Trans-Canada Pipe Lines' Place in the Canadian Economy

LT. COL. LEGGE: Most of the Speakers of the House of Commons in Ottawa have addressed this Club but today we will hear Mr. N. E. Tanner who, among his other achievements, was appointed Speaker of the Alberta Legislature at his First session in 1935. The Social Credit Government soon summoned him to the Cabinet and for seventeen years he was the Minister of the Departments of Mines and Minerals and of Lands and Forests. In 1952 the surging development of Alberta's resources drew him to private commerce and in 1954 he was named President of Trans-Canada Pipe Lines and later Chairman of the Board. Now that the line is in operation, he has renounced some of these heavy burdens and is the Managing Director in charge of the Calgary Office, as well as a Director of The Toronto-Dominion Bank, the National Trust Company and the Inland Cement Company. Mr. Tanner is a family man who has five children and nineteen grandchildren, but still finds time to be a life member of the Boy Scouts Association. He is also the President of the Calgary District of the Church of Jesus Christ of Latter Day Saints, and was given an honorary LL.D. by Brigham Young University.

Nevertheless, Mr. Tanner's fame will not rest on his career as a religious leader and as a Cabinet Minister but on his role as the leader of the Trans-Canada Pipe Lines. Since Sir Winston Churchill has concerned himself with most of the activities of mankind, it is not surprising that he has something true and something poetic to say about the importance of transport in warfare: "In a tale of war, the reader's mind is filled with the fighting. The battle . . . with its vivid scenes . . . excites imagination and commands attention. The eye is fixed on the fighting brigades as they move amid the smoke; on the swarming figures of the enemy; on the General, serene and determined, mounted in the middle of his staff. The long trailing line of communications is unnoticed. The fierce glory that plays on red, triumphant bayonets dazzles the observer; nor does he care to look behind to where, along a thousand miles of rail, road and river the convoys are crawling to the front in unnoticed succession. Victory is the beautiful, bright-coloured flower. Transport is the stem without which it could never have blossomed".

It is easy to draw an analogy to Sir Winston's image because the long continental pipe line is the new form of transport and the completion of the Trans-Canada Pipe Line this October was certainly a victory in the field of human construction. Nor is it remote and unreal to say that there were vivid scenes and sounds of battle connected with the creation of the pipe line.

Sharp differences of opinion are only natural for any major undertaking, as the manifold memoirs of the allied war leaders attest. The pipe line battle was no exception and both parliament and the country were divided in a tumultuous debate as to the best way of building this great project. Once the issue was decided, however, Mr. Tanner and his associates raced to finish another step in the rich development of this Dominion.

As a forum of public affairs, The Empire Club of Canada is fortunate to be addressed by the man who drove the pipe line to its victorious completion and who will now tell us about `Trans-Canada's Place in the Canadian Economy'.

MR. TANNER: I have chosen to talk today about The Trans-Canada Pipe Line project and its contribution to the economic welfare of this great country. It is not necessary here for me to point out that in the development of every country the transportation facilities are probably the most vital element in moulding an economically sound foundation. It not only affects the early settlement of the country but it is of paramount importance at every stage of its development. The economic life and development of nations have been built upon the exchange of commodities, and the more satisfactory the system of exchange the greater the opportunity for accumulation of wealth. This is particularly true of Canada with its great expanse of territory. The products of this country, from above or below the surface, cannot become great sources of wealth to the country until they have been developed and until the surplus of one region can be conveyed by adequate means of transportation to other regions or markets, where there is a demand for these products, nor can the country carry on as a unit without adequate means of transportation. This fact was so evident that as early as 1885 the C.P.R. was completed under most trying conditions and circumstances, in an endeavour to bind together various segments of this great nation, so widely separated both by distance and topography.

