Tue | Nov 20, 2018

TransCanada cancelling Energy East pipeline

Published:Friday | October 6, 2017 | 12:00 AM

Pipeline company TransCanada said on Thursday that it is cancelling a plan to build a pipeline that would ship 1.1 million barrels of oil per day from Western Canada to the Atlantic Coast.

TransCanada Chief Executive Officer Russ Girling said in a statement that "after careful review of changed circumstances, we will be informing the National Energy Board" it won't go ahead. He did not specify reasons, but Alberta's oil sands growth has slowed with the decline in the price of oil, and there was stiff environmental opposition in Quebec.

Girling had previously called the pipeline a historic opportunity to connect the oil resources of Canada's west to eastern consumers. He'd noted the oil could be shipped to the US Eastern Seaboard, Asia, and Europe.

Supporters said the pipeline was necessary to decrease reliance on the United States, which takes 97 per cent of Canada's energy exports. Alberta has the world's third-largest oil reserves, with 170 billion barrels of proven reserves.

Thrilled over job loss?

Montreal Mayor Denis Coderre, who has opposed the pipeline on environmental grounds, said he was thrilled to see it abandoned. Calgary, Alberta Mayor Naheed Nenshi sarcastically said he loved the fact that Montreal's mayor was celebrating the loss of Canadian jobs.

When TransCanada first announced the project in 2013, oil prices were neared a US$100 a barrel, but are now about half that.

Conservative opposition deputy leader Lisa Raitt called it a terrible day for Canada and blamed Prime Minister Justin Trudeau for not championing the nation-building project and the nation's energy sector. "Everything Justin Trudeau touches becomes a nightmare," Raitt said.

Controversial approval

Last year, Trudeau approved one controversial pipeline from the Alberta oil sands to the Pacific Coast, but rejected another. Trudeau approved Kinder Morgan's Trans Mountain pipeline to the Vancouver suburb of Burnaby, British Columbia, but rejected Enbridge's Northern Gateway pipeline to Kitimat, British Columbia. His government has been trying to balance the oil industry's desire to tap new markets with environmentalists' concerns.

Natural Resource Minister Jim Carr called the TransCanada's decision to end the Energy East pipeline a business decision.

"Conditions have changed," Carr said. "Commodity prices are not what they were then."

TransCanada put its application on hold in September after the National Energy Board said it would use a tougher review process that would include looking at indirect emissions related to the pipeline, from production to end use of the oil. The company warned then that it could cancel the proposed 4,500-kilometre (2,800-mile) oil pipeline from Hardisty, Alberta, to Saint John, New Brunswick, which would have been the most expensive project in TransCanada's history.

Carr noted that TransCanada's Keystone XL pipeline to Texas Gulf Coast refineries awaits some final approvals in the United States.

International oil companies ConocoPhillips and Royal Dutch Shell have sold Canadian oil sands assets this year. The costs to develop the oil sands, a type of unconventional petroleum deposit, are much higher that developing conventional oil deposits.

Alberta Premier Rachel Notley said she was deeply disappointed with TransCanada's decision.

"We understand that it is driven by a broad range of factors that any responsible business must consider. Nonetheless, this is an unfortunate outcome for Canadians," she said.

- AP