Telegraph Journal | OTTAWA • Energy East is all but dead, say industry experts.
A former TransCanada executive told the Telegraph-Journal in an interview that the pipeline is in jeopardy unless the federal government makes drastic moves in short order to give the company assurances that its $15.7-billion mega-project can clear new environmental hurdles.
With the countdown clock ticking, former TransCanada executive vice president Dennis McConaghy said nothing short of an assurance from Ottawa that an emissions test won’t kill the project is now needed.
“The Trudeau government would have to take the issue of emissions completely out of the hands of the National Energy Board and assume the responsibility of whether Energy East conforms or doesn’t conform to Canadian carbon policy,” McConaghy said. “That’s the minimum thing they would have to do for TransCanada to persevere here.
“Is incremental Canadian oilsands production consistent with Canadian carbon policy or not? They would almost have to indicate the answer they are going to get to for TransCanada to believe it and press on with the regulatory process.”
McConaghy, who worked for the company from 1998 to 2014 and was in charge of putting together the commercial agreements for the proposed Keystone XL pipeline and remains a shareholder with the company, said that he isn’t optimistic that will happen.
Others experts say Energy East’s importance has somewhat diminished with changing oil prices and the U.S. approval of TransCanada’s Keystone XL pipeline, alongside other pipelines that unlock Alberta oil and get it to new markets.
The possibility is also being raised that TransCanada may just decide to downsize its project and forgo its most controversial part: building new pipeline through Quebec and then into New Brunswick.
TransCanada announced earlier this month a 30-day suspension of its application to build Energy East, as it considers whether to abandon the project citing a tougher regulatory review process introduced by the country’s national energy regulator. Ted Morton, a senior fellow at the University of Calgary’s School of Public Policy and a former Alberta minister of energy and of finance, believes that “the project is at extreme risk”for that same reason.
The new environmental test “really opens up a Pandora’s box of policy scenarios and will be used by anti-pipeline activists to clog the process with numerous reports, consultants, expert witnesses – all of which TransCanada would have to reply to,” Morton said.“That means more time, more money and more uncertainty.”
In an open letter to Prime Minister Justin Trudeau, Premier Brian Gallant said that the proposed project is in jeopardy because the National Energy Board has said it would consider indirect greenhouse gas emissions caused by the project.
Gallant then called on the federal government to publicly commit to fund and undertake the greenhouse gas emissions analysis “to avoid added costs and constraints for the project proponent.”
The federal government has since said it’s offered to complete that review.
McConaghy believes Gallant’s letter doesn’t go far enough to explicitly call on Ottawa to remove the climate question from the assessment review.
“He should have said, ‘Of course you’re going to pay for it, and you’re going to take it out of the hands of the National Energy Board.’”
The federal Natural Resources Department has reiterated that its awaiting a response to the offer made to the National Energy Board and TransCanada to undertake the upstream and downstream assessments.
Premier’s office spokeswoman Tina Robichaud responded to Mc-Conaghy’s comments on Friday by saying in an email that “the federal government has been clear that the National Energy Board only makes recommendations.”
Robichaud added that the Trudeau cabinet would make the final decision on the project, noting that the Trans Mountain pipeline was approved “even when considering climate change.”
A new report by the Centre for International Governance Innovation released this week is questioning the need for new pipelines to carry oil to tidewater for export.
Jeff Rubin, a senior fellow at the centre and a former chief economist at CIBC, says in the report that the claim that additional pipeline capacity to tidewater will unlock higher prices is not corroborated by either past or current market conditions.
Rubin says overseas markets pay even lower prices for bitumen than in North America, so there is no economic case for additional pipeline capacity to tidewater or expanded oilsands production. He says international commitments to reduce global carbon emissions over the next three decades will also reduce the size of future oil markets.
“The National Energy Board should consider a rapidly decarbonizing global economy when assessing the need and commercial viability,” Rubin said.
There’s also the continued opposition the project faces.
Quebec Premier Philippe Couillard told the Telegraph-Journal earlier this month that concerns in his province remain.
Colleen Mitchell, president of the Atlantica Centre for Energy, suggested in an interview that TransCanada could consider amending its application to cut out plans to build the pipeline through Quebec and into New Brunswick.
The Energy East project was pitched to convert 3,000 kilometres of existing natural gas pipeline to crude oil. It was then to include the construction of 1,500 kilometres of new pipeline, mostly east of Ontario, which has proved more controversial.
“The original reason that this project was conceived was that the National Energy Board suggested to TransCanada that their natural gas pipeline was underutilized,” Mitchell said. “Originally, it was only going to go as far as Quebec to serve the two refineries there, but then it was expanded to support the New Brunswick refinery and an export market.
“They may go back to re-evaluating how to better utilize that gas pipeline that currently does exist.”
She added: “The original task was ‘let’s get a better return on an existing asset.’”
That option – to terminate the pipeline before it reaches New Brunswick – may have been something that Gallant subtly alluded to in the immediate aftermath of TransCanada’s decision to reconsider the project.
Gallant has said that the company is now considering continuing with the project or stopping it completely, as well as other options in between.
Robichaud has declined to clarify Gallant’s words, stating in an email that “it would be more appropriate” for the question to TransCanada.
The Calgary-based company declined an interview request.
T h e N at i o n a l E n e rg y B o a rd has also decided not to weigh i n u n t i l T r a n s Ca n a d a’ s 3 0 – d ay s u s p e n s i o n e n d s e a r l y next month.
ADAM HURAS LEGISLATURE BUREAU, as posted September 23 at https://www.telegraphjournal.com/telegraph-journal/story/100351688/energy-east?source=story-top