How can Notley sell Trans Mountain Expansion when her pipeline job numbers are wrong?

Trans Mountain Expansion

Premier Rachel Notley, centre, at the start of construction of the Line 3 pipeline in Ontario.

“Half of those 15,000 jobs would be directly in construction, the rest would be indirect and induced impact.” – Michael Burt

Alberta Premier Rachel Notley announced Tuesday that she is embarking on a “cross-country tour” to convince Canadians that Kinder Morgan’s West Coast project must be completed, despite ferocious opposition from opponents. But the announcement got off on the wrong foot when the Premier’s office grossly inflated the number of jobs Trans Mountain Expansion will create. Notley won’t be taken seriously in Ontario and British Columbia if she can’t get her math right.

“The Conference Board of Canada estimates the Trans Mountain pipeline expansion project will create 15,000 construction jobs and 37,000 operational jobs per year,” the Alberta government press release reads.

Trans Mountain Expansion

Michael Burt, Conference Board of Canada.

This is factually incorrect, according to Michael Burt, the Conference Board economist who supervised the economic impact study for Kinder Morgan.

“The numbers themselves are fine, but the label that is being used to describe them is overly simplified,” he said in an interview. “I can see how some people might misconstrue that because you are really talking about a lot of secondary impacts beyond just running the pipeline and building the pipeline.”

Astute readers will understand that it doesn’t take 37,000 people to operate a pipeline. The entire Alberta oil and gas upstream (extraction) sector employed 135,000 workers in 2016, according to Alberta government data.

The actual number of employees required to keep the pipeline running will be 400 to 450, says Burt.

What about those 15,000 construction jobs? Turns out only half of that number will be “working in the construction industry” and a smaller number yet will be directly employed welding pipe or digging the trench in which to bury it.

What’s going on here? Is Notley trying to “scam” British Columbians by inflating the job numbers, as economist Robyn Allan alleged in an Aug. 28 op-ed in The Province?

The answer is much more prosaic than Allan – an economist with no experience in energy economics and a conspiracy theory streak a mile wide – would have us believe.

Whoever wrote the press release simply misconstrued, to use Burt’s word, this information from the Trans Mountain Expansion website: “According to Conference Board of Canada estimates, the Project would create the equivalent of 15,000 construction jobs and the equivalent of 37,000 direct, indirect and induced jobs per year of operations.”

Trans Mountain Expansion

Trans Mountain Expansion pipeline route.

The confusion was caused by not understanding what is meant by “indirect and induced jobs,” the secondary impacts Burt talks about.

A direct job is the welder joining the sections of pipe together.

An indirect job is the salesman from the welding supply store who delivers welding rods to the site every week.

An induced job is the wait staff at the nearby restaurant who takes their order when the salesman buys the welder lunch once a month.

 

Economic impact studies measure the effect of a dollar spent as it works its way through the economy until that effect finally peters out or leaks outside the regional or national economy. Not all dollars have the same impact.

The Conference Board’s model calculates a number of person years of employment, then that figure is divided by the years it will take to build the pipeline or, in the case of operations, 20 years.

But Kinder Morgan sometimes stretches the construction jobs over three or four years instead of the original two used in the impact study, says Burt, which results in a different set of numbers and leads to further confusion.

In this case, 7,500 construction jobs per year support about the same number of indirect and induced jobs. But the 400 or 450 direct pipeline operating jobs support about 36,500 indirect and induced jobs.

The much higher operations job numbers are based upon the assumption that producers get higher prices in Asia than the heavily discounted Western Canada Select their oil fetches in the United States. Burt’s study assumed that extra income would be spent in Alberta to create jobs, and some of it would flow back to investors, who would also spend it, creating additional secondary impacts.

No wonder the poor press release writer made a mistake. I’ve interviewed Burt three times about the study – and the smaller studies undertaken to measure additional impacts like those created by 30 oil tankers visits each month to Kinder Morgan’s Westridge Terminal in Burnaby – and still have questions about the exact nature of some of the impacts.

But I’m not the one trying to sell the benefits of Trans Mountain Expansion to the Empire Club of Canada in Toronto or the Economic Club of Canada in Ottawa or the Greater Vancouver Board of Trade. Canadian movers and shakers – business leaders who can influence governments and public opinion – will be sitting in those audiences.

