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Canada chases conduits
Federal government tries arm twisting on Keystone XL; TransCanada goes to court
Gary Park for Petroleum News
Canada is pulling all the government, regulatory and legal levers at its disposal in an effort to restart construction on the three oil export pipelines that are currently stalled.
Federal Natural Resources Minister Amarjeet Sohi met with U.S. Secretary of Energy Rick Perry at a Houston energy conference on March 12 to impress on his counterpart how vital the completion of Keystone XL is on both sides of the international border.
“I stressed that point with Secretary Perry to ensure he is aware of the implications (for investment and jobs) of another one year delay to this project and the financial implications for TransCanada.
“He absolutely understands the concerns and he assured me he will do whatever he can to give the necessary support,” Sohi told reporters.
830,000 bpd According to the company’s latest estimate, the US$8 billion Keystone XL system would ship 830,000 barrels per day of crude bitumen from Alberta to Nebraska where it would feed into the existing Keystone line to Gulf Coast refineries.
The project has been trapped in a regulatory limbo for more than a decade and has failed to regain momentum despite being endorsed by President Donald Trump.
The latest setback occurred when a Montana judge halted construction and ordered a new environmental assessment.
TransCanada has retaliated by asking the U.S. 9th Circuit Court of Appeals to remove the injunction granted in November 2018, noting that it is approaching an internal deadline to begin construction this year.
Otherwise the company said in its court filing that an estimated 6,600 jobs “will be lost, hundreds of millions of dollars in taxes will not occur and TransCanada will lose earnings of over $900 million.”
TransCanada said it has cleared 1,500 acres in the U.S. to prepare the pipeline right of way, started construction of three work camps and prepared 11 of 14 pipe yards, but was forced to lay off 650 staff when the Montana judge issued his injunction.
Without making specific reference to Keystone XL, Perry insisted the U.S., despite its robust outlook for oil and gas exports, needs a stable, plentiful supply of all types of energy.
Minnesota opposition But Sohi was less eager to wage a lobbying campaign with Minnesota Gov. Tim Walz to end delays in issuing final approval to Enbridge’s Line 3 replacement to rebuild capacity from 370,000 bpd to 760,000 bpd from Alberta to Wisconsin.
The U.S. section, expected to cost US$6.8 billion, is opposed by Walz who is pursuing an appeal with his state’s utility board linking himself to opposition from environmental and Indigenous groups.
As a result, Enbridge has indicated Line 3 is unlikely to become operational until the second half of 2020, one year behind schedule.
Despite his frustration with that delay, Sohi said he will not contact Walz. “We respect the process that U.S. states have in place to issue permits,” he said.
First Nations’ consultations Those looking for shreds of hope might have found some in a statement by Sohi on March 13 that he was confident consultations with First Nations on the C$7.4 billion Trans Mountain expansion might be concluded within a 90-day deadline from Feb. 22.
“Based on the work we have done so far and the work we will continue to do over the next few months, I feel we are in a strong position,” he told reporters.
Sohi said the government, which owns Trans Mountain, has doubled the number of consultants on the project to 60, all of whom have been given a mandate to negotiate any issues raised by indigenous groups and have met with more than 100 indigenous communities along the pipeline route.
In addition, he said the government has employed outside experts and hired retired Supreme Court Justice Frank Iacobucci to determine whether the government is meeting the constitutional requirements for “meaningful consultation,” and offering “accommodations” where possible, he said.
Canada’s National Energy Board recommended on Feb. 22 that the government reapprove the Trans Mountain expansion to carry 590,000 bpd of crude bitumen to Pacific coast tanker ports.
That gave the cabinet of Prime Minister Justin Trudeau 90 days from that date to decide whether or not to go ahead.
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