The New Brunswick Progressive Conservative Party and the governing provincial Liberal Party did something unusual on Tuesday – they agreed on something.
That something is a motion asking the provincial legislature to support TransCanada Corp.’s proposed Energy East pipeline.
If there is anything the two parties could agree on, this is it.
The 4,500-kilometre long pipeline that would bring Western Canadian oil from Alberta to refineries in Quebec and Saint John and a marine export terminal – also in Saint John. Energy East represents hundreds of millions of dollars in potential tax revenues, thousands of jobs (at least during the nine-year development and construction phase) and billions of dollars in gross domestic product activity.
It’s the kind of project that any sitting government can point to and brag about when asked what it is doing to improve New Brunswick’s economy.
But in the wake of recent events, the future of the pipeline is unclear.
The January issue of Natural Resources Magazine will have a feature story on this topic, so I don’t want to give too much away here.
But Donald Trump’s presidential victory in November could mean TransCanada’s Keystone XL pipeline, vetoed by President Barack Obama in 2016, could be brought back from the dead by the president-elect.
Trump has said he is in favour of Keystone XL, which would ship 830,000 barrels per day of Western Canada’s oil production to refineries on the U.S. Gulf Coast.
And last week Ottawa approved approved two pipeline projects, Kinder Morgan’s Trans Mountain pipeline expansion in B.C. and Enbridge Inc.’s Line 3 into the U.S.
Which brings us back to the Energy East pipeline. When it was proposed in 2013, the future of Keystone XL, and the Trans Mountain expansion was uncertain at best. No one was sure if either pipeline would be built, and opposition to another pipeline project – Enbridge Inc.’s Northern Gateway (the Liberals rejected it on the same day it approved the two other projects) – was making it highly unlikely it would see the light of day.
In that context, Energy East was a bet made by TransCanada, and oil and gas companies in Western Canada, to have another option to get Canadian petroleum production (mainly from Alberta’s oil sands) to the coast where it can be shipped to the highest bidders around the world.
If the TransMountain expansion or Keystone XL or Northern Gateway or all three didn’t receive regulatory approval, at least the industry had another option in Energy East and the 1.1 million bpd of product it would transport across the country.
But TransMountain, Line 3 and Keystone XL – if Trump decides to approve it – would add well over one million bpd of pipeline capacity to the mix.
The Canadian Association of Petroleum Producers – the oil industry lobby group – is projecting oil sands production to increase 850,000 bpd by 2021 and another 700,000 bpd between 2021 and 2030. A lot of that additional production, if it is produced, can be shipped via the three aforementioned pipelines.
Does that leave Energy East as the lonely fourth wheel, especially with its review hearings mired in controversy?
When asked to comment on its commitment to the project, TransCanada issued this statement over the weekend to Natural Resources Magazine.
TransCanada remains committed to both Keystone XL and Energy East. Energy East remains of critical strategic importance because it will end the need for refineries in Quebec and New Brunswick to import hundreds of thousands of barrels of foreign oil every day, while improving overseas market access for Canadian oil. We look forward to the resumption of the Energy East regulatory process and showing why this project is also in the national interest.
Those are fine words. They don’t mean Energy East’s future isn’t cloudy, however.
And the rare bi-partisan cooperation between New Brunswick’s Progressive Conservatives and Premier Brian Gallant’s Liberals won’t be of much help as other political and market conditions impact the business case for Energy East.