The slippery politics of pipelines
Approvals tricky over many jurisdictions
The politics of pipelines used to be a lot simpler. It used to be Conservative prime minister Stephen Harper thundering to U. S. lawmakers that he won’t take no for an answer on the Keystone XL pipeline.
At the time, environmentalists and left- leaning politicians were appropriately aghast.
Now, an NDP Alberta premier is touring the country — or at least a few select cities — touting the benefits of pipelines that take Albertan oil to market. Prime Minister Justin Trudeau has borrowed Rachel Notley’s logic, framing his environmental policies as a way to smooth over pipeline approvals and win “social licence” for the emissions-intense bitumen shipped from the oilsands.
As Canadians start to feel the pinch from newlyintroduced carbon taxes, the pipelines — and the jobs they bring — take on an increased importance.
Here’s where the major pipeline projects stand as we push into the second half of both Notley and Trudeau’s first term in power.
KEYSTONE XL
If you didn’ t see any touchdown celebrations after Nebraska approved the $8 billion Keystone XL pipeline this week, that’s because it came with some major caveats.
It may also be because everyone involved in the Keystone pipeline is pretty jaded after former U.S. President Barack Obama delayed the project in 2011, before finally killing it in 2015. It was revitalized this year by Donald Trump, but there’s still major hurdles to clear.
The approval from Nebraska requires a new route, which will cause all kinds of construction and legal complications in that state and possibly a whole new review in neighbouring South Dakota.
And in any event, some people doubt the economic viability of the pipeline, which needs oil prices to be fairly high to make a profit.
That’s why most Canadian politicians have been looking elsewhere for a pipeline to hang their political hats on.
TRANS MOUNTAIN
The Trans Mountain pipeline is one of the few bright lights on the pipeline front. Not only has it cleared regulatory hurdles, but it also takes Alberta oil to the west coast, where it will get a better price.
Kinder Morgan has already started site preparations and terminal con- struction and expects to begin pipeline construction in February.
That’s not to say its supporters aren’t worried. Notley spent this week campaigning across Canada in support of the pipeline. Proponents look at the Dakota Access Pipeline protests in the United States and wonder if something similar could happen in Canada.
As Edmonton Journal columnist Graham Thomson wrote on Thursday, “Notley needs construction of the project to begin in 2018 to have a fighting chance in the 2019 provincial election.”
Trudeau’s problem isn’t existential like Notley’s, but not getting Trans Mountain built, after vetoing the Northern Gateway pipeline and seeing TransCanada kill Energy East will still come with a political price.
LINE 3 REPLACEMENT
Amid the frenzied celebrations from politicians in Alberta for the Trans Mountain approval, Enbridge’s Line 3 expansion pipeline got a little shortchanged on fanfare.
Although Trans Mountain is more likely to get name- checked, the Alberta NDP constantly references the “two pipeline approvals” won on their watch, with the second one being Line 3.
The pipeline was approved last year — at the same time as Trans Mountain — and is a $8.2 billion project, with $ 5.3 billion worth of it happening in Canada. The pipeline runs from Hardisty, Alta., to Wisconsin.
The plan is to replace the existing Line 3 with a new pipeline, improving safety and boosting capacity, which perhaps explains why it flew under the radar.
Despite that, Enbridge is still bickering with Minnesota about final approval of the deal. A ruling in December from that state will decide if the project goes ahead as planned.
ENERGY EAST AND NORTHERN GATEWAY
These two pipelines are dead, although recriminations over why are still flying.
Northern Gateway ran into trouble, in part, because the courts believed the government hadn’t adequately consulted with First Nations about the project.
Alongside the decision to approve Line 3 and Trans Mountain, Trudeau also pulled the plug on Northern Gateway, saying it didn’t serve the best interests of the affected communities.
Energy East was killed by TransCanada itself, and some blamed the burdensome regulatory environment for the company’s decision. Others blamed the economics of the pipeline, which required oil to be at a price that may not be realistic anymore.
That is a common thread running through all the new pipeline projects in Canada.
With oil prices stagnating, competing shale oil showing no signs of slowing down and carbon pricing soon to be a reality across the country, the cost benefit analysis of every pipeline is changing for the worse.