Page 4 - NorthAmOil Week 24

NorthAmOil COMMENTARY NorthAmOil
Canada approves Trans Mountain expansion, again
The delayed Trans Mountain expansion project has been approved again by the Canadian government, but the project still has obstacles to overcome, writes Anna Kachkova
WESTERN CANADA
WHAT:
The Trans Mountain expansion project has been re-approved by the Canadian government, which owns the scheme.
WHY:
The new approval comes was necessary after a court overturned the previous one.
WHAT NEXT:
Further attempts to
block the project can be expected as the developer attempts to secure nal approvals.
OTTAWA issued a new approval this week for the delayed C$7.4 billion (US$5.6 billion) Trans Mountain expansion project, but significant hurdles remain before the new pipeline can be built. e move comes a er the original approval was overturned by the Canadian Federal Court of Appeal last year. e judges cited inadequate consultation with indigenous groups that stood to be a ected by the project, as well as an incom- plete environmental review process, as reasons behind their decision at the time.
Back in play
e new approval comes as no surprise given how far the Canadian government has already gone to have the pipeline expansion built as the country struggles to send its abundant crude supplies to market. Last year, Ottawa bought the Trans Mountain pipeline – and its proposed expansion – from Kinder Morgan for C$4.5 bil- lion (US$3.4 billion) when it became clear that the pipeline operator would abandon the project amid lengthy delays and mounting costs. e company building the pipeline is now a Crown- owned entity, and there are plans for the project to be sold eventually. Indeed, the federal gov- ernment also said this week it would soon begin talks with indigenous groups that have expressed an interest in buying the project. Ottawa is open to selling up to 100% of its stake to First Nations, Métis and Inuit investors.
e court decision put the federal govern- ment in the position of being both the owner of the project and the body in charge of issuing a new approval. Opponents of the expansion have claimed this made Ottawa incapable of making an unbiased decision on the scheme, and the government has sought to reassure the public that steps have been taken to address the con- cerns involved.
In the wake of the original approval being overturned,thegovernmentanditsCrowncon- sultation teams re-started consultations with indigenous communities along the proposed expansion’s route. And while some First Nations remain opposed to the project, the majority have
accepted it and have signed impact bene t agree- ments with the developing company.
Earlier this year, the Canadian National Energy Board (NEB) had recommended that the pipeline expansion be re-approved, subject to 156 conditions. e Canadian cabinet has now accepted all of these conditions, as well as taking what o cials described as the “unprecedented step” of amending six of them to “make them stronger and better”. e amendments included strengthening marine and emergency response plans, with far more indigenous participation.
e cabinet has also proposed eight addi- tional “accommodation measures” to address speci c indigenous concerns. ese include the Salish Sea Initiative to curb the impact of increased tanker tra c on killer whales and the Quiet Vessel Initiative to reduce noise pollution.
In a further attempt to placate opponents of the project, Ottawa is proposing to direct all pro- ceeds the government earns from the pipeline – including from its eventual sale – to unspeci ed clean energy projects. Proceeds are anticipated to be C$500 million (US$379 million) per year in federal corporate tax revenue alone, once the project is placed into service.
Mixed response
e expansion project, which would twin a new pipeline with the existing one, would nearly tri- ple capacity on Trans Mountain from 300,000 barrels per day to 890,000 bpd. Canadian Prime Minister Justin Trudeau said this week that building expansion would help the country’s crude to reach markets beyond the US, at a time when US domestic oil production is booming, making it less reliant on imports.
“As we’ve seen over the past few years, any- thing can happen with our neighbours to the south,” Trudeau said. “Right now, we’re prisoners totheAmericanmarket.”
e re-approval of the pipeline was welcomed by the oil industry and some politicians. Alberta Premier Jason Kenney, whose United Conserv- ative Party (UCP) recently came to power in
Right now, we’re
prisoners to the
American market.
Justin Trudeau
Prime Minister Canada
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w w w . N E W S B A S E . c o m Week 24
20•June•2019