TransCanada pulls the plug on New Brunswick’s favourite mega-project
THE ENERGY EAST PIPELINE IS DEAD.
On Oct. 5, Calgary-based TransCanada Corp. announced it would not proceed with the $15.7-billion pipeline that would have delivered 1.1 million barrels per day of crude oil from Western Canada to Eastern refineries—including Irving Oil’s in Saint John. In a statement, TransCanada said it wouldn’t be going ahead with the pipeline after “careful review of changed circumstances.”
Some of the changed circumstances include the regulatory process. The decision comes after the NEB issued new rules for the Energy East environmental review, including an assessment of all greenhouse gas emissions related to the production and consumption of crude oil being shipped on the pipeline and an assessment of how Canada’s carbon taxes and other climate change regulations would impact the need for the pipeline. Herb Emery, the Vaughn Chair in Regional Economics at the University of New Brunswick, isn’t surprised TransCanada walked away from the project. “The regulatory uncertainty made it too much of a headache for TransCanada,” he says.
What does New Brunswick lose now that Energy East is dead? According to TransCanada’s figures, quite a lot$6.5 billion
Investment in the local economy3,771
Full-time direct and indirect spin-off jobs per year during the nine-year construction phase
Direct and indirect jobs during the 20-year operations phase
In tax revenue during the life of the project
Source: TransCanada Corp.
Market conditions have also changed since the project was announced four years ago. Kinder Morgan’s Trans Mountain pipeline expansion in B.C., and Enbridge Inc.’s Line 3 into the U.S., have been approved by the Canadian government. Meanwhile U.S. President Donald Trump has revived the controversial Keystone XL pipeline. Those three pipelines would add 1.8 million barrels of pipeline capacity that Western Canada’s producers could access. Emery wonders, with those pipelines back in play, if interest in Energy East had died off in Western Canada’s oil patch.
The decision isn’t good news for New Brunswick Premier Brian Gallant who has consistently supported the project and was keen to see the construction and operations jobs it would have provided residents, and capitalize on the taxes the pipeline would have generated.
Emery says the pipeline’s death speaks to a larger issue of how investment is being turned away by Justin Trudeau’s Liberal government in Ottawa.
“If you total up the value of resource projects cancelled, curtailed or just gone, it’s a lot,” Emery says. “The message being sent is Canada is not an easy place to invest in the resource sector.”