EDMONTON - There's no proof the game-changing economic boom that would accompany the proposed Northern Gateway pipeline would hammer central Canada's manufacturing sector, an economist told a federal panel Wednesday.

"It is not credible that one could argue this would cause Dutch disease," Robert Mansell told the three-member joint advisory panel reviewing the controversial project.

"Would it do, as has been alleged — cause the rate of inflation to go up and then force the monetary authorities to tighten the money supply and thereby shrink the economy? The answer is no.

"Monetary policy is based on what's called the Core Inflation Rate, which excludes the price of food and energy."

Mansell, answering questions on behalf of the pipeline builder, Calgary-based Enbridge (TSX:ENB), pointed to his updated report on the economic impacts of the proposed $6-billion plan to ship oilsands crude to a port on the B.C. coast and on to Asia by supertanker.

The report notes access to the exploding markets in Asia would boost Canada's GDP by $312 billion over 25 years — about $9 billion a year — and bring in $98 billion in government revenue.

Given that the resource industry is one of the key drivers of Canada's economy, the profit boost from diversified markets would bring more wealth and jobs across Canada, said the report.

"The net wealth associated with just the oil sands component of the industry is estimated at almost $1.5 trillion, equivalent to about $44,000 for each Canadian or roughly 18 per cent of Canada's entire tangible wealth."

A profit spike in the keystone industry brings concerns from critics, notably federal NDP Leader Thomas Mulcair, that it will swamp other producers, such as manufacturers in central Canada.

Dutch disease is named for a downturn in the Netherlands' economy in the 1970s when peaking natural gas prices were blamed for driving up inflation and driving down exports of manufactured goods.

Mulcair's concerns are echoed by studies from the Organization for Economic Co-operation and Development and the International Monetary Fund.

But Mansell told the panel that Dutch disease studies are all over the map, with some finding it brings calamitous change while others concluding it doesn't harm the economy at all.

He said if the key question is whether Dutch disease causes permanent harm to the economy, then the numbers don't add up.

Under Dutch disease, he said in the report, the Canadian dollar should now be falling against the U.S. greenback given oil prices dropped dramatically four years ago and have not recovered. Instead, he notes, the dollar has gone up during that period from 93 cents to par.

Six experts and Northern Gateway president John Carruthers spent a second day Wednesday answering questions from third parties seeking more information on the pipeline.

The joint review panel is hearing evidence and must file a report to the federal government in 16 months on whether the line is needed, whether the oil supply and the buyers are truly out there, and whether the pipe can be built and maintained in an environmentally sustainable manner.

Enbridge wants to build a 1,170-kilometre dual line from Bruderheim near Edmonton to a marine terminal in Kitimat, B.C.

It would ship 585,000 barrels of crude a day over 1,000 streams, First Nations areas and delicate ecosystems in the B.C. Interior.

The project has sharply divided debate in B.C. Critics say given the catastrophic harm that could result from a pipeline or tanker spill, the cost is not worth it at any price.

In his report, Mansell said the line is critical to course correct an industry that is getting caught flat-footed in a nimble and mercurial global market.

"The Canadian petroleum sector is quite unique in that at present virtually all of its exports go to just one foreign market, (the United States)," stated the report.

And that market, it said, doesn't appear set to grow any time soon given that protesters have effectively stalled the transcontinental Keystone XL pipeline and that half the states are now looking at implementing low-carbon fuel standards aimed directly at the oilsands.

"Some groups have been very successful in painting the oilsands as an environmental villain, particularly in terms of (greenhouse gas) emissions, and this appears to be having some effect on U.S. policy-makers," said the report.

It also cited statistics from the Bank of Canada that 85 per cent of Canadian exports across the board are going to low-demand developed regions like the United States and Europe while just eight per cent are going to hungry, developing countries like China, India, Korea, Indonesia, and Brazil.

"In general, the growth in oil imports by Asia is projected to be much greater than the growth in total oil demand," said the report.

In a separate report submitted to the hearing, Texas-based energy consultant Muse Stancil has said Northern Gateway will redraw the rules on oil pricing in North America.

"It can be expected to have a material effect on the distribution patterns and pricing dynamics for Western Canadian crude, as crude producers for the first time will have a high-volume alternative to their historical markets within North America," said the Muse Stancil report.

