Ottawa approves two pipelines, rejects one while imposing tanker ban on northern B.C. coast


Prime Minister Justin Trudeau announced approvals for two major export pipelines Tuesday, while dismissing a third pipeline and imposing a ban on oil tanker traffic on the northern section of B.C.’s coast.

“Canada is a country rich in energy of all kinds,” Trudeau said in approving two export pipelines and rejecting a third. “There isn’t a country in the world that would find billions of barrels of oil and leave it in the ground while there’s still a market for it.”

The federal Liberal government approved Kinder Morgan Canada’s plan to expand its Trans Mountain pipeline system and Enbridge Inc.’s plan to replace its Line 3 pipeline system Tuesday. At the same time, Trudeau announced the government would not approve another Enbridge project, the Northern Gateway project, and that Ottawa would impose a tanker ban on oil tanker traffic on the northern section of B.C.’s West Coast.

The Great Bear Rainforest is no place for a pipeline and the Douglas Channel is no place for oil tanker traffic,” Trudeau said of Northern Gateway.

Alberta Premier Rachel Notley, who has made the case for new pipelines since her NDP government ousted the Progressive Conservatives from power, flew to Ottawa to meet Trudeau immediately following the announcement.

 Trudeau and Environment and Climate Change Minister Catherine McKenna praised Notley for the provincial NDP government’s climate change policies and emissions cap, citing the plan as a major reason for the positive decision on the Trans Mountain project.

“Our province has been brutally slammed by the collapse in commodity prices,” Notley said in a release, adding the province has been through “a long dark night” but “today we are finally seeing some morning light.”

Notley also announced that her government would phase in a $50 carbon levy — up from the $30 levy the province had planned to implement — following the pipeline approvals. “We are putting in place a strong national climate-change policy,” she said, “and we are getting on with creating jobs and economic equality under the terms of that new policy.”

The decision on Trans Mountain and Line 3 was welcomed by Calgary’s oil patch. “At an operational level, it’s critically important becuase it gives us more takeaway capacity,” Ernst and Young’s Canadian oil and gas leader Barry Munro said. “At a strategic level, it’s bigger than that because it answers the question of, ‘do we have more than one market for our commodities?'”

At present, the vast majority of Canadian oil shipments are sent to the U.S., but Munro said the TransMountain pipeline would allow companies to send more domestic crude to overseas markets, including Asian markets.

The decisions announced Tuesday will result in hundreds of thousands of additional barrels of oil exported from Canada everyday, and should also help shrink or eliminate the discount domestic producers accept for their crude.

Kinder Morgan’s $6.8-billion Trans Mountain pipeline expansion, the most controversial of the decisions made Tuesday, would boost crude oil shipments from Alberta to B.C. by 590,000 barrels of oil per day.

Environmental activists, including at Stand.Earth, have vowed to protest the project’s construction with acts of civil disobedience. The line has also caused friction between mayors in Calgary and Edmonton, who support the line’s construction, and Vancouver Mayor Gregor Robertson, who opposes it and has said Trans Mountain approvals will result in “protests like you’ve never seen before.”

Robertson released a statement following the decision that said he was “profoundly disappointed.”

“This project was approved under a flawed and biased Harper-era regulatory process that shut out local voices and ignored climate change and First Nations concerns,” he said.

The Trans Mountain pipeline system would carry a total of 890,000 bpd to an export terminal in the Vancouver area, where the crude would be shipped to Asia. Energy executives in Calgary have pushed for West Coast-bound pipelines for years to diversify away from the U.S., where the majority of Canadian oil is shipped currently.

Explorers and Producers Association of Canada president Gary Leach, who represents small and intermediate oil and gas producers, said the decision will help attract investment in the energy sector and “lift a cloud hanging over Canada’s oil and gas industry for years.”

“It’s a great day for Canadian oil and gas industry and it shows we can get big infrastructure approved,” Leach said. With respect to the two approvals and one rejection, Leach said, “Two out of three is pretty good considering all the issues at play with pipeline construction.”

But oil patch hopes for greater access to Asian markets were also hurt by the Liberal government’s decision Tuesday to ban crude oil tanker traffic along the northern part of British Columbia’s Pacific coastline.

The moratorium on crude oil tanker traffic in the area presents another obstacle for Enbridge in its attempt to build the Northern Gateway pipeline, which would ship 525,000 bpd between Alberta and Kitimat, B.C.

The Northern Gateway project, which attracted significant protests during its own regulatory process between 2012 and 2014, was dealt what is likely its final denial on Tuesday, when Trudeau announced the federal government would not approve the $7.9 billion pipeline, which would have also allowed domestic energy companies to ship their product to Asia.

The project had been approved under the previous Conservative government, but the Federal Court of Appeal overturned the approval this year over a lack of consultation. The Liberal government did not to appeal that decision, and chose Tuesday not to allow the project to proceed.

“The Northern Gateway pipeline was a dangerous proposal and we applaud the government’s decision to deny it, however it does not justify the Prime Minister’s decision to approve the Kinder Morgan pipeline” said Sven Biggs, Energy and Climate Campaigner for Stand.Earth

Enbridge spokesperson Todd Nogier said the company was disappointed with the government’s decision. “Given today’s decision, we’ll need to assess our alternatives which we’ll do in consultation with our partners, including our Aboriginal Equity Partners,” he said.

The least controversial of the pipeline decisions Trudeau announced Thursday was the government’s approval of Enbridge’s Line 3 replacement project, which will boost shipments from Alberta to Superior, Wis.

The $7 billion project will boost the line’s capacity from 390,000 bpd to 760,000 bpd, increasing exports to the U.S., where the vast majority of Canadian oil is shipped.

Scotiabank president and CEO Brian Porter said in an email that he welcomed the government’s decision on the two pipeline approvals. “These projects will spur much needed job creation and economic growth, and help bring Canadian natural resources to the rest of the world,” Porter said.

Geoffrey Morgan reports for the Financial Post from Calgary. 

Story: Financial Post