Hello big tidewater? Trans Mountain approval welcomed, but opportunity still not locked in

Hello big tidewater? Trans Mountain approval welcomed, but opportunity still not locked in

By Deborah Jaremko

Nov. 29, 2016, 7:29 p.m.

http://www.jwnenergy.com/article/2016/11/hello-big-tidewater-trans-mountain-pipeline-expansion-approval-welcomed-industry-opportunity-still-not-locked/

 

The federal approval of the Trans Mountain Pipeline expansion starts to put confidence back in the market for upstream investors in Canadian oil development, says Canadian Association of Petroleum Producers (CAPP) president Tim McMillan.

But environmental groups are focusing on the accompanying decision to “dismiss” the approval for the Northern Gateway Pipeline, which they say is evidence that infrastructure projects can be halted by their actions.

“The fact of the matter is we made this decision because it is in the interest of all Canadians…The fact is that people asked us to serve to make difficult decisions in the interest of our country and the future we want to build for our kids and grandkids,” said Prime Minister Justin Trudeau in a news conference Tuesday.

“That means protecting the environment for future generations while creating good jobs and opportunity as we build a transition off of fossil fuels and into a renewable future. That can’t be done right now, today, or tomorrow. It has to be built over the coming months and years. That’s exactly what this decision is all about.”

Alberta premier Rachel Notley said the decision to approve the $6.8 billion pipeline project from Alberta to Burnaby, B.C. to shows “extraordinary leadership” by Trudeau. Ian Anderson, president of Trans Mountain proponent Kinder Morgan Canada, called the approval a defining moment for Canada and its energy industry.

The existing Trans Mountain Pipeline has been operating since the 1950s, but its expansion would provide the first meaningful volumes of oil exports from Canada to tidewater markets. The project would increase transportation volumes from 300,000 to 890,000 bbls/d.

“We are getting a chance to break our landlock,” Notley said in a statement.

“We’re getting a chance to sell to China and other new markets at better prices. We’re getting a chance to reduce our dependence on one market, and therefore to be more economically independent. And we’re getting a chance to pick ourselves up and move forward again.”

Trudeau cited Alberta’s Climate Leadership Plan as a key reason his cabinet was able to approve the new pipeline infrastructure.

The federal government also announced approval of Enbridge’s Line 3 replacement project between Alberta and Manitoba on its way to Wisconsin. This $4.8 billion project will replace the pipeline, which has been operating since 1968, and enable operations at its original design throughput of 760,000 bbls/d instead of the 390,000 bbls/d Enbridge has been running it at since 2010. The reduction in capacity is due to reduced pressure to ensure safe operations.

Trudeau also announced a moratorium on crude and persistent oil tankers along British Columbia’s north coast.

Environmental groups say the approvals, particularly the Trans Mountain green light, begin a new phase of escalating opposition that is empowered by the rejection of the Enbridge Northern Gateway project.

“Community opposition to the [Trans Mountain expansion] project has never been stronger, and as we’ve seen with Northern Gateway, that’s what will prevent this pipeline from ever being built,” read a statement by Jessica Clogg, executive director and senior counsel of West Coast Environmental Law.

CAPP president McMillan believes the approval will stand up.

“Canada has a very robust and thorough regulatory process with the National Energy Board, and when the Liberal government got elected just over a year ago they wanted to put an enhanced process in place, a second panel that would visit communities, test on greenhouse gases, and they wanted to make these changes to ensure they had confidence whatever the result…and at the end of that enhanced process the federal government said yes, this is in the national interest,” McMillan told reporters Tuesday.

“At this point I think it is reasonable to expect that not all Canadians will have the same opinion on this issue, as Canadians don’t on any given issue. We have a long expectation of free speech and people are certainly open and encouraged to express their beliefs, their thoughts, their views but I think it will be very difficult for people to question whether the process was thorough [and] whether it met the expectations of our government.”

McMillan cautioned that the approval, while positive, is just the first step towards realizing the potential of the Trans Mountain expansion.

“We need to see construction and ultimately until volumes are flowing through it that is when we will truly see the benefit,” he said.

Kinder Morgan says the decision triggers a number of next steps.

“Trans Mountain will continue to seek all necessary permits, and is planning to begin construction in September 2017, with an in-service date for the twinned pipeline expected in late 2019,” the company says.

“Other next steps will include a final cost estimate review with shippers committed to the project and a final investment decision by the Kinder Morgan board of directors.”

 

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on November 30, 2016, in economic impact, oil, political. Bookmark the permalink. Leave a comment.

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