CALGARY – Canadian politicians whose jurisdictions could benefit from a proposed multibillion-dollar oil pipeline are accusing the country’s energy regulator of creating uncertainty about the future of the proposed project.
TransCanada Corp. (TSX:TRP) put its application to build the $15.7-billion Energy East pipeline on hold this week after the National Energy Board said it would consider indirect greenhouse gas emissions in evaluating the 4,500-kilometre pipeline from Hardisty, Alta., to Saint John, N.B.
Alberta Energy Minister Margaret McCuaig-Boyd said having regulators consider so-called upstream and downstream emissions could cast a chill over the future of energy development.
“Deciding the merits of a pipeline on downstream emissions is like judging transmission lines based on how its electricity will be used,” she said in a statement Friday.
“This is not an appropriate issue to include in the review. We believe it would be a historic overreach and has potential to impact the future of energy development across Canada.”
New Brunswick Premier Brian Gallant said shifting regulatory parameters have created a “lack of clarity” and that the federal government should step in to get the review process back on track.
He noted that without the pipeline, crude is often shipped using less safe means, like over rail, and that much of Eastern Canada relies on imported foreign oil, often from countries with less stringent environmental oversight.
“This pipeline would allow us as a country to reduce our dependency on foreign oil,” Gallant said. “Many of the eastern refineries depend on oil coming from countries from around the world and that certainly is a potential risk in the future to our energy security.”
Saskatchewan Premier Brad Wall said in a written statement that Canada is beginning to move away from rational discourse on pipelines.
“Will the federal government apply the same greenhouse gas emissions test to every sector, including auto manufacturing? Or perhaps this is just about oil and gas?”
“Whether people like the oil and gas industry or not, in a general sense, does not matter. Oil will continue to be necessary to our survival and way of life for decades, even as the world transitions to cleaner fuels.”
NEB spokeswoman Sarah Kiley said the board typically considers direct emissions from the construction and operation of a pipeline, such as from pump stations and marine terminal activities.
In this case, she said the board broadened the scope of its review of the Energy East and Eastern Mainline projects due to “increasing public interest” in greenhouse gas emissions and the federal government’s interest in assessing upstream emissions associated with major pipelines.
Kiley said upstream emissions include activities before the oil would reach the pipeline, such as emissions created in producing oil, whereas downstream emissions refer to activities once the oil has left the pipeline like the refining and combustion of the oil.
McCuaig-Boyd said Alberta’s climate plan, cited by Prime Minister Justin Trudeau in his approval of two new pipelines last fall, should satisfy concerns about upstream emissions.
Greenpeace Canada spokesman Keith Stewart said the province’s climate plan doesn’t eliminate the need for such an assessment.
“The oil market has changed since 2013 when Energy East was proposed and we need to recognize that the future is in wind and solar energy powering electric vehicles, not new pipelines or the tar sands mines required to fill them,” he said in an email.
Atlantica Centre for Energy president Colleen Mitchell said the new regulations are redundant, and she questioned whether utilities, rail lines or trucking companies will now be asked to consider the emissions of their cargo or how the electricity is used.
“It is beyond the scope of this or any pipeline project to measure that,” Mitchell said. “This puts a chink in the investment viability of projects in Canada.”
She added that the track record for resurrecting projects that are placed on hold is not promising.
TransCanada filed a letter to the NEB asking for a 30-day suspension for the project so it can study how the NEB’s decision on greenhouse gas emissions will affect “costs, schedules and viability.” The request was accepted in a decision late Friday.
The Calgary-based company is calling the changes to the regulatory process “significant,” and warns that the entire project and related Eastern Mainline pipeline project could be cancelled.
It indicated that it may need to record a writedown of its investment in the project, if it is discontinued.
The project’s cancellation would be a blow to New Brunswick, which expected billions in investment and hundreds of jobs as a result of the pipeline, which would end at Irving Oil’s Saint John refinery.
Saint John Mayor Don Darling said he was “very concerned” about the uncertainty surrounding the proposed pipeline.
“To have these storm clouds hovering over the project is very concerning,” he said. “We certainly would call on the NEB to bring clarity to the process and timelines.”
— By Brett Bundale in Halifax.