"Northern Gateway allows the Canadian crude producers to both stop selling to their least attractive refiner clients (from a pricing prospective) and reduces their need to ship heavy crude via comparatively expensive rail transport."

The joint review panel, representing the National Energy Board and the Canadian Environmental Assessment Authority, has been travelling around British Columbia and Alberta throughout the year hearing evidence.

The line, if approved, won't be built until 2014, but it has also already chilled relations between the Alberta and B.C. governments.

British Columbia wants a better revenue sharing deal without further taxing Enbridge. Alberta Premier Alison Redford has said B.C. won't get a dime of oil royalties, saying such a deal would alter the conventions laid down at Confederation.

The hearings run until Saturday, then resume in the Alberta capital from Sept. 17 to 28.

Starting next month, they move to Prince Rupert and Prince George in B.C. for question-and-answer hearings relating to the lines themselves and the environmental risks and contingency plans.

Prime Minister Stephen Harper's government has said it supports the concept of getting oil to the Asian market, but has said the Northern Gateway decision will rest on science rather than politics.

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  • Northern Gateway President John Carruthers

    (Sept. 4) - Northern Gateway president John Carruthers argues the pipeline is just as important to Canada as the St. Lawrence Seaway and the Canadian Pacific Railway..."when constructed, [they] laid the foundation for significant benefits for generations of Canadians. Our project is no different."

  • Robert Mansell, U of C School of Public Policy

    (Sept. 4) - Robert Mansell, academic director of the University of Calgary School of Public Policy, argued the benefits the pipeline could have for Canada. "Just imagine a situation where, if not for Northern Gateway, you had shut in 525,000 barrels per day for one year. That loss works out to $40-million a day, or $14.4-billion per year," he said.

  • Leanne Chahley, lawyer for the Alta. Federation of Labour

    (Sept. 4) - Leanne Chahley, a lawyer for the Alberta Federation of Labour, questioned the estimated economic gains. "It's still a social science that you're involved in, economics. How much degree of certainty should we give it?"

  • Gil McGowan, Alta. Federation of Labour President

    (Sept. 4 ) - Albert a Federation of Labour argues the $6-billion line would mean 5% less refinery in Alberta and the loss of 8,000 jobs. "China is in the midst of a building boom in terms of refineries and refining capacity, so our fear is that if our policymakers allow this pipeline to be built we'll end up in a situation where our own homegrown refineries are no longer economic and they'll close down," federation president Gil McGowan said. "We'll end up in a situation where we're sending our raw bitumen oil to China and then buying back the refined product."

  • John Carruthers, Northern Gateway President

    (Sept. 4) - Northern Gateway president John Carruthers on the Enbridge's committment to environmental responsibility: "It involves assessing, in the same objective fashion, and according to the same standards, the information or evidence that has been presented by those who are opposed to the development of our project. And it culminates in approving the project under a framework of conditions that will promote reconciliation over division, and fact over rhetoric."

  • John Risdale, B.C. First Nations Chief

    (May 2012) - B.C. First Nations leaders travel to the step of the Alberta Legislature to voice their concerns on the environmental damage. "The pipeline route that they have proposed is following the most major river system that we have and when the river is ruined, the people are ruined, the land is ruined," said Hereditary Chief John Ridsdale of the Wet'suwet'en First Nation.

  • Terry Lake, B.C. Environment Minister

    (Sept. 4) - B.C. Environment Minister Terry Lake on how Enbridge plans to exceed world standards in spill prevention. "We certainly want to clarify with Enbridge some of the comments made over $500-million more of safety improvements and what exactly will that mean," Lake says. "In terms of monitoring, in terms of response capability, how can we ensure that any proponent would have to live up to what we consider world class response and mitigation measures."

  • Economist Robert Mansell, U Of C School Of Public Policy

    (Sept. 5) - <strong>On the chance that the proposed Nothern Gateway pipeline would have a negative effect on central Canada's manufacturing sector</strong>: "It is not credible that one could argue this would cause Dutch disease." "Would it do, as has been alleged -- cause the rate of inflation to go up and then force the monetary authorities to tighten the money supply and thereby shrink the economy? The answer is no. "Monetary policy is based on what's called the Core Inflation Rate, which excludes the price of food and energy."

