Independent Assessment: Kinder Morgan Inflated Pipeline's Job Numbers by Factor of 3 while Dramatically Underestimating Spill Costs

BURNABY, BC, Nov. 10, 2014 /CNW/ - Simon Fraser University's Centre for Public Policy Research, has released a report, produced in collaboration with The Goodman Group, Ltd. that refutes Kinder Morgan's claims regarding the positive economic benefits of its controversial pipeline project. The report, entitled Economic Costs and Benefits of the Trans Mountain Expansion Project (TMX) for BC and Metro Vancouver, demonstrates that the benefits of the pipeline are very small and have been significantly overstated by Kinder Morgan, whereas the worst-case costs of a catastrophic spill are very large and have been vastly understated.

"We correctly anticipated that the benefits from the pipeline would be small in the context of the overall BC economy and mostly short-term," said Ian Goodman, President of the Goodman Group, Ltd. and co-author of the report. "But we were very surprised that the Company has exaggerated the short-term jobs associated with building the pipeline by a factor of three."

Kinder Morgan maintains that building TMX will create 36,000 person-years of employment in BC (including a wide range of spin-offs). But the report has determined that TMX will only create 12,000 person-years or less over the 3-year period for construction and related activity - equivalent to 4000 jobs/year (or less). This is less than 0.2% of the total provincial employment.

A review of the fiscal benefits also demonstrates the tiny returns to BC from TMX. Kinder Morgan's flawed analysis, which overstates jobs also overstates tax benefits from building and operating TMX. Based on the Company's own estimates regarding the increased revenues to tar sand producers from TMX, BC gets less than 2% of these revenues; tar sands producers retain 68%, and 31% goes to Alberta and other provinces in royalties and corporate income taxes.

"KM has vastly underestimated the worst-case costs for a catastrophic pipeline rupture. Contrary to KM's findings, damage and cleanup costs for major accidents are highly correlated with population density. So a worst-case scenario for TMX would involve a major accident in a more densely populated area (such as Metro Vancouver) damaging and disrupting key infrastructure, and possibly resulting in a spill to water and losses of human life. Costs for such a catastrophe could escalate to the multi-billion dollar range - more than 10 times higher than the KM estimates," says Brigid Rowan, Senior Energy Economist at The Goodman Group, Ltd and co-author of the report.

Doug McArthur, Director of the Graduate School of Public Policy at SFU notes:

"The jobs created are nowhere near the number claimed by Kinder Morgan and the costs are grossly underestimated when the risks of a major spill, particularly one occurring in the Vancouver area, are factored in, using standard economic costs -- the whole project is highly questionable from a public policy point of view. These findings, along with the increasing evidence from intervenors in the NEB pipeline hearings that Kinder Morgan is not providing accurate and complete data and information about the pipeline, make it difficult to see how the NEB can approve this pipeline while fulfilling its obligation to uphold the public interest."

For detailed release visit: http://www.sfu.ca/mpp.html

SOURCE: Simon Fraser University

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