Kinder Morgan's Trans Mountain pipeline benefits questioned

A new report says Kinder Morgan is overplaying theeconomic benefits, and downplaying the costs of its proposed TransMountain pipeline expansion.

Simon Fraser University's Centre for Public Policy Research teamed with The Goodman Group Ltd., a California-based consultingfirm, to examine the estimated impacts of the project.

The authors dispute Kinder Morgan's claim that 36,000person-years of employment would be created in British Columbiaduring the project's development.

More like 12,000, tops, they say,which is less than 0.2 percent of total provincial employment.

"We correctly anticipated that the benefits from the pipelinewould be small in the context of the overall B.C. economy and mostly short-term," said Ian Goodman, president of the Goodman Group.

"But we were very surprised that the company has exaggerated theshort-term jobs associated with building the pipeline by a factor ofthree."

The long-term jobs are also overstated, according to the report.

Kinder Morgan has projected 50 direct full-time jobs once thepipeline is up and running, with 2,000 resulting from the project'sspinoff benefits. The report pegs the spinoff jobs at closer to 800.

Doug McArthur, director of Simon Fraser Universitys graduate school of public policy, said Kinder Morgan appeared to have made a mistake in its methodology for calculating spinoff jobs.

"The job numbers and job estimates that Kinder Morgan had provided and the magnitude and the difference to what we found in our estimates really did surprise us," he said in an interview with CBC's The Exchange with Amanda Lang.

BC coffers to get 'tiny benefit'

The report's authors say B.C. government coffers will get a"tiny" benefit from the Trans Mountain expansion, with Alberta andoilsands producers the main beneficiaries.

Property tax benefits forB.C. communities along the route would average less than one percent of current totalmunicipal revenues.

McArthur estimates 65 per cent of the fiscal benefit will go to Kinder Morgan, about 32 per cent to Alberta and only two per cent to British Columbia.

On the cost side, the report also takes issue with KinderMorgan's numbers. The company's most expensive spill scenario putsthe cost at $100 million to $300 million. Goodman and Simon Fraserfigure it would be in the "multibillion-dollar range" if oil spills in a populated area.

"KM has vastly underestimated the worst-case costs for a catastrophic pipeline rupture.Contrary to KM's findings, damage andcleanup costs for major accidents are highly correlated withpopulation density," said Brigid Rowan, Senior Energy Economist at The Goodman Group, Ltd and co-author of the report.

"So a worst-case scenario for TMX would involve a major accidentin a more densely populated area (such as Metro Vancouver) damagingand disrupting key infrastructure, and possibly resulting in a spillto water and losses of human life."

Project 'highly questionable'

McArthurestimated the potential damage in the $2 billion to $5 billion range.

"What they did not do is look at a major or catastrophic event in a major urban area.This pipeline comes right into the heart of Burnaby and Vancouver, he told CBC.

The project is "highly questionable from a publicpolicy point of view," in part because of the questionable data, McArthur said.

"These findings, along with the increasing evidence frominterveners in the NEB pipeline hearings that Kinder Morgan is notproviding accurate and complete data and information about thepipeline, make it difficult to see how the NEB can approve thispipeline while fulfilling its obligation to uphold the publicinterest."

The Trans Mountain pipeline currently ships 300,000 barrels of petroleum products per day from the Edmonton area to the West Coast.

The $5.4-billion expansion would nearly triple its capacity to890,000 barrels a day.

Past research by The Goodman Group has taken aim at otherprojects' stated economic benefits, such as Enbridge Inc.'sLine 9 reversal between southern Ontario and Montreal andTransCanada Corp.'s Keystone XL pipeline to the U.S.