Oilpatch pushes for construction to start immediately on green-lit Trans Mountain pipeline

The federal cabinet approved the controversial pipeline expansion on Tuesday, but challenges remain before the project, now owned by the Crown, moves forward.

Federal cabinet approved controversial project Tuesday, but hurdles remain

A truck loaded with pipe being unloaded at the Trans Mountain yard in Edson, Alta. (Terry Reith/CBC)

Alberta's energy sector is cautiously celebrating the federal government's approval of the Trans Mountain pipeline expansion that will carry oil from Alberta to the coast of B.C.

"Today is the culmination of a lengthy and thorough review that considered the thousands of hours of environmental and technical studies, scientific evidence and meaningful engagement that were part of the comprehensive assessment," Trans Mountain president Ian Anderson said in an emailed release following the decision.

The company said that in the 10 months since progress was halted on the $7.4-billion project after a Federal Court of Appeal decision, it's continued to advance planning work and has remained confident the pipeline expansion meets the National Energy Board's commitments. 

"It's a big deal, we've been waiting four years for new pipeline capacity so that we can access markets," said Richard Masson, an executive fellow with the School of Public Policy at the University of Calgary and the former head of the Alberta Petroleum Marketing Commission. 

"We've had lots of projects start up and now we don't have enough pipelines to get our product to market. And so we're actually curtailing production. So getting this pipeline approved is a step towards getting our economy healthy again."

The Canadian Energy Pipeline Association said in an emailed release the delays have been costing Canadians $693 million each year, and it encouraged the government to move ahead immediately.

And the Canadian Association of Pipeline producers said it expects an average increase of $20 billion of annual investment in the sector if Canada can enhance its domestic competitiveness, sustaining 120,000 jobs.

But the fact the project has been approved by cabinet does not mean construction will start right away.

Coming challenges

The company, a Crown-owned entity, will first have to make some required notifications and meet pre-construction conditions, according to a spokesperson. 

There also will likely be additional hearings at the National Energy Board in order to secure the company's preferred routing. 

Speaking on Tuesday afternoon, Prime Minister Justin Trudeau said there will be shovels in the ground on the project this summer.

Masson guesses major work won't start until next year, if there aren't major hiccups. 

Those potential delays include ongoing legal challenges, such as B.C.'s appeal to the Supreme Court to allow the province to restrict heavy oil shipments through its territory. 

Legal arguments

Masson expects groups opposed to the project will argue the federal government is in a conflict for approving a pipeline that it owns or that the consultations with First Nations were inadequate. 

"It's a long ways from an approval to a completed pipeline," said Masson.

Many in the oilpatch see it as a critical project for the industry and it has become a political minefield for the federal government, sandwiched between fervent opposition and fervent support. 

Gary Mar, president of the Petroleum Services Association of Canada, said the government has created further roadblocks for itself by declaring a climate change emergency the day before the approval was announced. 

Trudeau bridged that apparent conflict by committing pipeline earnings — estimated to be $500 million a year in federal corporate tax revenue alone — to investments in clean energy projects. But Mar said it's just opening the project up to further scrutiny.

"It remains to be seen whether they'll have the commitment necessary to make sure that this project goes through to completion," Mar said. "I won't be optimistic until I see it constructed."

One group says it's not as monumental a decision as it may seem, as both tanker traffic and approvals for major oil and gas projects could be impacted by two bills, C-48 and C-69, that are likely to be approved this week. 

The Canadian Association of Oilwell Drilling Contractors says the decision to OK Trans Mountain is trivial in light of that pending legislation.

"This industry is on life support. Today's announcement does little to provide future certainty to drilling and service rig contractors as they continue to exit the Canadian market at an alarming rate," said Mark Scholz of the association in an emailed release.

Question of ownership

Finance Minister Bill Morneau said the pipeline is a big first step in getting the sector going, and one that will have a strong economic outcome.

"We've had our own analysis to say this project is economic based on every single scenario we've been presented with," he said.

He said a number of parties have reached out, from corporations to Indigenous groups, to express interest in buying the pipeline.

Trudeau said the government is open to 100 per cent Indigenous ownership of the project.

"When it comes to potential Indigenous buy-in, we're not putting a limit on it," he said. 

The current route of the Trans Mountain pipeline. The expansion would twin it.

Project Reconciliation, one of the Indigenous-led groups that has expressed interest in the project, said it sees it as a chance to "move from managing poverty to managing wealth."

Suncor commended the government for opening the door to Indigenous involvement. 

"From our own experience, we know how beneficial working with Indigenous communities can be. These partnerships can provide a revenue stream for Indigenous communities so they can support services like education, daycare, elder care or housing," Suncor president Mark Little said in an emailed release. 

If built, the 1,150-kilometre expansion project would nearly triple the existing pipeline's capacity to 890,000 barrels a day. It would allow pipeline shipments from Alberta's oilpatch to coastal B.C.

Tanker traffic from the Westridge Marine Terminal in Burnaby, B.C., would increase from about five vessels a month to one a day.

The pipeline expansion's approval may have contributed to Canada's main stock index having one of its best days of the year.

The S&P/TSX composite index closed up 149.90 points, or nearly one per cent, and the August crude oil contract was up $1.94 US to $54.11 US per barrel. 

With files from Sarah Rieger, Drew Anderson, The Canadian Press.


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