“There is not a school, hospital, road or bike lane anywhere in the country that doesn’t owe something to oil and gas. Pipelines are just as critical for jobs and economies across the country as they are for Alberta, and to stifle the oil and gas industry would be economically negligent,” Notley said in the release.

If Notley wants influential Canadians to buy her message, she can’t be negligent with the data that underpins that message, especially easy ones that any government staff economist would have caught.

Let’s hope the Premier’s team tightens up the execution before her first speech on Nov. 20 in Toronto.

Trans Mountain Expansion

Source: Trans Mountain Expansion.

 

Posted in: Markham on Energy

12 Comments on "How can Notley sell Trans Mountain Expansion when her pipeline job numbers are wrong?"

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  1. Earl Richards says:

    Kinder Morgan’s pipeline is a stupid business plan to begin with, because there is no equipment to clean-up a filthy, tar sands spill. This stupid business plan is an insult to the intelligence of the British Columbian people. The dilbit is riddled with cancer-causing, toxins. Dump KM, to save beautiful BC.

    • Hi Earl

      Do you have a citation for the claim about cancer-causing toxins? A credible citation, I mean.

      FYI – I live in White Rock. There are probably 20 thermal coal trains a day travelling past my community, destined for China or some other Asian market where it will be burnt to generate electricity and create smog so bad it kills people by the thousands every year. How about the ships full of sulfur and other toxic chemicals that dock at the Vancouver Port?

      • Reynold says:

        “DilBit also contains toxins, such as benzene, heavy metals and polycyclic aromatic hydrocarbons, which can be dangerous in the short term for the human central nervous system and carcinogenic over the long term. ” from http://www.pembina.org/blog/501

        • Sure, and the reason dilbit contains those toxins is because they’re found in the bitumen, just as they’re found in all crude oil to one extent or another. The crude that’s been flowing to Burnaby since 1954 is also toxic. The diluent that makes up 30% of dilbit is simply a light hydrocarbon that by itself adds little to no toxicity to dilbit. The toxins criticism is without merit, at least when compared to crude oil. What does have merit is the way dilbit behaves in cold, roiling water compared to light sweet crude. That is legitimately an issue for concern in the event of a spill.

          • Reynold says:

            You asked for a reference re toxins and I supplied one.
            The point is not to compare one source of toxins with another. We need to transition away from both.

      • Reynold says:

        So does the fact someone is polluting with coal justify the use of tar? The fact that some other people steal doesn’t justify theft by me.

        • My comment goes to British Columbian’s willingness to accept risk in the transportation of various chemicals and other raw materials. It is inconsistent to demand 0% risk for a pipeline while accepting some degree of risk for the materials I mentioned in my other post. Your silly analogy makes no sense.

  2. Natalie Green says:

    Earl Richards, you haven’t got the first clue what you’re talking about! The pipeline companies are directly responsible for cleaning up any spills! After they clean up, there is then the environmental checks to make sure it is all cleaned up!

    • Natalie’s right. That’s how the system works. Here’s something that has received no attention in the energy media, but I’ll be writing a column about it soon: after the big Enbridge spill into the Kalamazoo River in 2010, the Canadian industry implemented a pipeline integrity that reduced pipeline leaks even further and also greatly reduced the risk of a catastrophic failure. So, when Earl says that Kinder Morgan’s business plan is “stupid,” he really doesn’t know what he’s talking about.

      • Aldyen Donnelly says:

        In fact, a Transmountain pipeline spill, in Burnaby in 2009–more accurately, how Kinder Morgan handled it–is the primary reason many Burnaby residents and their mayor so vehemently oppose the pipeline expansion.

  3. Reynold

    Oil consumption is forecast to expand from 96MM b/d to 103MM b/d by 2040. It’s not going anywhere until credible alternatives exist. The only way to reduce oil supply is to reduce consumption, which means the electrification of transportation. That’s decades in the future. In the meantime, Alberta has the right to sell its oil on world markets, and that includes Asia. TMX is going to be built whether you like it or not.

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