Energy East Pipeline Outcome
IGNITE FREDERICTON COLUMN – October 2017
Extreme Disappointment with the Energy East Pipeline Outcome
This month, I am going to use this opportunity to convey our extreme disappointment with the outcome of the Energy East Pipeline project -- a 4,500 km pipeline that would have transported 1.1 million barrels of oil per day from Western Canada to refineries in Eastern Canada. In a province with a $14 billion deficit - New Brunswick could not afford to lose the prospect of 3,700 high paying jobs with a $6.5 billion GDP provincial impact!
On a national scale, Canada has lost the potential of 14,000 jobs and $55 billion in national economic impact = $10 billion in federal and provincial tax revenue = ability to lower corporate and personal taxes, which pay for public services, facilities and infrastructure. This is a massive blow on top of the federal Finance Minister Morneau’s tax policy proposals. At least with Energy East Pipeline, the business community stood a chance to benefit from supply chain and procurement opportunities to offset rising taxes.
The outcome of this project will be a major deterrent to attract future investment. It will have a ripple effect around the globe for decades to come. TransCanada Corporation invested $1 billion nationally ($25 million in New Brunswick). It comes as no surprise that they reached threshold in terms of cutting its losses and not investing another dollar in the unpredictable regulatory processes.
We urge and hope that policy makers and in particular regulators - namely the National Energy Board (NEB) is held accountable for the manner in which this project was handled.
We understand and commend the federal government on its priority focus for green energy and sustainability; but are completely perplexed at the lack of consolidated political will to balance the conversation with FACTS:
- Pipelines are a 4.5 times safer means to transport oil than rail according to a Transportation Safety Board report. The pipeline would have reduced the risk of future disasters like Lac Megantic.
- Displacement of 1,600 rail cars moving oil across Canada daily. With Canada’s oil sands projected to grow by 850,000 barrels by 2021 according to the Canadian Association of Petroleum Producers, the country needs a safer, less carbon intensive means to transport increased production.
- Energy independence replacing 759,000 barrels of foreign oil imported into Canada daily. Foreign oil that comes from countries with lower environmental standards and controls. Even as we shift to a lower carbon economy, according to the International Energy Agency, by 2040, global energy demand will increase by 31% increasing the demand for oil by 12%. The pipeline would have connected continental oil to key refineries like Saint John and world markets.
With 65 years of experience and a track record of safely, transporting oil across its North American 4,300 kilometres of pipeline, TransCanada has demonstrated responsible, reliable development and transmission of oil and gas products. They complied with regulatory requirements hosting public consultations and responding to thousands of inquiries. According to TransCanada’s regulatory filing overview, the detailed application contained 38,885 pages in 116 binders, outlining information on “jobs, economic benefits, environmental planning measures, design / construction methods for safe operations, findings from a third-party Environmental and Socio-Economic Assessment, and details on discussions with over 7,000 individuals, 5,800 landowners and 166 Indigenous communities and organizations across six provinces.” In my humble opinion, it sounds like due diligence was exercised.
I would also like to address the suggestion that this outcome was market-condition driven. This is only accurate if one considers the regulatory environment (and its associated costs and time) as part of the market conditions. While the current price of oil is obviously sub-optimal for investment, it has been around the $50/barrel mark for more than three years. TransCanada was still pushing ahead with its NEB application at this price point (October 2014). However, the new conditions regarding up and downstream emissions added to the process this year pushed the costs and time considerations past the point of viability. In short, Energy East was clearly still worth TransCanada’s investment - which already approaches $1 billion - at the current price prior to the regulatory changes. Something changed and it wasn’t market conditions.
Let’s learn from this. To our federal and provincial governments - priority focus is required to create a harmonized provincial/federal regulatory process, and one which is reasonable and predictable with clear timelines and requirements. It will be a long time before we see an economic engine project like Energy East, but next time - we urge the public to take a vocal stance with your elected federal and provincial officials (write, tweet, lobby) to express support. This is a massive blow to New Brunswick and Canada for generations to come!
Laurie Guthrie, EcD, BIS
Economic Development & Marketing Specialist
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