PipelinestoU.S. look­ing­more­likely

Lethbridge Herald - - BUSINESS & AG NEWS - Ian Bickis THE CANA­DIAN PRESS — CAL­GARY

Af­ter nearly a decade since the last ma­jor oil pipe­line was built, and with ex­ist­ing ones brim­ming with crude, Canada’s en­ergy in­dus­try is won­der­ing when and if any new life­lines to for­eign mar­kets will go into the ground.

Those con­cerns were height­ened last week af­ter Kinder Mor­gan ef­fec­tively put its Trans Moun­tain ex­pan­sion pro­ject on hold un­til it can be as­sured Bri­tish Columbia won’t con­tinue trying to block the pipe­line.

A cru­cial meet­ing this week­end be­tween Prime Min­is­ter Justin Trudeau and the pre­miers of Al­berta and B.C. could sway the fate of the pipe­line, but all sides have said they’re stick­ing with their po­si­tions as the meet­ing ap­proached.

But as Trans Moun­tain’s fate was put in jeop­ardy af­ter the B.C. NDP’s elec­tion win, pipe­lines head­ing south to the U.S. have been propped up by the elec­tion of U.S. Pres­i­dent Don­ald Trump, who has tied him­self closely to the oil and gas in­dus­try.

Both Tran­sCanada’s Keystone XL — which will run from Hardisty, Alta., to Steele City, Ne­braska — and En­bridge’s Line 3 — which links Hardisty to Su­pe­rior, Wis­con­sin — should avoid the po­lit­i­cal pit­falls that have sunk En­ergy East and North­ern Gate­way and have put Trans Moun­tain in doubt, said Zachary Rogers, a re­search an­a­lyst at Wood Macken­zie.

“While there cer­tainly is risk, and noth­ing is 100 per cent cer­tain ... Line 3 and Keystone XL are likely to pro­ceed,” said Rogers in an in­ter­view.

En­ergy East, which would have de­liv­ered bi­tu­men from the oil­patch to East­ern Canada, was can­celled by Tran­sCanada Corp. in Oc­to­ber 2017 af­ter strong op­po­si­tion from municipalities and Indige­nous groups. North­ern Gate­way would have sent bi­tu­men from Bruder­heim, Alta. to Kiti­mat, B.C., for trans­porta­tion to Asian mar­kets. It too faced strong op­po­si­tion, and was re­jected by Trudeau in 2016.

Trump’s is­su­ing of a pres­i­den­tial per­mit for Keystone XL re­vived a pipe­line that had be­come a gal­va­niz­ing sym­bol in the bat­tle against cli­mate change and the car­bon foot­print of oil­sands pro­duc­tion that ul­ti­mately led then-Pres­i­dent Barack Obama to deem the pro­ject as not in Amer­ica’s best in­ter­est in 2015.

But with state ap­proval in Ne­braska fol­low­ing Trump’s per­mis­sion, Rogers now ranks the 830,000 bar­rel a day pipe­line as the most likely to go for­ward.

“There are some dif­fi­cul­ties ob­vi­ously, on the reg­u­la­tory front, but Keystone XL has largely cleared its last ma­jor reg­u­la­tory hur­dle at the end of last year,” he said.

Those dif­fi­cul­ties in­clude landowner per­mis­sions and lo­cal per­mit­ting, as well as court chal­lenges in Ne­braska from some of the many groups still op­posed to it, but over­all the reg­u­la­tors in­volved look to be on board, said Rogers.

“The Supreme Court of Ne­braska and the State Leg­is­la­ture and the Ne­braska Pub­lic Ser­vice Com­mis­sion have all re­peat­edly been in sup­port of the pro­ject. So we view the reg­u­la­tory risk on Keystone XL as rel­a­tively low com­pared to Trans Moun­tain.”

Mean­while, En­bridge’s Line 3 pro­ject, which aims to re­place its ag­ing pipe with a more ro­bust new one, has run into its own op­po­si­tion as en­vi­ron­men­tal and Indige­nous groups look to stop any pipe­lines that would al­low or en­cour­age more oil­sands growth.

Re­plac­ing Line 3 would al­low the com­pany to re­store the orig­i­nal 760,000 bar­rel a day ca­pac­ity, adding about 375,000 bar­rels of ship­ping ca­pac­ity be­cause of current pres­sure re­stric­tions on the line.

The reg­u­la­tory process for the line has taken longer than ex­pected as reg­u­la­tors in Min­nesota take a closer look at the pro­ject’s ne­ces­sity and safety de­tails, but the com­pany should have a fi­nal de­ci­sion from the state in June.

The progress on pipe­lines to the U.S. is en­cour­ag­ing, but pro­duc­ers need ac­cess to new mar­kets and pre­dictabil­ity in build­ing projects af­ter sev­eral failed at­tempts, said Cana­dian En­ergy Pipe­line As­so­ci­a­tion pres­i­dent Chris Bloomer.

“We re­ally are at a cross­roads as to how we go for­ward as a coun­try ... What we’re look­ing for from the fed­eral gov­ern­ment is lead­er­ship, con­crete di­rec­tion as to where this is go­ing.”

He said the U.S. ad­min­is­tra­tion has a clear vi­sion on pipe­lines and the en­ergy sec­tor, and that the se­ries of failed pipe­lines has hurt investment in Canada.

“We’ve had the investment flee­ing the en­ergy sec­tor in Canada for quite a while, given the un­cer­tainty and the reg­u­la­tory process,” said Bloomer.

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