  • Texas-Based Energy Consultant Muse Stancil

    (Sept. 5) - <strong>In a report submitted to the hearing, Texas-based energy consultant Muse Stancil said the Northern Gateway will have an effect on oil pricing in North America:</strong> "It can be expected to have a material effect on the distribution patterns and pricing dynamics for Western Canadian crude, as crude producers for the first time will have a high-volume alternative to their historical markets within North America," said the Muse Stancil report. "Northern Gateway allows the Canadian crude producers to both stop selling to their least attractive refiner clients (from a pricing prospective) and reduces their need to ship heavy crude via comparatively expensive rail transport."

  • Richard Johnston, UBC Political Scientist

    Sept. 5 - <strong>On the chance the federtal Tories could lose ground in B.C. due to unfriendly policies such as support of pipelines to the west coast:</strong> "Among the risks to their base, I would put Northern Gateway highest," Johnston said. "The risk/benefit ratio (for B.C.) is massively unfavourable in itself and if the government were to force the issue pre-emptively, they would add an additional dimension to the debate, singling out one province for ill-treatment, rather like the NEP and Alberta. I expect Conservative MPs are worrying about this aloud."

  • Elisabeth Graff, B.C. government lawyer

    (Sept. 7) - "Are you willing to acknowledge this is a complex organizational structure that limits the liability of a corporate giant that definitely would have sufficient funds?" she asked. "What we're left with is an entity which you tell us has the financial resources necessary to cover any type of spill, but we're still doubting whether that is possible." "No, I just fundamentally can't accept that," replied Mr. Carruthers. "Because of the investment, everyone would want to make sure there's proper funding available in case of a spill," he said.

  • Janet Holder, Enbridge senior executive

    (Sept. 7) - "We're doing everything in our power to mitigate against a spill." "Believe me, Enbridge doesn't want a spill. It's not what we're in the business for. We're in the business of moving very safely, environmentally sound and in a sustainable way, product from one spot to another."

  • Geoff Plant, B.C.'s head lawyer for the hearings

    (Sept. 7) - "The question [is] whether Enbridge is actually capable of getting the kind of insurance to ensure against the risk of liability," on whether the insurance is there should an oil spill happen.

  • Barry Robinson, lawyer for three environmental organizations

    (Sept. 8) - "If free market economies aren't at play, where's the economic benefit?" asked Robinson about the economic effects of the hypothetical possibility of Chinese interests buying control of the Northern Gateway pipeline.

  • Kelowna resident James MacGregor

    (Spet. 6) - The Avaaz petition <a href="http://www.avaaz.org/en/petition/Stop_Enbridges_Northern_Gateway_pipeline/?whtizcb" target="_hplink">"No Enbridge Tankers/Pipeline in BC Great Bear Rainforest"</a> was started by James MacGregor and has since passed 10,000 signatures. "BC's entire Great Bear Rainforest, its wildlife and the livelihoods of coastal First Nations are all at great risk if Enbridge's Northern Gateway pipeline is approved," he said. "I know I'm not the only one out there speaking up about the pipeline, but I felt like I couldn't sit back and do nothing." (Source: <a href="http://www.vancouverobserver.com/blogs/earthmatters/petition-opposing-northern-gateway-pipeline-clears-10000-signatures" target="_hplink">Vancouver Observer</a>)

  • Hana Boye, lawyer for Haisla First Nation

    (Sept. 17) - On who could end up with ownership stakes: "If we don't know who these investors are, we're not able to determine if they're financially viable, if they're market-force driven or if it's in the interest of Canadians," she said.

  • Crystal Lake pipeline

  • Chris Peters, Engineer

    (Sept. 17)- Peters argues that an approval of the pipeline might mean a setback to Canada's national climate change policy aims to reduce such emissions to by 2020. That cost "should be recorded as a negative and a cost to the planet," said Peters.

  • Crystal Lake pipeline

  • Crystal Lake pipeline

  • trenton falls pipeline

  • Terry Lake, B.C. Environment Minister

    (Sept. 17) - In the worry that in the event of a spill, Enbridge won't have tge insurance to cover the clean-up costs: "Enbridge and Northern Gateway are very aware of that concern now, so we'll look to their response. But we've made it clear that taxpayers will not be left on the hook," Lake said. "I think that the company would argue they have the resources necessary. What British Columbians want to see is an ironclad guarantee that they do have the resources necessary, that the structure and the insurance in place will protect British Columbians from the cost of any adverse event," he added.


