TRUDEAU PLANS TO PICK A PIPELINE
14 Sep 2016
National Post – (Latest Edition)
TRUDEAU PLANS TO PICK A PIPELINE
Prime Minister Justin Trudeau plans to approve at least one new oil pipeline project in his first term, with Kinder Morgan Inc.’ s Trans Mountain expansion to the Pacific Coast the most likely candidate, people familiar with his plans said.
The prime minister is seeking to strengthen environmental standards and build confidence in new regulatory rules while also stoking growth in Canada’s sluggish economy by backing a pipeline.
Trudeau therefore plans to neither approve all the projects under consideration nor reject them all, according to the people who spoke on condition of anonymity because the discussions are private.
Trudeau faces a series of high-profile energy decisions over the next three months, including a final cabinet ruling on Kinder Morgan’s Trans Mountain proposal and a legal appeal related to Enbridge Inc.’ s Northern Gateway pipeline. Trudeau will also decide on Petroliam Nasional Bhd.’s Pacific NorthWest natural gas project, while TransCanada Corp.’ s Energy East pipeline is due for a decision in about two years.
Kinder’s proposal is seen as likeliest to win approval despite opposition among key figures in vote- rich Vancouver, the people said. The Trans Mountain expansion already has conditional regulatory sign- off from the National Energy Board.
Red tape and environmental opposition bogged down major Canadian energy proposals during the nineyear reign of the previous Conservative administration led by Stephen Harper. Northern Gateway, Trans Mountain and Energy East have all been delayed in Canada, while the Keystone XL pipeline to the Gulf Coast was rejected by the U. S. government.
Trudeau’s government believes it must demonstrate to investors the country is capable of reaching consensus to build major energy projects, while not alienating environmentalists who make up a key constituency for the Liberal Party. The government hopes to approve one project before the next election in 2019, the people said.
The prime minister routinely says, when asked about pipeline issues, that his government is balancing environment concerns and the economy but that his job is to get Canada’s resources to market. Trudeau didn’t specifically address his plans for Kinder Morgan when asked Tuesday afternoon. “There’s always going to be speculation by one side or the other about what we might do,” he told reporters in Ottawa. “The fact is, we need to get our resources to market in safe and reliable ways.”
Trudeau has signalled he doesn’t support Northern Gateway on its current route through B.C., and any major new routing could force the company to restart its approval process, the people said. A spokeswoman for National Energy Board, however, said that’s not necessarily the case. If a route-change request is made “we will take a look and develop a process for reviewing the application,” spokeswoman Sarah Kiley said by email.
Jim Prentice, former Alberta premier and federal environment minister, welcomed the news but warned Kinder Morgan’s project alone won’t be enough.
“We need pipelines, we need pipelines to the West Coast, and most advantageous for Canada of course are pipelines into the AsiaPacific basin and Trans Mountain would certainly be helpful,” Prentice, a Calgary- based adviser in the energy group at Warburg Pincus, said Tuesday in New York. “But we also need to bear i n mind that Trans Mountain won’t solve the problem” because tankers that can navigate the region are too small to service Asia, he said.
Canada needs an energy port that can ship up to two million barrels per day to Asia, Prentice said, and Canadians should be concerned that investors are cooling to the country’s oil patch. “The concern that really should alarm us as Canadians is low-cost capital is exiting the Canadian basin,” he said.
Trudeau is also concerned about the electoral impact of Energy East, which is unpopular in Quebec where the Liberals hold 40 of 78 seats, the people said. TransCanada’s plan would see a new pipeline delivering crude from the oilsands in Alberta to the Atlantic Coast via the second-most populous province, a much longer route than the other proposals.
The prime minister has spoken favourably about the Kinder Morgan pipeline in the past and his government is said to consider it a netpositive for its so-called “progressive” political movement nationally. Though opposed by Vancouver’s mayor, it would be popular in Alberta, where Premier Rachel Notley’s New Democratic Party government is advancing carbon- emissions limits favoured by Trudeau.
Trudeau’s cabinet has until December to make a decision on Trans Mountain. Finance Minister Bill Morneau and Trade Minister Chrystia Freeland are the loudest voices around the table in favour of energy sector development, the people said.
Kinder Morgan’s $6.8-billion, 1,145- kilometre Trans Mountain expansion would carry Alberta crude to Vancouver, tripling capacity of an existing line to 890,000 barrels per day.