Since that time the widely separated parts of the country have been tied more and more closely together by the completion of other trans-continental systems of transportation, such as the railways, highways, air lines, greatly improved waterways and by our most recent systems of pipe lines. One cannot imagine what Canada would be like today without any one of these great systems which make possible the rapid and economic exchange of goods and transportation of people in the fast moving business of today. Though each and every one of these systems of transportation has proven to be of such great importance to the future economy of Canada and vital to the wellbeing of its people, they have often met with the severest of criticism and opposition, but rarely, if ever, has any project been the cause of so much controversy and been under such constant fire and excited so much public interest from coast to coast as the Trans-Canada project. However, today, all will agree that every one of these systems is vital to Canada and a credit to the energy and foresight of many Canadians. It is not my intention, therefore, to deal with any of the criticisms nor controversies nor actions taken by any board or government. Rather I should like to outline briefly for you what this project will contribute to the economic welfare of this great country of ours and to the enjoyment of a higher standard of living by millions of Canadians.

It is a great source of satisfaction for me today to be able to say that the final weld in the Trans-Canada Pipe Line 2,290 mile natural gas transmission system was made two months ago yesterday. It was tested and approved by the Board of Transport Commissioners for Canada on October 22nd. Five days later the valves were opened to make Canadian gas available to Canadians all along the system from Alberta to Montreal. It is also most gratifying to be able to say that the line has been completed ahead of schedule and well within the estimated cost. This is a real credit to our then President, Charlie Coates, and his engineers and all who have been responsible for directing the construction of this mammoth undertaking. Credit and appreciation also goes to all those companies and individuals who co-operated and assisted in making this project a reality. First I should like to discuss with you the varied aspects of the source of supply of this great fuel, natural gas, which is the most modern and desirable fuel available today. I say this because gas as a fuel requires no storage whatever, such as bins or tanks. It is easy to control and an adequate supply is always on tap. It offers the most uniform and controlled heat and is cleaner than any other fuel.

In order to discover, develop and establish proven reserves of oil and natural gas, it was necessary for millions and millions of dollars of new risk capital to be invested by those who had faith. in the future of the country. Yes, millions of real risk capital were spent in the search for oil and gas prior to 1947 when the Leduc strike was made; in fact, the Imperial Oil Company alone spent over $23 million before it made its successful discovery at Leduc. Since that time it is estimated by most reliable authorities that between four and five billion dollars have been invested in the oil and gas industries in Canada, which is equal to $265 for every man, woman and child in Canada. These great expenditures of new risk capital in the oil and gas industry have been most beneficial to Canada in many ways. It has included aerial photographic, magnetomotive and geologic surveys; the drilling of hundreds of stratigraphic test wells; all accomplished through the use of helicopters, Canadian-built deHavilland aircraft; muskeg tractors built by Bombardier of Quebec; trains, trucks and cars; and diesel-powered tugs and barges. It has helped open up much new country in the Western Provinces and the Northwest Territories by building roads and establishing new bases along rivers and lakes where no development had ever taken place, thereby making it available for settlement and the development of other natural resources. The same is true of many places along our main line, especially in Northern Ontario, where roads had to be built, compressor stations constructed and fuel made available, all of which would encourage more settlement and make more and more mining, forest and industrial development possible. The great exploration, and later drilling programme, which was carried on resulted in the development of our oil and gas resources; in fact, in the last decade Canada has moved from a position where she could produce only 10% of her oil requirements to where she is now able to produce more than 100%, even though the consumption in Canada has increased nearly three-fold. With the millions of barrels of proven reserves of oil, Canada is in a very favourable position as far as being independent of foreign countries for its oil requirements. This development programme has also resulted in proven reserves of natural gas being increased in the last eight years from 4.8 to over 26 trillion cubic feet, thereby placing Canada in a position where all of her natural gas requirements can be met with Canadian natural gas, with large quantities available for export, as and when they are developed. There seems to be a general feeling among those who are not closely associated with the industry that when the statement is made that there are trillions of cubic feet of gas reserves now proven, that sufficient gas wells have been drilled to deliver the gas and are capped and just waiting to be produced. In reality, millions and millions of dollars will have to be spent in the drilling of hundreds of wells in the proven areas, so that the gas may be produced as required. In addition the construction of processing plants will be required to take out the by-products, such as sulphur, butane, propane, etc., before the gas is suitable and available for the pipeline to take it to the ultimate consumer. Also, Alberta Gas Trunk Line will spend over fifty million dollars in building lines to the producing fields to carry the gas to Trans-Canada Pipe Line's terminal at the Alberta-Saskatchewan border. It is very significant to note that without pipeline transportation oil and gas development would be very materially restricted; in fact, the transportation of gas is entirely dependent on pipelines. No home or industry could be provided economically with natural gas as a fuel or raw material without a pipeline.

