Regulator sets out plan for Trans Mountain NP3
Disparity hits Canadian producers hard
OTTAWA • Canadian oil companies continue to face a near-record discount for their products, tingeing the political climate around the Trans Mountain pipeline just as the national energy regulator laid out plans to push ahead with the project.
The gap between Canadian and U.S. oil prices last week widened to as much as US$52 per barrel, with Canadian producers receiving just one third of the value for their crude compared to American producers. That price gap is the largest in more than five years, pummelling Canadian oil producers and shrinking government tax revenues.
Slumping Canadian oil prices come as the National Energy Board publicized its hearings schedule for the Trans Mountain pipeline on Friday.
The regulator released a list of 99 parties that will testify in public hearings for Trans Mountain, ranging from oil company representatives to First Nations chiefs to environmental activists. The hearings will be condensed, focusing exclusively on the environmental impacts of increased tanker traffic offshore B.C. and putting the regulator under a tight Feb. 22 deadline to release its final report.
“They’ll have to be very brisk about it for sure, but the topics are very specific,” said Rob Steedman, chief environment officer at the NEB.
The 99 parties must file written statements and evidence to the board by Oct. 31. That will be followed by oral hearings in late November or early December for First Nations to voice environmental concerns. A second, optional oral hearing will be open to all parties in January.
The regulator said in its report that the hearings “will be carried out as expeditiously as the circumstances and considerations of fairness permit, but, in any case, within the time limit imposed by the GIC (Governor in Council).”
The consultations are part of a two-pronged approach by Ottawa to resume construction of the Trans Mountain pipeline after a Federal Court of Appeal ruling halt- ed the project in August.
Natural Resources Minister Amarjeet Sohi gave the regulator 22 weeks to gather evidence around the marine shipping impacts of the project, which it will then submit back to Ottawa. The government, for its part, will carry out its own separate consultations with various First Nations communities affected by the project.
The consultations kick off amid growing discontent in Canada’s oil and gas sector over a lack of available pipeline capacity. The U.S. is essentially the only buyer of Canadian oil barrels, which has for many years forced Canadian companies to accept a steep discount for their product. A report by the Fraser Institute estimates Canadian oil producers lost around $20.7 billion in forgone revenues between 2013 and 2017, or about one per cent of Canadian GDP, due to a lack of pipeline access.
The head of the Canadian Association of Petroleum Producers called the discount a “crisis” in an interview with the Calgary Herald last week, as producers miss out on a rise in global oil prices.
When markets closed this weekend, the price for Western Canadian Select, a benchmark oil price, was selling for US$24 per barrel. U.S. benchmark West Texas Intermediate sold for US$71.
Imperial Oil, Husky Energy and Cenovus Energy are among the oil companies that will take part in the NEB hearings process.
The National Energy Board had previously studied the impacts of marine shipping in its May 2016 report, which recommended the approval of Trans Mountain. However, the regulator did not include those findings in its review of the project as defined by the Canadian Environmental Assessment Act, 2012 — a decision the Federal Court roundly rejected in its ruling.
THEY’LL HAVE TO BE VERY BRISK ABOUT IT FOR SURE, BUT THE TOPICS ARE VERY SPECIFIC.