CACOUNA SHELVED
TransCanada axes project
TransCanada Corp.’ s decision not to build a crude oil export terminal near beluga whale habitat on the St. Lawrence River will delay its $ 12- billion Energy East pipeline project by two years and could run up costs.
TransCanada announced Thursday it was scrapping plans for a marine terminal at Cacouna, Que., and looking for an alternative site in the province that wouldn’t affect dwindling beluga whale populations. As a result, the company doesn’t expect Energy East to ship crude oil until 2020, two years later than expected.
“This decision is the result of the recommended change in status of the beluga whales to endangered and ongoing discussions we have had with communities and key stakeholders,” TransCanada president and CEO Russ Girling said in a release.
TransCanada spokesman Tim Duboyce said the company is not forecasting an increase in the project cost “as a result of the announcement that we are making today.” Some analysts were not so sure. “Note that cost for the 1.1 million ( barrel per day) Energy East project remains unchanged at $ 12 billion, although it is possible the cost and/ or schedule could change when the amended application is filed with the NEB,” CIBC World Markets analyst Paul Lechem said in a research note following TransCanada’s announcement.
In November, TransCanada said the anticipated cost of its Keystone XL pipeline to the U. S. Gulf Coast had jumped to $ 8 billion from $ 5.4 billion as a result of six years of regulatory delays for that project.
TransCanada filed its 30,000page Energy East application to the National Energy Board ( NEB) in October, but will now need to submit an amendment to the federal regulator. The company has said it will submit its amendment in the fourth quarter of this year.
NEB spokesperson Katherine Murphy said the regulator will continue to review the Energy East application, but would not issue a notice that the application was complete — which would trigger the NEB’s legislated 15-month-maximum hearing and review period — until after the amendment was filed and reviewed.
Cacouna was one of two export terminals planned for the 4,600- kilometre pipeline route between Hardisty, Alta. and Saint John, N. B., and would have handled an average of 175 Suezmax and Afromax oil tankers every year. A Suezmax tanker can hold about one million barrels of oil, meaning the Cacouna facility could potentially have exported an average of 450,000 barrels of oil per day.
Asked whether TransCanada wanted to find a site that could accommodate at least that much export capacity, Duboyce said, “We’re taking this one step at a time.”
“The fact that there are two marine terminals as part of the project though, is also a sign of what our shippers want. They want those options,” Duboyce said.
BMO Capital Markets analyst Carl Kirst said in a research note that there was some upside to the cancellation of Cacouna. “On the positive side, we think being responsive/ sensitive to the Quebec environmental challenge will help generate a smoother regulatory process and this in turn should increase the odds of the project,” Kirst said.