This week marks not only return to school, but also a return to hearings for Enbridge, a Canadian company intent on building the controversial Northern Gateway project (NGP). The $6-billion project is a twin pipeline; one will carry 585,000 barrels of diluted bitumen each day from Alberta’s oilsands west to Kitimat on the coast of British Columbia and another will carry the diluents back to Alberta.
The company recently announced $500 million in improvements to pipeline safety for the Northern Gateway pipelines. Those include increasing the thickness of the line by 2%, adding 50% more shut-off valves and increasing inspections by 50%. However, the recent spills at Enbridge pipelines in Michigan and Wisconsin remain fodder for environmentalists and First Nations representatives so it’s really no surprise they are opposing the pipeline over fears of a catastrophic spill in Canada’s relatively pristine north.
Opposition to the project came from a surprising sector last week: some of Canada’s most powerful trade unions. After all, Enbridge and the Alberta government claim that the province will lose $72 billion over nine years if the pipeline is not built, and Enbridge claims that the NGP will create 63,000 person years of employment during the construction of the pipeline, and 1,146 full-time jobs once it’s completed.
However, a recent study has come out saying that Enbridge’s job creation estimates assume that workers would otherwise be unemployed, and a large share of the estimated jobs come from induced employment, i.e. the economic impact of expenditures by Enbridge workers and governments. The report says that these “induced” impacts are particularly difficult to estimate and notoriously easy to overstate.
According to Enbridge’s own estimates, the pipeline will only create about 1,850 construction jobs per year for three years. Even adding in upstream employment from pipe and valve manufacture, if that were to occur in Canada, the reality, according to the report, is that there would be no more than 3,000 jobs per year for three years.
Also, the Alberta Federation of Labour has argued that Canada’s refining industry will actually shrink, with an expected loss of 8,000 jobs if the pipeline project goes ahead and diverts bitumen feedstock to China. Canada, and by extension, the manufacturers who supply valves and controls and actuators and pipes for refining, will lose out on opportunities from upgrading and refining, because oil sands bitumen will be exported to China after only minimal processing.
In an attempt to overcome these objections, a British Columbia newspaper tycoon, David Black, has stepped in with a proposal for a $13-billion refinery in Kitimat as a way to bring economic benefit to the province. Enbridge seems uninterested.
Gil McGowan, leader of the Alberta Federation of Labour, said, “We think this project will kill more jobs than it will create.” He noted that Enbridge’s own figures estimate a 4% reduction in refining capacity by 2018 in Canada as a result of the pipeline. “This isn’t just about losing value-added jobs in the future, it’s now becoming clear that existing jobs in the refining sector are also threatened,” he said.
So with its environmental record in question, the powerful trade unions and First Nations and countless other organizations against the project, it seems Enbridge is going to have a tough week.
What does all this mean for valve, actuator and control manufacturers? While most of them sell to global markets, it seems that short term benefits of selling to the pipeline could result in losing long term domestic opportunities that could come from building and maintenance of a refinery in North America. What do you think?