Trudeau likely to approve one project
Justin Trudeau plans to approve at least one new oil pipeline project in his first term, with Kinder Morgan’s Trans Mountain expansion the most likely candidate, say people familiar with his plans.
The prime minister is seeking to strengthen environmental standards and build confidence in new regulatory rules while also stoking growth in Canada’s sluggish economy by backing a pipeline. Trudeau, therefore, plans to neither approve all the projects under consideration nor reject them all, according to the people who spoke on condition of anonymity.
Trudeau faces a series of highprofile energy decisions over the next three months, including a final cabinet ruling on Kinder Morgan’s Trans Mountain proposal and a legal appeal related to Enbridge Inc.’s Northern Gateway pipeline. Trudeau will also decide on Petronas’ Pacific NorthWest natural gas project, while TransCanada Corp.’s Energy East pipeline is due for a decision in about two years.
Kinder’s proposal is seen as likeliest to win approval despite opposition among key figures in vote-rich Vancouver. The project, linking Alberta and the Pacific Coast, already has conditional regulatory sign-off from the National Energy Board.
Trudeau skirted a question Tuesday about the belief his government would like to approve at least one pipeline to tidewater before the next federal election in 2019.
“The fact is we need to get our resources to market in safe and reliable ways,” Trudeau said at a news conference with visiting International Monetary Fund head Christine Lagarde.
“The way that happens is up to the proponents of the projects, up to the regulators and the boards examining them. It’s up to the communities that make decisions. It’s up to a process that, quite rightly, shouldn’t be about politics and should be about what’s right for Canadians, what’s right for our future.”
Red tape and environmental opposition bogged down major Canadian energy proposals during the nine-year reign of the previous Conservative administration.
Northern Gateway, Trans Mountain and Energy East have all been delayed in Canada, while the Keystone XL pipeline to the Gulf Coast was rejected by the U.S. government.
Trudeau’s government believes it must demonstrate to investors the country is capable of reaching consensus to build major energy projects, while not alienating environmentalists who make up a key constituency for the Liberal Party.
Trudeau has signalled he doesn’t support Northern Gateway on its current route through British Columbia, and any major new routing could force the company to restart its approval process. A spokeswoman for National Energy Board, however, said that’s not necessarily the case. If a route-change request is made “we will take a look and develop a process for reviewing the application,” spokeswoman Sarah Kiley said by email.
Former Alberta premier Jim Prentice warned Kinder Morgan’s project alone won’t be enough.
“We need pipelines, we need pipelines to the West Coast, and most advantageous for Canada of course are pipelines into the AsiaPacific basin and Trans Mountain would certainly be helpful,” Prentice, a Calgary-based adviser in the energy group at Warburg Pincus, said Tuesday in New York.
“But we also need to bear in mind that Trans Mountain won’t solve the problem” because tankers that can navigate the region are too small to service Asia, he said.
Canada needs an energy port that can ship up to two million barrels per day to Asia, Prentice said, and Canadians should be concerned that investors are cooling to the country’s oilpatch.
“The concern that really should alarm us as Canadians is low-cost capital is exiting the Canadian basin,” he said.
Trudeau has spoken favourably about the Kinder Morgan pipeline in the past and his government is said to consider it a net-positive for its so-called “progressive” political movement nationally.
Finance Minister Bill Morneau and Trade Minister Chrystia Freeland are the loudest voices around the table in favour of energy sector development, the people said. Trudeau’s cabinet has until December to make a decision on Trans Mountain.
Kinder Morgan’s $6.8-billion, 1,150-kilometre Trans Mountain expansion would carry Alberta crude to Vancouver, tripling capacity of an existing line to 890,000 barrels per day.