Pipe­lines: Go, go, no.

The McLeod River Post - - Front Page - Ian McInnes The McLeod River Post

It’s done. A three way in one. Prime Min­is­ter Justin Trudeau has ap­proved two pipe­lines and re­fused one. Not that ap­proval will stop the protests but at least there is more cer­tainty there was.

The En­bridge’s Line 3 pipe­line is a go as is Kin­der Mor­gan’s Trans Moun­tain. On the down side for the energy in­dus­try the long run­ning saga of En­bridge’s North­ern Gate­way pipe­line is likely over with the project get­ting the thumbs down.

Line 3 is a re­place­ment and ca­pac­ity build­ing pipe­line but still re­ported as En­bridge’s big­gest ven­ture to date. When the pipe­line is up and run­ning, there will be the po­ten­tial to ship 760,000 bar­rels a day into the sys­tem that moves three mil­lion bar­rels a day of oil to the U.S. The aging Line 3 pipe­line has had is­sues and re­ally this one was a no brainer to rub­ber stamp.

Kin­der Mor­gan’s Trans Moun­tain is still more con­tro­ver­sial and will likely still ex­pe­ri­ence strong re­sis­tance. Trans Moun­tain is an ex­pan­sion of an ex­ist­ing pipe­line, which is prob­a­bly why it got the green light. Kin­der Mor­gan’s $6.8 bil­lion project is set to triple the pipe­line’s ca­pac­ity to 890,000 bar­rels a day.

Both Line 3 and Trans Moun­tain should see a wel­come jobs boost for com­pa­nies and work­ers along and be­yond the con­struc­tion route.

To be hon­est, I am not all sur­prised at the con­tent of Trudeau’s an­nounce­ment. The one that did not get the go ahead, North­ern Gate­way, had a very con­tro­ver­sial route through The Great Bear Rain For­est to Kiti­mat and had struck le­gal hur­dles when a Fed­eral Court ruled that the Harper gov­ern­ment had not ad­e­quately con­sulted First Na­tions along the route. And, given Trudeau’s re­ported per­sonal dis­like of the North­ern Gate­way I think there was lit­tle chance of it com­ing to fruition.

When U.S. Pres­i­dent Elect Trump takes of­fice next year he may well give the nod for an­other pipe­line. Tran­sCanada’s Key­stone XL ex­pan­sion. The trou­ble is as I look at the milling mob of jour­nal­ists around OPEC rep­re­sen­ta­tives, whom I be­lieve could not col­lec­tively de­cide on what to have for break­fast let alone on a cut in oil pro­duc­tion, I can’t help but think that this has all come too late.

The world has changed and is still chang­ing. The oil price is low and I think set to re­main there as sup­ply out­strips de­mand. I won­der what the prospect of an­other one mil­lion bar­rels a day of pro­duc­tion com­ing out of Canada, not in­clud­ing Key­stone, will do to a very twitchy mar­ket. I’m won­der­ing if there won’t be quite a lot of mid­night oil be­ing burned by oil ex­ec­u­tives and in­vestors as they crunch the vi­a­bil­ity num­bers of these projects.

I won­der what the prospect of an­other one mil­lion bar­rels a day of pro­duc­tion com­ing out of Canada, not in­clud­ing Key­stone, will do to a very twitchy mar­ket.

Photo cour­tesy of Kin­der Mor­gan

Trans Moun­tain is an ex­pan­sion of an ex­ist­ing pipe­line, which is prob­a­bly why it got the green light. Kin­der Mor­gan’s $6.8 bil­lion project is set to triple the pipe­line’s ca­pac­ity to 890,000 bar­rels a day.

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