National Observer | Canada’s second largest pipeline company has sent a message that it’s reviewing whether to abandon a major crude oil expansion project due to stringent new climate change standards proposed by a federal regulator.
In a statement released late on Thursday after the closing of financial markets, Calgary-based TransCanada Corp. said it had asked the National Energy Board to suspend its review of the Energy East and Eastern Mainline projects for 30 days as it studies how a new list of issues to be considered by the regulator might impact project costs.
The NEB announced on Aug. 23 that it wanted to consider the impact of both upstream and downstream greenhouse gases in its review of the pipelines. This is the first time in Canadian history that the federal regulator has proposed in an assessment to review not only the impact of pollution caused during construction and operations of a pipeline, but also the impact of pollution caused by the production and consumption of the oil to be shipped by an operator.
TransCanada sent the NEB a letter asking for a 30-day suspension on its review so that it could calculate the impact of that decision on its bottom line. It also indicated that it was going to stop recording some accounting expenses related to the project, retroactive to the date of the NEB’s recent announcement.
“Due to the significant changes to the regulatory process introduced by the NEB and the request for a 30-day suspension of the applications, TransCanada will cease recording Allowance for Funds Used During Construction (AFUDC) on the projects effective August 23, 2017, being the date of the NEB’s announcement altering the terms of their assessment,” the company said in its statement on Thursday.
The Energy East pipeline is the largest pipeline proposal in Canadian history, and if approved, would ship up to 1.1 million barrels of oil per day from producers in Alberta, Saskatchewan and North Dakota to refineries and marine ports in Quebec and New Brunswick. Eastern Mainline is a proposal to add 250 kilometres of new natural gas pipeline facilities and nine compression facilities to an existing natural gas system in southern Ontario.
But the company indicated on Thursday that it was hitting the brakes on Energy East due to the new guidelines proposed by the NEB.
“Should TransCanada decide not to proceed with the projects after a thorough review of the impact of the NEB’s amendments, the carrying value of its investment in the projects as well as its ability to recover development costs incurred to date would be negatively impacted,” the company said in its statement.