Trudeau okays Trans Mountain crude oil pipeline expansion

Bloomberg

Prime Minister Justin Trud-eau’s government decided to proceed with the construction of a major crude oil pipeline, saying the project has met strict requirements on safety and consultation with Canadian indigenous groups.
Trudeau’s cabinet approved the expansion of Trans Mountain, a state-owned pipeline that runs from Alberta to Vancouver. The project will add 590,000 barrels of daily shipping capacity, a 15 percent boost to Western Canada’s current 4 million. Trudeau said the corporation responsible for building the pipeline hopes to have shovels in the ground in the current construction season.
“Take a look at my record, and you’ll see that I’ve talked about the importance of developing our resources for a long time,” Trudeau said at a press conference in Ottawa. But “in order to get the job done, Canada needed to have its act together on the environment.”
For years, Trans Mountain has been beset by legal challenges from environmentalists, indigenous groups and the British Columbia government. To keep it alive, Canada’s Liberal Party-led government decided last year to acquire the pipeline from Kinder Morgan Inc. It was a risky move for Trudeau, one that could potentially alienate pro-environment voters, a key block for the Liberals as they head into an October election.
But Trans Mountain currently represents the only made-in-Canada solution for an industry hamstrung by a lack of shipping capacity, which has weighed on local heavy crude prices and prevented production increases. Two other pipelines are working their way through the US regulatory process.
The decision “will help boost confidence in the Western Canadian oil and gas sector,” Kevin Birn, IHS Markit’s director of North American crude oil markets, said by phone. But “investors are going to be skittish in the fact that they want to see this deal go into the ground.”
Trudeau also needs to be wary of existing anger in energy-producing regions like Alberta, where his tougher environmental stance has been met with open revolt. Industry groups and regional lawmakers warn the Liberals’ proposed new rules on project assessments will choke future investment in the energy industry.
The National Energy Board has set 156 mandatory measures for the project to move ahead, along with 16 recommendations to lessen the impact of added marine shipping. The government will also take additional steps to respond to the needs of indigenous communities, and will begin the process of making indigenous groups shareholders in the pipeline.
Delbert Wapass, executive chair of Project Reconciliation, an indigenous group seeking to buy a majority stake in Trans Mountain, said his organisation will be reaching out to the government “very quick” and thinks “it’s very realistic” that a majority stake in the pipeline could be secured this year. Other indigenous groups including the Alberta-based Iron Coalition are also seeking to purchase stakes in the pipeline.
“We are going to fine-tune our plan here and reach out to other First Nations and continue engaging and moving forward in a very responsible manner,” said Wapass, former chief of Saskatchewan-based Thunderchild First Nation.

HURDLES REMAIN
Even with the approval and support from several First Nations, regulatory and political hurdles remain. Fresh lawsuits arising from the decision would place any timelines for project completion in doubt. The government of British Columbia is seeking a separate ruling from the Supreme Court on whether it can restrict oil shipments through the province.
“Although I regret the federal government’s decision, it’s within their authority to make that decision,” British Columbia Premier John Horgan said. “It’s up to us now to make sure, as this project proceeds, we have no impact on our marine life, on our natural environment.”
The project may also face protests that could disrupt construction. Tzeporah Berman, international program director at Stand.Earth, blasted the decision on both economic and environmental grounds, arguing the expansion will likely only send more Canadian oil to US refineries, rather than developing new markets in Asia.