CALGARY — After nearly a decade since the last major oil pipeline was built, and with existing ones brimming with crude, Canada's energy industry is wondering when and if any new lifelines to foreign markets will go into the ground.
Those concerns were heightened last week after Kinder Morgan effectively put its Trans Mountain expansion project on hold until it can be assured British Columbia won't continue trying to block the pipeline.
After a crucial meeting in Ottawa this weekend between Prime Minister Justin Trudeau and the premiers of Alberta and B.C., B.C. premier John Horgan said he will continue to block the project.
While there certainly is risk, and nothing is 100 per cent certain...Line 3 and Keystone XL are likely to proceed.
But as Trans Mountain's fate was put in jeopardy after the B.C. NDP's election win, pipelines heading south to the U.S. have been propped up by the election of U.S. President Donald Trump, who has tied himself closely to the oil and gas industry.
Both TransCanada's Keystone XL — which will run from Hardisty, AB, to Steele City, Nebraska— and Enbridge's Line 3 — which links Hardisty to Superior, WI — should avoid the political pitfalls that have sunk Energy East and Northern Gateway and have put Trans Mountain in doubt, said Zachary Rogers, a research analyst at Wood Mackenzie.
"While there certainly is risk, and nothing is 100 per cent certain...Line 3 and Keystone XL are likely to proceed," said Rogers in an interview.
Energy East, Northern Gateway cancelled
Energy East, which would have delivered bitumen from the oilpatch to Eastern Canada, was cancelled by TransCanada Corp. in October 2017 after strong opposition from municipalities and Indigenous groups. Northern Gateway would have sent bitumen from Bruderheim, AB, to Kitimat, BC, for transportation to Asian markets. It too faced strong opposition, and was rejected by Trudeau in 2016.
Trump's issuing of a presidential permit for Keystone XL revived a pipeline that had become a galvanizing symbol in the battle against climate change and the carbon footprint of oilsands production that ultimately led then-President Barack Obama to deem the project as not in America's best interest in 2015.
But with state approval in Nebraska following Trump's permission, Rogers now ranks the 830,000 barrel a day pipeline as the most likely to go forward.
"There are some difficulties obviously, on the regulatory front, but Keystone XL has largely cleared its last major regulatory hurdle at the end of last year," he said.
Those difficulties include landowner permissions and local permitting, as well as court challenges in Nebraska from some of the many groups still opposed to it, but overall the regulators involved look to be on board, said Rogers.
"The Supreme Court of Nebraska and the State Legislature and the Nebraska Public Service Commission have all repeatedly been in support of the project. So we view the regulatory risk on Keystone XL as relatively low compared to Trans Mountain."
Meanwhile Enbridge's Line 3 project, which aims to replace its aging pipe with a more robust new one, has run into its own opposition as environmental and Indigenous groups look to stop any pipelines that would allow or encourage more oilsands growth.
Replacing Line 3 would allow the company to restore the original 760,000 barrel a day capacity, adding about 375,000 barrels of shipping capacity because of current pressure restrictions on the line.
The regulatory process for the line has taken longer than expected as regulators in Minnesota take a closer look at the project's necessity and safety details, but the company should have a final decision from the state in June.
What we're looking for from the federal government is leadership, concrete direction as to where this is going.
The progress on pipelines to the U.S. is encouraging, but producers need access to new markets and predictability in building projects after several failed attempts, said Canadian Energy Pipeline Association president Chris Bloomer.
"We really are at a crossroads as to how we go forward as a country...What we're looking for from the federal government is leadership, concrete direction as to where this is going."
He said the U.S. administration has a clear vision on pipelines and the energy sector, and that the series of failed pipelines has hurt investment in Canada.
"We've had the investment fleeing the energy sector in Canada for quite a while, given the uncertainty and the regulatory process. Since Energy East and the Northern Gateway pipeline, that's been an ongoing situation, but maybe the situation with regards to the Kinder Morgan situation has kind of put an exclamation point on that," said Bloomer.
However, U.S. pipelines are not without their foes, as the massive protests against Energy Transfer Partners' Dakota Access pipeline demonstrated in 2016.
Already groups like the Treaty Alliance Against Tar Sands Expansion and others who oppose the industry have said they're preparing to hinder development of the pipelines heading to U.S. markets.
Greenpeace campaigner Keith Stewart said both pipelines can expect continued resistance on all fronts, on both sides of the border.
"Kinder Morgan is not alone in facing a sea of troubles, as all three pipelines are facing stiff resistance on the ground and in the courts. This is because there's simply no role for these kinds of new fossil fuel megaprojects that lock us into a high-carbon, high-risk economic model if we are serious about dealing with our climate crisis or respecting Indigenous rights."
With a file from HuffPost Canada
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