The Trans-Canada Pipe Line system, which extends from Alberta to Montreal, and makes gas available to hundreds of industries and many thousands of homes all across Canada, is the largest and longest single pipe line that has ever been undertaken as an initial project and naturally presented many problems in its construction. Before the financing of the project could be undertaken at all it was necessary for us to carry on months of negotiations with both the producers and distributors for the firm purchase and sale of gas on a unique twenty-five and twenty year basis. Without these contracts it was impossible to proceed with the financing. Also, it was necessary for five of the original corporate sponsors to guarantee twenty-one million dollars of interest on bonds and debentures until such time as the earnings could be built up to cover interest requirements. Without actually seeing the construction gangs in operation with their enormous machinery, it is impossible to visualize or describe the problems with which they had to contend. Even before construction was begun it was necessary to negotiate for rights-of-way sixty-five feet in width all along the 2,300 mile line, with at least 5,000 owners, some of whom were scattered all over the world, and the rights-of-way varied from prairie wheat fields and cattle ranches to very small parcels of suburban acreage. Then too, nearly one million tons of pipe and other material had to be ordered and delivered in time for the construction. This tremendous tonnage would load over 40,000 railway cars and many thousands of trucks. The British-made pipe which was used required 100 shiploads to bring it to Canada. Welland Tube of Welland supplied 110,000 tons. The handling of these large quantities of pipe and assembling and checking for use was no mean undertaking.

Then too, imagine having to dynamite and blast a trench six feet wide and six feet deep through more than 500 miles of the granite shield, the hardest rock ever experienced by veteran pipeliners, where almost twelve million pounds of dynamite had to be used, in fact, well in excess of that used in the dynamiting of Ripple Rock in the Pacific. In many places solid rock overburden had to be blasted and moved before the heavy machinery could even be brought in to carry on with the drilling and blasting of the trench. A second blasting was necessary to remove ragged edges; the broken rock all had to be moved out, three regular sand bags were laid every twenty feet and the pipe specially wrapped to protect it from the jagged rock. On three of the sections not a single foot of trench was cut with the regular rotary ditcher. The blasting of the trench also had to be done under rivers and lakes through the solid pre-cambrian rock by men working from barges set up and anchored in the stream. Three hundred miles of muskeg had to be crossed in an area where they experienced the worst weather in memory with only five days free from rain from June 1st to August 15th, where the heavy machinery would sink almost out of sight and special equipment had to be used and miles and miles of riprapping done; all of these conditions were conquered by the ingenuity of the pipeline builders. Besides this they were faced with miles of moving sandhills in Saskatchewan and hundreds of river, highway and railway crossings, with much of the construction being done in severe winter weather with temperatures as low as 40° below zero. The bending of as many as 100 bends per day of 30 to 34 inch pipe to follow the contour of the country, the tarring and inner and outer wrapping of every inch and welding every forty foot joint was necessary to form a solid steel artery some 2,300 miles in length, through all kinds of terrain. All this was necessary to make this mammoth undertaking possible and to serve Canadian gas to Canadians. The first section of 76 miles of the line was built from Niagara to Toronto in 1954, making it possible to build up a market here in the Toronto area. Gas has been made available by Consumers Gas Company to the consumers here in Toronto for the last four years through this line. Construction of the West-East pipeline began in July of 1956, but after 225 miles were laid construction was discontinued as a result of the steel strike in the United States. It was re-commenced in 1957, when over 1,100 miles were constructed; then in 1958 the remaining 850 miles were completed. The total actual construction time was just over one year.

