Today, we filed our official application for the Energy East Pipeline with the National Energy Board (NEB). One important part of this filing is a new economic impact report on the project.
TransCanada already commissioned one study by Deloitte to give Canadians an overview of the economic benefits of the project. So why are we publishing a second study now?
Since we commissioned the first study over a year ago we have expanded our plans for the Energy East Pipeline. As we move into the next phase of our project and seek regulatory approval from the NEB, we decided it was important to commission a new report from the Conference Board of Canada (CBoC) based on the latest scope of the project, including the addition of the Eastern Mainline Project. Additionally, this new report is a required part of the regulatory filing.
Not surprisingly, the studies delivered different results because Deloitte and the CBoC use different methodologies. On top of that, the Statistics Canada data that factor into the report are frequently updated. We are now using the Conference Board of Canada study because it is more current, but the Deloitte study (PDF, 1.9 MB) remains available to the public online.
What are the results of the new report?
The Conference Board of Canada report found that Energy East will support an average of approximately 14,000 direct and indirect full-time jobs across Canada during seven years of development and construction. During the first 20 years of operations, the Energy East Pipeline will generate more than 3,000 direct and indirect full-time jobs.
When combining the project’s development and construction phase with the operations phase, the CBoC found that Energy East will add more than $7.6 billion in tax revenues for local, provincial and federal governments across Canada. And by the year 2040, Energy East is expected to generate at least $36 billion in additional GDP in Canada.
In addition, by creating a safe and reliable route to transport oil from Western Canada to Eastern Canada, Energy East will improve market access for Canadian oil and increase competitiveness for Eastern Canadian refineries.
What is new in the Conference Board of Canada report?
|Updated Input/Output Model||When comparing the CBoC and Deloitte reports it is important to note that both used Statistics Canada’s Input/Output Model, an economic tool that simulates the impact of one business or sector activity upon other businesses and sectors. However, the CBoC employed the most up to date version of the model which was released on February 10, 2014.|
|New development and construction timelines||The Deloitte study separated development and construction of Energy East into two phases over six years. The CBoC study combined development and construction of Energy East and the Eastern Mainline Project into a seven-year period without dividing into a construction phase and development phase.|
|Eastern Mainline Project||The CBoC factored in the impact of the Eastern Mainline Project. To learn more about the Eastern Mainline Project visit http://easternmainline.com.|
|A more defined operations timeline||A pipeline can operate indefinitely when properly maintained. However, a defined time period is needed in order to conduct a proper economic analysis. The Deloitte report used a time horizon of 40 years for the operations phase for the project, while the CBoC used a defined 20-year phase period based on agreements that TransCanada has already signed with shippers.|
|Comparable GDP benefits||Despite a large difference in pipeline operations timelines between the two studies, the contribution to Canada’s GDP remains fairly comparable at $35.3 billion (Deloitte) and $36.4 billion (CBoC). This is due to the fact that the CBoC analyzed the full scope of the project, which includes the Eastern Mainline, and applied a different methodology by taking into account revenues and profits, cost assumptions and capital costs. Deloitte used preliminary estimates of capital and operating costs only.|
Read more about the benefits of the Energy East Pipeline detailed in the report.