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TransCanada cancels plans for Energy East pipeline
Published Thursday, October 5, 2017 6:48AM MDT
Last Updated Friday, October 6, 2017 5:48AM MDT
There is shock from the energy sector on Thursday as Calgary-based TransCanada announced it would be dropping the idea of a pipeline from Alberta to the east coast.
The company put the Energy East project on hold in September, four years after it was first announced.
Officials said they made the move after the National Energy Board ruling said the board assessment will include a look at the upstream and downstream greenhouse gases that would be produced by the pipeline.
In a statement released on Thursday morning, TransCanada CEO Russ Girling said:
After careful review of changed circumstances, we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications. TransCanada will also notify Quebec's Ministère du Developpement durable, de l'Environnement, et Lutte contre les changements climatiques that it is withdrawing the Energy East project from the environmental review process.
Girling also thanked the support of many different organizations, the municipalities that passed resolutions in favour of the project and its customers. "Most of all, we thank Canadians across the country who contributed towards the development of these initiative," he wrote.
Premier Rachel Notley also released a statement expressing her feelings about the decision to cancel Energy East.
“We are deeply disappointed by the recent decision from TransCanada. We understand that it is driven by a broad range of factors that any responsible business must consider. Nonetheless, this is an unfortunate outcome for Canadians.
“Our government has supported Energy East since the project was proposed. We believe this nation-building project would have benefited all of Canada through new jobs, investment, energy security and the ability to displace oil being imported into Canada from overseas and the United States.
“The National Energy Board needs to send a clear message on what the future of project reviews look like in Canada. Our government understands that deliberation on upstream emissions and land-use integrity is important and must continue. Investors need confidence and we look forward to seeing that certainty in place soon.
“This decision highlights the importance of diversifying market access and the subsequent national priority that must be placed on the Trans Mountain expansion project.”
Calgary's mayor Naheed Nenshi said he, along with all Calgarians, was disappointed to hear the news of the cancellation of Energy East.
"This ought to have been a transformative project for the Canadian economy."
Nenshi said he has been critical of the approval process. "I've been critical of the decision to include upstream emissions because I think that's double or triple counting those emissions in a transportation mechanism like a pipeline. I think the federal government has erred there and I think it's incumbent on the Trudeau government to come clean on what they want the NEB to do so that we don't make this mistake in the future as well."
Jason Kenney, one of the candidates for leadership of Alberta's United Conservative Party called TransCanada's decision a 'devastating blow' to the province.
"It's an attack on our economy and on the energy sector. It's a devastating blow to Canada's economic future. Energy East represented to us an opportunity to make Canada energy independent. Instead this decision, because of uncertainty created by the Trudeau government and the National Energy Board, this decision to cancel Energy East means that the Eastern and much of Central Canada will be importing conflict oil through tankers from dictatorships, some of which fund terrorism, rather than buying Canadian oil produced in Alberta and Saskatchewan."
Kenney said that he wants to see changes with the equalization payments sent to Quebec from Alberta.
"We've had enough of the federal government and the rest of the federation that will endlessly take tens of billions of dollars of our wealth through equalization but will not even give Alberta and the Western energy economy a chance to sell our oil even within Canada let alone overseas."
He says that now is the time to create consequences for the losses of such pipeline projects, such as a referendum by Albertans to demand renegotiation of the equalization formula.
"It's time that Alberta stood up for our interests in the federation in the same way that Quebec leadership has, in the same way Peter Lougheed did in fighting the national energy policy 35 years ago."
The Canadian Energy Pipeline Association says it is 'extremely disappointed with the decision'.
The organization released a statement on Thursday morning, saying:
TransCanada was forced to make the difficult decision to abandon its project, following years of hard work and millions of dollars in investment. The loss of this major project means the loss of thousands of jobs and billions of dollars for Canada, and will significantly impact our country’s ability to access markets for our oil and gas.
CEPA also said that pipelines are the only viable way to get large amounts of oil and gas to market and the country will be missing out on a big opportunity with the loss of Energy East.
Others in the oil industry are lamenting the loss of Energy East. Suncor, through its spokesperson Sneh Seetal, said that it is 'disappointed'.
"We supported the Energy East Pipeline, which would have offered supply flexibility for our Montreal refinery. We have a position in all other pipeline projects and no single pipeline decision will constrict our ability to grow and develop.”
Cenovus, a committed shipper on Energy East, is disappointed that the project will no longer be proceeding.
Brett Harris, external communications manager, said that it would have created thousands of jobs and contributed billions to the Canadian economy.
"The cancellation of Energy East underscores the importance of completing approved pipeline projects such as the Trans Mountain Expansion and Line 3 Replacement projects so that Canada can expand its market access and receive full value for its oil exports."
Meanwhile, Montreal Mayor Denis Coderre celebrated the Energy East announcement on Thursday, suggesting in a series of tweets that citizen groups and local politicians from the Montreal-area played a key role in putting a stop to the project.
Coderre and numerous other elected officials had argued the environmental risks associated with it far outweighed the economic benefits.
"The abandonment of the Energy East project is a major victory for the municipal world," Coderre wrote.
Coderre also thanked local Indigenous groups for their leadership on the pipeline file.
Tara Weber, with BNN's Western Canada bureau, says much of Alberta is disappointed with end of the Energy East project.
"The province is disappointed, but not surprised. Energy East has faced substantial hurdles and we got a fairly strong warning that it was all over in late August when TransCanada put the project on hold."
She says, as Girling did in his statement, much has changed in the situation. "The price of oil is still struggling, global supply and demand of oil is very different and then on top of it all, the project has faced a number of delays and additional burdens in the regulatory process."
Weber adds that some may think that with the approval of Kinder Morgan's Trans Mountain, Enbridge's Line 3 and Keystone, the Energy East project wouldn't be needed.
"None of those are a given and at this point, Alberta resources remain landlocked with the U.S. as the main customer for our crude."
The $15B project would have carried crude oil from Alberta to refineries in the Maritimes.
(With files from the Canadian Press)