In recent months, I’ve seen a heartwarming display of support for the oilpatch boil over and start to make some noise. One of the common phrases is “build the pipeline!” Another is “We support the pipeline!”

But which pipeline? Most people really don’t know. So here’s a primer for you.

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First of all, it’s not one pipeline. There are actually five export oil pipelines at issue. One’s mostly built, one is in purgatory, two have been cancelled (but should be reborn and built) and the last, we own, but haven’t yet built.

Enbridge Line 3 Replacement

The first is the Enbridge Line 3 Replacement. This project is pretty much all done in Canada, with some of the last work in Saskatchewan happening south of Moosomin this past winter. You would think it’s ready to put into service, but that’s not the case. Opposition in Minnesota has meant that permits to build that portion won’t be issued until this November, pushing back the project a full year. It was supposed to be in service in later 2019, and now that’s going to be later 2020, at best.

Line 3 Replacement replaces the one problematic pipeline in the Enbridge mainline system that has required the most maintenance.

Keystone XL

The next one is the Keystone XL pipeline. It was kyboshed by President Barrack Obama, but revived by President Donald Trump the same week he took office. It looked like it was finally going to start construction last year when a Montana court ordered it be reviewed, again, on an environmental basis. As of mid-March, TransCanada was expecting construction to be delayed yet another year, as it would likely lose this year’s construction season.

Some people have said no Saskatchewan oil would flow on Keystone XL. I strongly disagree. Most of the production from northwest Saskatchewan that is not refined in Lloydminster ends up being pipelined by the Husky mainline to Hardisty, Alta., Canada’s oil hub. That’s where the Enbridge mainline and Keystone pipeline originate. There is no reason that I know of that oil from a thermal plant at Edam, piped to Lloydminster, then Hardisty, could not find its way into Keystone XL.

Both of these pipelines would allow Canada to ship more oil to the U.S. That’s good, but it does not allow us to ship to new markets. Anything going in those new lines would still be at the mercy of American, and only American, oil markets.

The next two, the dead ones, are dead precisely because of the policies of the Justin Trudeau-led federal Liberal government.

Energy East

The next pipeline is Energy East. For Saskatchewan, this pipeline is/was the most important. Right now, every drop of oil produced in Southeast Saskatchewan that does not go by rail is shipped by TEML to the Enbridge Mainline terminal at Cromer, Man. via the 16-inch Westspur line. Very little, if any, goes by rail these days.

Energy East included a planned 71 kilometre, 16-inch pipeline called the Cromer Lateral that would have allowed as much as 100 per cent of southeast Saskatchewan’s oil to be shipped on Energy East instead of the Enbridge Mainline. That meant, instead of being locked into shipping that oil into the American Midwest or southern Ontario, Saskatchewan and Manitoba producers could have used the Cromer Lateral and Energy East to sell their oil to refineries in Montreal, Quebec City or Saint John, New Brunswick.

The Irving Refinery at Saint John is the largest refinery in Canada, and it currently accepts its oil principally by tanker, but can also receive it by rail. Those tankers come from places like Saudi Arabia, Nigeria, Azerbaijan, and the United States.

Energy East would have started at Hardisty. Its capacity would have been 1.1 million barrels per day. Thus, most of its oil would have come from Alberta. But some of it could have come from northwest Saskatchewan, for the same reasons I explained for Keystone XL.

In addition to supplying Montreal, Quebec and Saint John refineries, displacing foreign oil, Energy East would have allowed us to export oil, on our own tankers, to foreign markets like Europe. Energy East was supposed to have been in service by 2018. It’s 2019. All the arguments about Northern Gateway being in service by now, and the impact on differentials, also apply to Energy East. If Energy East had been working by now, Western Canada would not have lost billions of dollars this last winter. Those are billions we will never get back.

One more thing on Energy East – it would have made Canada energy independent. If the rest of the world decided to not sell us oil, we would be just fine. That is not the case now. Without foreign oil, Eastern Canada would be walking.

Energy East was killed when the Trudeau government “moved the goalposts” on the environmental assessment for the project – adding greenhouse gas emissions for the oil it would have carried into consideration. At that point, TransCanada threw its hands up and gave up, after spending a billion dollars to get to this point. Bill C-68 will change the way pipelines have been assessed for generations, a system that, up until the last decade, worked just fine, thank you.