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  • 10. Oil And Gas Accounts For 4.8 Per Cent Of GDP

    The oil and gas industries accounted for around $65 billion of economic activity in Canada annually in recent years, or slightly less than 5 per cent of GDP. Source: <a href="http://www.ceri.ca/docs/2010-10-05CERIOilandGasReport.pdf" target="_hplink">Canada Energy Research Institute</a>

  • 9. Oil Exports Have Grown Tenfold Since 1980

    Canada exported some 12,000 cubic metres of oil per day in 1980. By 2010, that number had grown to 112,000 cubic metres daily. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=9&SheetID=224" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 8. Refining Didn't Grow At All As Exports Boomed

    Canada refined 300,000 cubic metres daily in 1980; in 2010, that number was slightly down, to 291,000, even though exports of oil had grown tenfold in that time. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=7&SheetID=104" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 7. 97 Per Cent Of Oil Exports Go To The U.S.

    Despite talk by the federal government that it wants to open Asian markets to Canadian oil, the vast majority of exports still go to the United States -- 97 per cent as of 2009. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>

  • 6. Canada Has World's 2nd-Largest Proven Oil Reserves

    Canada's proven reserves of 175 billion barrels of oil -- the vast majority of it trapped in the oil sands -- is the second-largest oil stash in the world, after Saudi Arabia's 267 billion. Source: <a href="http://www.ogj.com/index.html" target="_hplink">Oil & Gas Journal</a>

  • 5. Two-Thirds Of Oil Sands Bitumen Goes To U.S.

    One-third of Canada's oil sands bitumen stays in the country, and is refined into gasoline, heating oil and diesel. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>

  • 4. Alberta Is Two-Thirds Of The Industry

    Despite its reputation as the undisputed centre of Canada's oil industry, Alberta accounts for only two-thirds of energy production. British Columbia and Saskatchewan are the second and third-largest producers. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>

  • 3. Alberta Will Reap $1.2 Trillion From Oil Sands

    Alberta' government <a href="http://www.huffingtonpost.ca/2012/03/27/alberta-oil-sands-royalties-ceri_n_1382640.html" target="_hplink">will reap $1.2 trillion in royalties from the oil sands over the next 35 years</a>, according to the Canadian Energy Research Institute.

  • 2. Canadian Oil Consumption Has Stayed Flat

    Thanks to improvements in energy efficiency, and a weakening of the country's manufacturing base, oil consumption in Canada has had virtually no net change in 30 years. Consumption went from 287,000 cubic metres daily in 1980 to 260,000 cubic metres daily in 2010. Source: Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=6&SheetID=99" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 1. 250,000 Jobs.. Plus Many More?

    The National Energy Board says oil and gas employs 257,000 people in Canada, not including gas station employees. And the Canadian Association of Petroleum Producers says the oil sands alone <a href="http://www.capp.ca/aboutUs/mediaCentre/NewsReleases/Pages/OilsandsaCanadianjobcreator.aspx" target="_hplink">will grow from 75,000 jobs to 905,000 jobs by 2035</a> -- assuming, of course, the price of oil holds up.


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  • 10. Encana

    Brand value: $418 million Photo: Doug Suttles, president and CEO of Encana Natural Gas (The Canadian Press) Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 9. Canadian Natural Resources

    Brand value: $702 million Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 8. Syncrude

    Brand value: $933 million Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 7. Suncor

    Brand value: $936 million Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 6. Cenovus

    Brand value: $1.109 billion Photo: Brian Ferguson, president and CEO of Cenovus Energy (The Canadian Press) Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 5. TransCanada

    Brand value: $1.47 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 4. Husky

    Brand value: $1.607 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 3. Petro-Canada

    Brand value: $1.831 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 2. Esso (Imperial Oil)

    Brand value: $1.849 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>

  • 1. Enbridge

    Brand value: $4.726 billion Source: <a href="http://www.brandfinance.com/offices/canada" target="_hplink">Brand Finance Canada</a>