Another of Canada's major pipeline proposals has fallen by the wayside after TransCanada announced the cancellation of the multi-billion-dollar Energy East project. The proposed pipeline from Alberta to New Brunswick had been in the works for four years, but was recently slowed by market conditions and changes to federal regulations.
"After careful review of changed circumstances, we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications," stated Russ Girling, TransCanada president and CEO. "We appreciate and are thankful for the support of labour, business and manufacturing organizations, industry, our customers, Irving Oil, various governments, and the approximately 200 municipalities who passed resolutions in favour of the projects. Most of all, we thank Canadians across the country who contributed towards the development of these initiatives."
First announced in 2013, Energy East was planned as a combination of upgrades to existing pipelines and new construction that would have carried 1.1 million barrels of crude oil daily from terminals in Alberta and Saskatchewan to refineries in the Maritimes and Quebec. TransCanada projected that the pipeline would generate nearly 14,000 direct and indirect jobs across the country.
However, changes to the National Energy Board's review process slowed the project. In January 2017, the NEB announced the review of Energy East would restart, after the original panel hearing the application stepped down and a new one was named. This past August, the board announced that the scope of the review would be expanded to include greenhouse gas emissions related to the project. On September 8, TransCanada requested that the NEB suspend the review for one month.
Canada's Environment Minister, Jim Carr, said the TransCanada decision was strictly based on business conditions and was not related to regulatory issues.
"Our government has approved two major export pipelines that are now under construction, and a third is expected to start soon. The Trans Mountain expansion and Line 3 projects alone represent over $11.6 billion in investment and will support thousands of jobs," Carr said in a statement. "In making the decision to approve these projects, our government took into consideration a wide variety of information, data and scientific evidence, including the National Energy Board's recommendation report, the views of Canadians and enhanced consultations with Indigenous peoples. Our government would have used the same process to evaluate the Energy East Pipeline project that saw the Trans Mountain expansion and Line 3 projects approved. Nothing has changed in the Government's decision-making process."
Alberta Premier Rachel Notley, long a proponent of Energy East, expressed disappointment in the decision.
"We understand that it is driven by a broad range of factors that any responsible business must consider. Nonetheless, this is an unfortunate outcome for Canadians. Our government has supported Energy East since the project was proposed. We believe this nation-building project would have benefited all of Canada through new jobs, investment, energy security and the ability to displace oil being imported into Canada from overseas and the United States," Notley stated. "The National Energy Board needs to send a clear message on what the future of project reviews look like in Canada. Our government understands that deliberation on upstream emissions and land-use integrity is important and must continue. Investors need confidence and we look forward to seeing that certainty in place soon. This decision highlights the importance of diversifying market access and the subsequent national priority that must be placed on the Trans Mountain expansion project."
Irving Oil has been partnered with TransCanada on the project since its start in 2013. Irving President Ian Whitcomb said the decision was unfortunate.
"This is a sad day for Canada. The construction of the Energy East pipeline was a once-in-a-lifetime opportunity. This was a $15-billion private-sector investment that would have enabled further investment and development in our country, creating thousands of skilled jobs and generous tax revenues and royalties for all levels of government along with creating energy security for our country," Whitcomb said.
Other related groups have also expressed their disappointment, including trade unions whose members would have been involved in construction of Energy East.
Robert Blakely, COO of Canada's Building Trades Unions, said the decision could not have come at a worse time for the organization's members in the West and Maritimes, and pointed squarely at changing regulations as the problem.
"It is clear that Canada needs and wants a regulatory system that is second to none and most of us thought that we had that. If we have a way to deal with our issues perhaps we need to stick to that. We do not need to have the rules of the game to be changed in midstream. That is neither fair nor appropriate; we ought not to ask a proponent to take a multi-billion-dollar gamble on a process that changes simply because a dog barked on Upper Teacup Road," Blakely said. "The Building Trades regrets the opportunities that have been lost in Atlantic Canada, Québec, Ontario and on the Prairies. What have been lost are high quality, high paying jobs in all of those regions on the construction of this world-class, nation building project. The continuing jobs on maintenance and upgrading are not just jobs for a short term but jobs for the life of the asset. What has been gained seems to be things like the continuity of oil tankers on the St. Lawrence River, railcars loaded with hydrocarbons passing through our cities, paying for gas at the pump using of the world price and not the made in Canada price and the continued reliance on expensive foreign oil sources. We lose the environmental advantages that the pipeline could have provided. This does not seem to be a rational balance."
TransCanada emphasized that it will be redirecting the capital intended for Energy East towards other projects. It has recently revived the previously shelved Keystone XL proposal after the Trump administration indicated a willingness to approve the American portion of the line.