shipped to Liaoning or Mississippi,” McGowan said. “The few jobs created by the pipeline and export terminal will be dwarfed by the long-term jobs in refineries and upgraders elsewhere.”



Olav Rokne, Communications Director, Alberta Federation of Labour at 780.289.6528 (cell)

or via e-mail