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Time to rethink the upgrader question

By: Ken Allred

  |  Posted: Wednesday, Apr 23, 2014 06:00 am

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“The time has come, the Walrus said, to talk of many things …”

The people of Kitimat have come out 58 per cent opposed to the Gateway pipeline. In the greater scheme of things this vote may be somewhat insignificant but nevertheless it should be cause for reflection.

From day one the major opposition to Gateway has been the nature of the product being shipped: raw bitumen. Perhaps this is the question that needs to be re-examined.

From a layman’s perspective it has never made sense to ship raw bitumen all the way to Asia (or even Texas for that matter) for processing. Firstly, it involves two pipelines as opposed to one – one for the bitumen and a return pipeline to ship the diluent back to source. Secondly, the volume of unprocessed bitumen plus the dilbit has got to be considerably greater than processed crude, hence higher costs. And thirdly, bitumen has to be processed somewhere, so why not near the source?

Ten years ago, there were proposals to build up to 10 upgraders in Alberta’s Industrial Heartland, now only one is being constructed and no others are on the books. What has changed? Sure, the availability and cost of labour is a major factor, but that’s nothing new. What has really changed?

Perhaps we need to shift our focus from getting the product out of the ground to refining what we already have. This in itself would win accolades from the opponents of Alberta’s major industry and would cool the economy and provide more labour equilibrium.

How many of the NEB’s 209 conditions relate specifically to the transport of bitumen as opposed to refined product? The only conditions that appear to relate specifically to the nature of the product being shipped seem to relate to the thickness of the pipe and the actual laying thereof. Both of those items will add significantly to the cost in addition to the added costs of the other conditions.

The opposition to both Gateway as well as Keystone appear to centre around the raw bitumen factor, so a change in focus from bitumen to refined product may take most of the wind out of the sails of the opposition.

Alberta’s energy industry needs to sit back and rethink the whole concept of oil sands extraction and conversion into marketable product, perhaps with the idea of some significant compromises. It is imperative that we get our resources to market and perhaps the most acceptable way to do so is to upgrade it here, keeping the jobs in Alberta and in doing so to appease the opposition which appears to be focused on the product – not the transport of it.

Why can we not be the ones to reap the benefit from the value added product? Are we destined to continue forever as hewers of wood and drawers of water?

The time has come!

Ken Allred is a former St. Albert alderman and MLA.


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