Ontario, Ottawa set to clash over Energy East pipeline.
TORONTO • Ontario’s energy regulator has cast doubts over the economic benefits of TransCanada’s Energy East crude oil pipeline proposal, setting the stage for a clash between the province and Ottawa at National Energy Board hearings on the project.
“What we have found is there is an imbalance between the economic and environmental risks of the project and the expected benefits for Ontarians,” Ontario Energy Board vice-president Peter Fraser said Thursday as he released its review requested by the province’s energy ministry on the $12-billion project Thursday.
TransCanada’s proposal to transport 1.1 million barrels of oil per day from Alberta to eastern refineries and an export terminal in New Brunswick partially through an existing pipeline is currently being reviewed by the NEB.
“I can assure you that Ontario plans to be an active intervener in the National Energy Board approval process and our participation will reflect the concerns of the Ontario public to the federal regulator,” Ontario Energy Minister Bob Chiarelli said in a statement.
The NEB has received more than 1,800 applications to participate in the hearings. No date for the hearings has been set.
The minister also said that new federal legislation has “drastically reduced” the scope of the hearings that can be undertaken by the NEB on Energy East. “This has directly resulted in a reduced voice for First Nations communities, minimal consideration of the implications for our natural environment, and inadequate participation from local communities.”
The report, conducted at a cost of $2.4 million and involving 15 months of consultation with communities, notes that Ontarians are concerned about the threat of an oil spill that could damage waterways, and recommends the company consider an alternative route along a CP rail line to avoid environmentally-sensitive areas.
TransCanada spokesman Tim Duboyce said the project’s proposed route minimizes new land disturbance by taking advantage of existing pipeline right-of-way and land owned by the company.
“Work to date with landowners and communities in the area indicates general acceptance of the applied-for route,” Duboyce said in a statement that noted the rail option goes through or near seven towns.
The province’s decision to use its energy regulator to weigh in on a project squarely under federal jurisdiction changes the game for companies looking to build pipelines, said Trevor McLeod, director for Natural Resources Policy at the CanadaWest Foundation.
“It is unorthodox, and a little bit bizarre, frankly,” McLeod said. “This is a big play by the Ontario government and it’s significant from a political context, as the province has no jurisdiction. Their role is political, and it will be interesting to see how it comes out.”
Bob Schulz, a professor at University of Calgary, said while politics may have been a motive for Ontario, the province may also be responding to genuine concerns from communities.
“But what concerns me, sitting in Calgary… is that people in Alberta are saying there are jobs for the whole country — everybody gets some benefits here. But the people in Ontario are only apparently only worried about themselves.”
The OEB report also suggests that Métis and First Nations have not been sufficiently consulted by TransCanada.
“This is alarming as yet another pipeline project risks ignoring aboriginal rights,” Adam Scott, a spokesperson for Environmental Defence said in a statement.
The energy regulator’s report also echoes concerns by natural-gas distributors such as GazMetro and Union Gas of rising natural gas prices if TransCanada converts a portion of the pipeline from natural gas to oil.
Ontarians would likely see natural gas prices rise by as much as 3.5 per cent annually over the next two decades if TransCanada does not address the capacity shortfalls on the natural-gas side, the report warned.
The OEB is demanding TransCanada update its gas demand, supply and price forecasts to reflect current and projected market conditions, so that “Ontario natural gas consumers should not subsidize the Energy East pipeline.”
Steve Baker, president of Union Gas, said the company is willing to support the pipeline but wants “assurance that Ontario natural gas customers will not bear the costs and risks related to the Energy East oil pipeline and we continue to be open to finding a satisfactory resolution of these issues with TransCanada.”
The OEB, which engaged Mowat Centre, a University of Toronto think-tank, to conduct its own economic analysis on the project, also disputes the magnitude of economic benefits and employment opportunities outlined in separate reports by three research institutes.
Mowat Centre’s analysis found studies by the Canadian Energy Research Institute, Deloitte and the Conference Board of Canada “overemphasized the economic benefits anticipated to flow to Ontario and did not include any of the risks,” the OEB said.
Duboyce said TransCanada disagrees with parts of the OEB report.
“The main conclusion that we would fundamentally disagree with is there are not significant economic benefits for Ontario in this project,” Duboyce said in an interview, noting that the province will get a $15-billion GD P boost and up to 4,200 full-time direct and spin-off jobs during the planning and construction phase of the project, apart from contract work for the province’s suppliers.