The impact of this giant Trans-Canada system on the economy of Canada will be felt from coast to coast and we hope in many important parts of the United States. As you all know, Canada has been greatly blessed by nature providing it with an abundance and variety of natural resources. Petroleum and natural gas, however, are in greatest abundance in the west about 2,300 miles from the centre of population here, where the people and the industries provide the greatest demand. Therefore, extensive transportation systems, one of which is the Trans-Canada Pipe Line, are necessary to make it possible for the country to enjoy the benefits of this great natural resource. When one stops to realize that every wheel of industry is dependent on petroleum products to continue in operation, he is more conscious of the importance of this industry. Some of the benefits of this essential transportation system may be listed:

1. It provides a market for and, therefore, encourages the development of petroleum and natural gas, which is present in such abundance in the west, and which is so essential in the east. Approximately 200 million dollars a year will have to be spent for drilling and equipping new gas wells necessary to supply Trans-Canada's needs.
2. Many processing plants will have to be built for the purpose of extracting by-products from the gas.
3. Alberta Gas Trunk Line Company will spend over 50 million dollars to build a pipe line system to pipe the gas from the many producing fields to Trans-Canada's western terminal at the Alberta-Saskatchewan border.
4. Many associated industries have been and will be established all across Canada, such as the Welland Tube Company pipe mill at Welland; the Mannesman Tube Company of Sault St. Marie; the Alberta Phoenix Tube and Pipe; the Regina Pipe Company; Peace River Glass Company, which makes wrapping material for pipelines; valve manufacturing plants and plants required to make dope to be used for the covering of pipe.
5. Petrochemical plants will be built in different parts of Canada for the use of gas as a raw material and as a base for the manufacture of a very wide range of synthetic goods, such as clothing made from nylon, orlon and dacron, which are long wearing and wrinkle resistant fabrics. Also, many kinds of plastics, detergents, insecticides, etc., are made from natural gas.
6. It will make available in abundance the most desirable fuel known today for approximately half the area of Canada, and will add to the comfort and convenience of approximately two-fifths of the population, or over six million Canadians.
7. Utility companies which will pipe the gas from Trans-Canada's Pipe Line to your homes and industries, will also spend large sums of money in extending present services and completing new systems.
8. All of these industries from one end of Canada to the other provide employment for thousands and tens of thousands of men and women, many of whom must be technically trained.
9. Vast areas of new country will be opened up for settlement and industrial development, particularly in Northern Ontario.
10. Finally, it will have a very far-reaching effect on foreign trade and exchange. In 1956 Canada imported $130 million worth of coal from the United States, $12 million worth of sulphur, over $50 million worth of pipe and $15 million worth of natural gas. Practically all of the natural gas will be replaced by our own Canadian gas and when export permits are granted millions of dollars will come into Canada in payment of the gas exported. We are safe in estimating that the saving in coal imports will be approximately $40 million now being spent for United States' coal. With Trans-Canada taking large volumes of gas, sulphur will be recovered in quantity sufficient to meet all of Canada's requirements, with large quantity for export. From the above it would be safe to estimate that well over $200 million savings and earnings in United States' dollars per year will result from this pipeline, which makes it possible for Central and Eastern Canada and some of the United States to use Canadian gas.

I should like now to deal briefly with the question of export of natural gas, which has occupied so much of the time and consideration of boards, commissions and governments and the people generally. This, I feel, is a question of major importance.

