TransCanada Corp.’s decision last week to ask the National Energy Board for a 30-day “pause” of the review of the $15.7 billion Energy East pipeline is news New Brunswick Premier Brian Gallant could have done without.
The proposed 4,500-kilometre-long pipeline that would take Alberta and Saskatchewan crude oil to refineries in Eastern Canada – including Saint John’s Irving Oil refinery – has been touted by Gallant’s Liberals as a key economic opportunity for the province.
The Energy East project would see a new pipeline and marine terminal built in the province and create thousands of jobs during the development and construction phase, as well over 250 direct and indirect jobs during the operations phase of the pipeline. There are hundreds of millions of dollars in tax revenues at stake as well.
However, the pipeline review has been a rocky one. The NEB suspended the review process last year after it was reported that two NEB board members on the three-person Energy East review panel, Jacques Gauthier and Lyne Mercier, had met privately with former Quebec premier Jean Charest while he was on the payroll of TransCanada Corp.
This led to protests in Quebec that the review was rigged to ensure the approval of Energy East.
The review still hasn’t been re-started, and since last year the federal Liberal government has made moves to revamp how oil and gas projects are reviewed.
Some of the big changes include new NEB rules which would require an assessment of all greenhouse gas emissions related to the production and consumption of crude used to fill the pipeline, and how new carbon taxes and other climate change regulations would impact the need for Energy East.
Given all these changes and headaches, it’s no surprise TransCanada is wondering if all this effort is worth it.
But it’s not just the federal government’s changes to the review process that has TransCanada thinking twice about building the pipeline.
The reality is the oil and gas industry might not need Energy East anymore.
Back in 2013 when the pipeline was first proposed, the Keystone XL pipeline looked dead in the water and the TransMountain expansion and Enbridge Inc.’s Line 3 pipeline to the Midwest hadn’t been approved.
Today, Keystone XL is back in game thanks to U.S. President Donald Trump’s support, and the TransMountain and Line 3 projects have been approved by the feds.
Those three projects add about 1.8 million barrels per day of pipeline capacity for Western Canadian producers. Energy East has a capacity of 1.1 million bpd.
Some experts, including Herb Emery, the Vaughn Chair in Regional Economics at the University of New Brunswick, don’t think there is much urgency among Western Canadian producers to have Energy East built anymore because they have access to U.S. markets with the three other pipelines.
If Emery is right, that is what really could spell the end for Energy East. TransCanada is not going to invest more money on a review for a project its customers no longer want or need.