Northern Gateway

Northern Gateway was approved, with conditions (as they all have). A B.C. court quashed that approval, calling for additional consultation with First Nations, the same process that is currently happening with the Trans Mountain Expansion.

Northern Gateway was supposed to be built by 2018. That’s important, because as it was an outlet to Asian markets, it would have allowed Canada to take advantage of typically higher oil prices compared to WTI. Our bitumen and heavy oil typically trades at a differential (i.e. lower) price to WTI. This past winter, those differentials became extreme, to the point where it was a discount of over $45 a barrel. We were essentially giving our oil away because we had nowhere else we could sell it. If Northern Gateway had been in service, as it was supposed to have been, Alberta would not have lost billions of dollars, and Saskatchewan, hundreds of millions, in the last year, as a result.

Northern Gateway was killed when Trudeau declared that the Kitimat region of British Columbia, which only in recent years has been dubbed the “Great Bear Rainforest,” was no place for a pipeline. One of his first acts as prime minister was to order his transport minister to ban tankers off the northern B.C. coast. Bill C-48 is the implementation of that ban. This bill bans oil exports off northern B.C., but does nothing about oil imports on the east coast. More on that later.

Trans Mountain Expansion

The last pipeline in play is the Trans Mountain Expansion. This would twin an existing 65-year-old pipeline and add 590,000 bpd in capacity, principally for export. While some of that oil might end up going to California, the real prize is overseas exports for all the above reasons – we are no longer captive to the American market, and can sell our oil based on the usually higher Brent price, instead of a discounted differential to the lower WTI price.

Why they matter

Now, why is it so important to be able to sell our oil overseas, when we currently sell almost every drop of oil we don’t use ourselves to the Americans?

It’s because the Americans may not need us much longer.

When I started writing for Pipeline Newsnearly 11 years ago, North Dakota was producing 150,000 bpd, and Saskatchewan was producing 425,000 bpd. Now Saskatchewan produces 485,000 bpd, and North Dakota produces 1.4 million bpd, on their way to 2 million bpd in a few short years.

Since January, 2010, Texas has added over 3.8 million barrels per day, going from 1.1 million bpd to 4.9 million bpd. Let me put that into perspective for you. Canada, as a whole – oilsands, Hibernia, Bakken, Weyburn – everything, produces about 4.2 million bpd, and we’re one of the largest oil producers in the world, accounting for 4 per cent of global production. Texas added the equivalent of nearly all of Canada in less than a decade, and they’re not stopping, either.

American production is currently 11.9 million bpd. It is expected to average 13 million bpd in 2020, adding the equivalent of two Saskatchewan’s worth of production in that time.

Current projections are seeing the United States reaching energy independence status by 2020. The U.S. Energy Information Administration just forecast America will become a net exporter of crude oil and petroleum products on a monthly basis later in 2019 and on an annual basis in 2020.

That means that, theoretically, they won’t need our oil. But they are buying it. Why? Because they buy our oil at a discount, and now export their own oil and refined products at world price.

One thing Canada has discovered is that, with the exception of approving Keystone XL, President Donald Trump has proven to not be Canada’s friend on trade. Look at the tariffs he imposed on Canadian steel and aluminum. And he claimed it was on a national security basis!

So what happens when the U.S. is producing so much oil, it decides it really doesn’t need our oil anymore? What if Trump decides getting our oil on the cheap isn’t enough, but he wants to impose a tariff on it, too, just because he feels like it? What do we do then?

We have no options. Zero. Today, because of Prime Minister Justin Trudeau’s policies, we cannot export our oil overseas except for a very small volume via the existing Trans Mountain pipeline. We’re stuck, completely and utterly. If Northern Gateway and Energy East had been built and in service by now, we would have enough capacity to theoretically export up to 1.6 million bpd (assuming all of Energy East’s capacity was used for export instead of supplying Canadian refineries). With Trans Mountain, that number would be 2.3 million bpd. But right now, we have next to nothing for export capacity.

Oil is the lifeblood of Canada’s economy. Oil is what makes the federal equalization program possible. And that pays for things like hospitals and schools. If we can’t sell our oil, what will happen to us?

That, my friends, is why building export pipelines – plural – is so important. We need Trans Mountain Expansion, Northern Gateway and Energy East, and we need them yesterday, which happens to be when they were supposed to be in service in the first place.

Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@sasktel.net.