In the administration of the natural resources of a country any government has the responsibility to see that the resources are developed with as little waste as possible, or, in other words, that a good conservation programme is carried out, and, further, that the needs of the citizens of the country are fully protected. However, these resources should not be saved just for the sake of saving them for future generations, but, if there is a surplus after protecting the needs of the people for the foreseeable future, and the trend is toward further development and greater production, as it definitely is with natural gas, exportation to a suitable market would be most beneficial to all. It goes without saying that export should be granted where it will make the greatest contribution to the Canadian people. It is generally conceded by boards, commissions and governments that Canada has sufficient 'proven reserves of gas to meet all of Canada's foreseeable requirements, together with trillions of cubic feet for export, as it is developed.

I should like to show how export proposed by our company would be beneficial to Canadians generally. We have entered into contracts with Midwestern Gas Transmission Company to sell 200 mmcf of gas at Emerson and also with Tennessee Gas Transmission Company for 200 mmcf at Niagara Falls, the second being contingent upon the first. The sale of this gas at Emerson would assure producers of an additional market for 200 mmcf of gas per day and, therefore, it would greatly encourage the development of the presently proven reserves and the search for further reserves. This in itself would start a chain of activity in the associated industries that would be felt all across Canada and would result in more and more of our Canadian oil and gas resources being developed and made ready for use. This contract would be very helpful to the consumer in Eastern Canada as the gas would be sold to the midwest on a 90% load factor the year round and would more fully utilize the facilities of the Trans-Canada Pipe Line and, therefore, would reduce the unit cost of transportation to the consumers in Eastern Canada. This would make it possible to serve more Canadians over a wider area here in the east. Even greater and more important contributions would be made as a result of the contract to export surplus gas at Niagara. Under our contract Tennessee Gas Transmission, which has very large storage reservoirs close to Niagara, is able to take and has contracted to take delivery of any amount from nothing up to 200 mmcf of gas per day as it is not required for use in Canada. Trans-Canada Pipe Lines has no obligation to deliver any gas but has the market available from day to day or month to month as the gas is not required by Canadian consumers. This arrangement also makes a supply of gas in storage always available if needed to meet Canadian requirements.

Our project is built and must be so maintained as to meet the peak requirements of our Canadian consumers at any time. This means that in the summer months and on warm days, when the demand is low, the project would have a ready market for any gas in excess of the Canadian requirements. This contract, as you can readily see, would make is possible for us to run our line at full capacity the year round and every day of the year without in any way prejudicing the supply for the Canadian consumer. Such an arrangement reduces very materially the unit cost of transportation. It is very comparable to a train running full as compared to running at half capacity. It should be very evident, therefore, that the export of natural gas is most desirable in that a larger market makes possible and encourages further development and, therefore, produces that much more new wealth; it also makes gas available more cheaply to the consumer. Besides this, any gas which is sold outside the country improves our balance of trade. In conclusion I should like to make a quick summary: 1. Pipelines are essential to the development of our gas resources and the making of them available to the market. 2. The development of the petroleum and natural gas industry has resulted in many new and associated industries being established all across the country, all of which help to develop the country and provide jobs for thousands and thousands of our citizens. 3. During the last ten years approximately four and one-half billion dollars has been spent in the development of the oil and gas industry, resulting in the establishment of much new wealth and in making Canada less and less dependent on other countries for this necessary fuel, energy and raw material. 4. Besides making this new wealth available much new country has been opened up for settlement and development of other natural resources and industry. 5. Though trillions of cubic feet of natural gas have been proven up millions of dollars must be spent in the drilling of hundreds of wells necessary to produce the gas and in the construction of plants required to process it for pipeline use. 6. The natural gas industry also contributes greatly to a favourable balance of trade.

7. The export of our surplus natural gas would contribute greatly to the development of our proven reserves and would provide new incentive in the search for new reserves and at the same time make gas available to the ultimate consumer in Canada more cheaply than it could be made available otherwise, and bring in millions of dollars in payment of the exported gas. Trans-Canada Pipe Lines was built to serve Canadians from west to east and is determined to take her rightful place in a dignified manner, which we hope in time will be recognized as contributing greatly to the national economy and security of this our country.

THANKS OF THE MEETING were expressed by Mr. Royd Beamish.