Pipeline industry optimistic after new Liberal policy

Despite delays and new rules, Canada's pipeline industry is confident the change in policy unveiled by the Liberal government will still lead to the approval of new oil export projects.

The biggest concern is the new regulatory policy will delay approval process

Canada's pipeline industry wants to build projects to the east and west after the Keystone XL project was rejected by US President Barrack Obama. (Al Grillo/Associated Press)

Despite delays and new rules, Canada's pipeline industry is confident the change in the way pipelines are assessed, unveiled Wednesday by the Liberal government, will still lead to the approval of new oil export projects.

The federal government will add nine months to the deadline for TransCanada's Energy East project and four months for Kinder Morgan's Trans Mountain expansion.

"It's not good that there are delays. The goal posts keep moving away," said Chris Bloomer, the president of the Canadian Energy Pipeline Association. "But if this results in getting to a point where we do get projects approved and get that uncertainty over with, that's great."

One reason for the delays is that now the emissions associated with oil extraction and processing will be taken into account in the pipeline approval process. How those greenhouse gases are calculated and how much of a factor they play in the ultimate decision on a project is unclear.

A pipeline's emissions will be weighed against the economic impacts, among other factors.

"How will these things be measured?" said Bloomer. "On what basis will they be making a decision on both those items?"

The federal government is also launching its own initiative to consult with First Nations and the greater public. 
Natural Resources Minister James Carr (left) and Minister of Environment and Climate Change Catherine McKenna announced Wednesday that pipeline projects will face new environmental regulations. (Fred Chartrand/Canadian Press)

"While we have concerns about how this delay could impact the project schedule, we support the principle that public confidence in the review process is crucial," said Kinder Morgan president Ian Anderson in a statement.

Kinder Morgan's Trans Mountain expansion proposal is currently in National Energy Board hearings underway in Burnaby, B.C. 

Some First Nation groups — who have presented at those hearings — are not convinced the new rules will improve the regulatory process.

One aspect that didn't change with Wednesday's announcement is that the federal government will make the ultimate decision on pipeline export projects. The fact that politicians have the power to approve or deny a project is viewed as a risk on its own, considering what happened with TransCanada's Keystone XL proposal in the U.S.

"Even though the state department expert review process said 'It is OK, we see no reason not to approve the pipeline that probably should be approved,' it still got cancelled and that's politicization," said analyst Steven Paget with FirstEnergy Capital.

"Politicians overruling a process that they put in place to make sure it wasn't politicised," said Paget. "That's a real issue and that could still happen. The federal cabinet still has the final say."

Eventually, the federal government plans to overhaul the National Energy Board, although that process is said to be a few years away.


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