Pipeline Politics and the Building Pressure on the Energy East Proposal

US State Department rejects TransCanada's request to temporarily suspend its Keystone application
November 4, 2015 10:35 pm Last Updated: November 7, 2015 12:01 pm

OTTAWA—Keystone XL is dead! Long live Energy East!

Like a game of pipeline whack-a-mole, a bid by TransCanada Corp. to suspend its controversial north-south Keystone XL pipeline proposal has elevated the west-east Energy East pipeline plan to the top of Canada’s political agenda.

“With Keystone now delayed, even more important we approve Energy East,” Saskatchewan Premier Brad Wall posted on his Twitter account Tuesday, Nov. 3.

“There’s no doubt it puts a whole lot more attention now on Energy East,” Donald Arsenault, New Brunswick’s energy minister, told The Canadian Press in an interview.

On Wednesday, the U.S. State Department rejected TransCanada’s request to temporarily suspend its application. The request was interpreted by the administration as a political move, aimed at increasing its chance of approval by a possible future Republican administration—something the company denies.

Meanwhile TransCanada’s proposed 4,600-kilometre Energy East pipeline—designed to move 1.1-million barrels of crude oil a day from Alberta and Saskatchewan to refineries in Eastern Canada—is likely to garner its own opposition.

Pipeline politics have been a Canadian staple for the past decade and that won’t change with the departure of Stephen Harper’s Conservatives and the arrival of Justin Trudeau’s Liberals in Ottawa.

Trudeau, sworn in on Wednesday, has appointed a cabinet with heavy hitters on the climate change file. He can expect to begin fielding pipeline calls almost immediately.

There’s just no way to square taking strong action on climate change and moving forward with these pipelines.
— Adam Scott, Environmental Defence

Trudeau has always supported Keystone XL. The 1,897-kilometre pipeline would move 830,000 barrels a day of Alberta bitumen to Nebraska and then on to Gulf Coast refineries.

The Liberal leader has been more ambivalent about Energy East, saying it needs a more rigorous environmental assessment. Trudeau has also been a vigorous proponent of a more aggressive Canadian climate change policy—something environmental groups say cannot co-exist with new pipelines, which equate to expanded oil sands production.

“There’s just no way to square taking strong action on climate change and moving forward with these pipelines,” Adam Scott of Environmental Defence said Tuesday.

Scott predicts Energy East will become the next big battleground for environmentalists.

“If it’s possible to kill a project like Keystone, then you can sure bet that Energy East will face an even stronger opposition.”

TransCanada’s failed attempt to postpone its licence application comes just as Trudeau begins an intense month of international summitry, during which he’ll rub elbows with U.S. President Barack Obama.

Keystone, which former Prime Minister Stephen Harper once called a “no-brainer” despite Obama’s misgivings, had become an awkward reminder of diverging Canada-U.S. directions on climate policy.

Social Licence

Alberta Premier Rachel Notley, who will join Trudeau and Obama at the UN global climate change conference in Paris later this month, has said she is focused on building relationships to promote projects “that have the best chance at success.”

She said her government wants to improve the province’s environmental record to build support for Alberta products in overseas markets not open at the moment.

“What our government can do to increase the likelihood that our product will earn the social licence that is needed for us to get it to that all-important tidewater is for us to improve our record on the environment,” she said Tuesday.

It’s an approach Trudeau has echoed and may advance at the climate change conference in Paris.

Keystone XL would carry crude oil along a 1,897-kilometre pipeline from Hardisty, Alberta, to Steele City, Neb., where it would link up with other pipelines that run to the Gulf Coast and the Midwest.

It would carry an average of 830,000 barrels of oil a day to U.S. refineries. Proponents have long suggested it would lessen American reliance on oil from the Mideast while creating thousands of jobs. But opponents have argued it would be an environmental disaster and have suggested its economic impact has been overstated.

In any case, the request has been mooted. A State Department spokesman says there’s no obligation, nor is there a legal basis, for slowing down a permit-review process at the behest of an applicant.

Department spokesman John Kirby says the review is proceeding.

Given the repeated negative comments Obama has made about the pipeline, he’s widely expected to turn down the request.

With files from The Canadian Press