Pipeline Approval Delays: the Costs of Inaction

Canada’s oil patch once again finds itself with too much crude and too few pipelines

February 21, 2018

Jean-François Perrault, SVP & Chief Economist, Scotiabank Economics

Pipeline bottlenecks and insufficient transportation infrastructure are long running themes in the Canadian oil industry. Canada is blessed with the world’s third-largest proven oil reserves behind only Venezuela and Saudi Arabia, but Alberta’s bituminous bounty is more than one thousand kilometers from Pacific ports in British Columbia and three-times that distance from major refineries on the US Gulf Coast.

The relatively isolated nature of Canadian energy resources in the Western Canadian Sedimentary Basin (WCSB) comes at a cost—producers pay roughly $10–12/bbl to move their product south by pipeline to refineries on the US Gulf Coast (USGC) and $20/bbl or more to make the same trip by rail car.