CALGARY C Many within the oilpatch are quietly seething over Ottawa’s announcement that decisions on the Energy East and Trans Mountain pipelines will be delayed because it studies the projects’ contributions to greenhouse gas emissions.
Ottawa to consider additional time weighing Energy East, Trans Mountain pipeline approvals
The two companies proposing the pipelines, TransCanada Corp. and Kinder Morgan Inc., were diplomatic in their responses towards the new approval rules announced Wednesday, saying they’d “concerns” concerning the delays. But industry executives and politicians in Alberta, as well as financial analysts who follow the sector, happen to be more vocal about the negative consequences.
The transitional rules for pipeline applications, which will be essentially until Prime Minister Justin Trudeau’s government develops permanent regulations for natural resource projects, will also be expected to include a climate assessment.
“I would describe this announcement as not surprising but deeply disappointing, and a discouraging signal to investors at a time when Canada is facing a flat-lined economy,” Explorers and Producers Association of Canada president Gary Leach said in an email.
It is definitely a intensive, arduous, and expensive process involving an astounding number of time, a wide range of expertise and years of consultations.
“From our perspective, it was more a case of political grandstanding and a not so subtle proceed to wrestle control of natural resources from the province,” AltaCorp Capital analyst Dirk Lever said inside a strongly worded note to clients on Thursday. “Where is the next Peter Lougheed?”
The reference is to Lougheed, the late former premier of Alberta who sparred with former prime minister Pierre Elliot Trudeau over the federal government’s National Energy Program.
“Anyone associated with the pipeline application will explain it is an extremely intensive, arduous, and expensive process involving an astounding quantity of time, an array of expertise and years of consultations,” Lever wrote.
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Like Lever, many the oilpatch took problem with the view expressed by Natural Resources Minister Jim Carr and Environment Minister Catherine McKenna in their Wednesday press conference, when they said the federal government needed to “restore the general public rely upon the way Canada reviews and assesses major resources projects.”
The ministers announced the department of environment and global warming would study the greenhouse gas emissions of oil and gas projects that would feed into the Trans Mountain and Energy East pipelines as part of their regulatory assessment of these pipelines. A climate change assessment would also apply to projects upstream from liquefied gas facilities.
Wildrose Party leader Brian Jean blasted the announcement as “more red tape and more delays” and said in a statement, “the National Energy Board pipeline review process is among the most thorough on the planet, and i am discouraged that today’s announcement will further delay these common sense decisions on projects which will benefit Canada’s economy.”
FirstEnergy Capital Corp. analyst Steven Paget noted inside a report Thursday the federal government retained the ability to make a ultimate decision on pipeline projects, and worried about the procedure becoming an increasingly political decision by Ottawa.
“We would argue the actual difficulty is that the process might simply be getting good politicized. In the event that happens, decisions on these projects won’t be produced by merit, but through the political inclination from the government during the day,” he said.
Some energy experts praised Ottawa’s new plan.
University of Alberta energy economist Andrew Leach says studies show pipelines are likely to increase oilsands production by a small amount.
That will even increase greenhouse gas emissions.
He and Mark Jaccard at Simon Fraser University say the big issue is going to be just how much is simply too much.
Jaccard says those decisions are only able to be made within the overall context of Canada’s greenhouse gas targets and can need to include provinces and industries across Canada.
With files in the Canadian Press
gmorgan@nationalpost.com
Twitter.com/geoffreymorgan
