Political disaster for Trudeau
At least project on life support, rather than dead
The Federal Court of Appeal has spoken clearly for the southern resident killer whales of the Salish Sea, for the First Nations that live along the Pacific Coast and for the environmental activists who run the cities of Vancouver and Burnaby.
The court’s decision to quash the federal cabinet’s construction permits for the Trans Mountain pipeline will be hailed by professional objectors everywhere. Justice Eleanor Dawson, who wrote the decision, and her colleagues, justices Yves de Montigny and Judith Woods, can take comfort from the fact that their jurisdiction did not extend to considering the thousands of jobs across the country that have been imperilled by the decision — not to mention the deleterious impact it will have on national unity.
But the net effect is that Canada’s attempts to realize a world price for its resource bounty has again been thwarted, even under this ultra-progressive prime minister and a government that has modernized the National Energy Board, overhauled the environmental assessment process and introduced a “worldleading” marine safety system.
The decision slaps a large sign on Canada’s resource industry that reads Closed for Business. Potentially, it will cost thousands of jobs and billions in revenue.
Thursday’s court decision, and its delays and rising costs, are “extremely frustrating,” Canadian Association of Petroleum Producers president and CEO Tim McMillan said.
“We have a regulatory system in Canada that is so complex that not even the government or the regulator understands it,” McMillan said, noting the proponent, Kinder Morgan, did fulfil extensive consultations with First Nations. Former Saskatchewan premier Brad Wall said the duty to consult with Indigenous people is critical, but added, “the benchmark keeps changing.”
Wall said Justice Dawson is the same judge who ruled Ottawa did not fulfil its duty to consult during Enbridge Inc.’s Northern Gateway pipeline project application, which he said is all the more frustrating since both Ottawa and Kinder Morgan attempted to work the recommendations from that process into its consultations with First Nations. “What is enough and why does it keep changing?” Wall said. “There doesn’t seem to be an easy, quick fix to this at all.”
Similarly, Canadian Energy Pipelines Association president and CEO Chris Bloomer said both the federal government and Kinder Morgan went through an additional review and consultation process shortly after the Liberals came to power in Ottawa and “even that seems to have been deficient.” “They need to move as quickly as possible to find a solution,” Bloomer said. Across the oilpatch, analysts, investors and executives expressed their discouragement with the court ruling.
Canaccord Genuity analyst David Galison said he expected the government would continue consultation work on the project, which he expected would eventually get built, albeit later than previously expected.
“If I were a betting man, I’d say 2021 or after that,” Galison said.
By that time, Scotiabank commodity economist Rory Johnston said the amount of crude oil moving on railway cars would continue to grow without new export pipelines as the current export system is full and in apportionment. “You need two of the three (currently proposed pipelines) to clear our egress issues,” Johnston said, referring to the Trans Mountain expansion, Enbridge’s Line 3 project and TransCanada Corp.’s Keystone XL project. Without new pipelines in 2023, he said railways would be moving 700,000 bpd out of Canada — a massive increase over current out-bound rail shipments of 200,000 bpd, which itself is an all-time high.
WHAT IS ENOUGH AND WHY DOES IT KEEP CHANGING?