Article content continued

How did Ottawa and Alberta come up with $15 billion?

I contacted the Prime Minister’s Office and was rerouted to Minister Carr. NRCan confirmed no internal assessment. Scotiabank was their primary source.

Premier Notley’s office confirmed Scotiabank as its only source.

I called the bank. The annual loss predicted — if no new pipeline capacity is built — is $7 billion, not $15 billion.

Did anyone in government read Scotiabank’s report beyond bullet points?

Still, it’s a big number. How is it some of the most sophisticated heavy oil conglomerates in the world find themselves trapped taking an unfair price in U.S. markets costing $7 billion a year?

The short answer — they don’t.

In 2009, large oilsands producers had plans to upgrade 80 per cent of the bitumen produced. They scraped those value added plans in favour of exporting bitumen directly. Today, only 40 per cent of the oilsands bitumen produced is routed to upgraders.

Instead of investing in Alberta, companies like Suncor, Cenovus, and Husky invested in refineries throughout the U.S. They deliver their heavy oil to their own facilities as feedstock. When they do, they buy low and sell high.

Prime Minister Trudeau’s characterization of sophisticated big oil being “trapped” reveals his lack of understanding of how the industry is structured.

Oil producers knew a bitumen export plan would increasingly expose them to the volatile light heavy discount. They adopted a variety of price mitigation strategies beyond integrating operations with refineries they own in the U.S. This is why, for example, Suncor CEO Steve Williams can tell shareholders, “We have virtually no exposure to the light/heavy differential.”