The Future for Pipelines in Alberta

By: Rod Garland - CAGC Member Services

The Future for Pipelines in Alberta

The Alberta Enterprise Group recently held a panel discussion in Calgary to analyse the demise of the Energy East pipeline and discuss what it could mean for the future of energy infrastructure and investment in Canada.

Who are the Alberta Energy Group?

Formed in 2007, they are comprised of business leaders who advocate and lobby to improve the prosperity of Alberta as a place to live and conduct business.

Their role is to communicate the benefits of doing business in Alberta; to positively inform the public and policy makers on complex and challenging issues facing the province and the country; and create real change as the community requires. AEG member companies employ over 150,000 Albertans and generate billions in economic activity each year. The Chairman and founding member is Murray Edwards
also Chairman of CNRL.

The panel included Dennis McConaghy – Former Executive VP, Corporate Development – TransCanada Corporation, Dr. Andrew Leach – Associate Professor, Alberta School of Business – University of Alberta and Martha Hall Findlay – President + CEO, Canada West Foundation. The panel moderator was Claudia Cattaneo of the Financial Post

Andrew’s opening comments were that the reasons for the cancellation were about money, timing and regulations. His opinion was that $100 bbl oil is gone, the capacity requirement has diminished and that the length of the pipeline to the east coast through multiple regulatory regimes meant that cost effectiveness was unlikely. Opposition with the keystone pipeline, a long regulatory process and public interest acceptance were other reasons.

Dennis was convinced that TCP would not have successfully got all of the required permits. He mentioned that the changing of rules and regulations including requirements to assess upstream and downstream impacts of carbon emissions that were added late in the process were a key factor in the company’s decision and felt that the “Needs Assessment” should be the prerogative of TCP and shippers of product, not the regulators. He was skeptical that any other similar pipeline project would get built in the future.

Martha believes that the change in US Presidents that led to a quick approval of the Keystone project in the States, would likely lead to a successful outcome of that pipeline making the Energy East pipeline unnecessary. She also believes that the uncertainty with regulations detrimentally affects business decisions that CEO’s have to make and erodes investor confidence and delays for any reason cost money.

In the open free for all discussion the following points were made

Feds haven’t defined exactly what carbon taxes mean.

Carbon taxes shouldn’t have any relevance to whether or not a pipeline should be built that should be made as a needs assessment by industry shippers

The libs and NDP cheered when the company cancelled the project as it would have been a political nightmare for them in Ottawa.

Political sanction comes too late in any new pipeline process after companies have expended time, effort and money which ends up being wasted.

The example of Enbridge’s Northern Gateway pipeline was quoted whereby conditional approval from the Conservative government was granted, only to be cancelled by the subsequent Liberal government in 2016 citing concerns with the route through the Great Bear Rainforest. They also introduced a moratorium on oil tanker traffic on the BC Coast essentially killing the project as viable.

Investors are unwilling to risk capital without a degree of certainty that political decisions won’t stop projects at the last minute.

There is a lack of political leadership in defining a workable energy strategy. Several investors have turned away because of political delay (eg Petro-china, Petronas). Canada is perceived in the eyes of the world as not being able to get projects completed.

Going Forward

In the views of the panel, retaliation doesn’t work, all groups have to be on the same side.

Carbon taxes will have to be addressed to make projects acceptable.

There should be consideration for expanding railroad networks as an option to move product even though pipelines are a more economical transportation system.  New technologies such as converting fluids into pellets that could be safely transported over-land would eliminate the concerns over possible spills from pipelines and from tankers off the BC coast.

Projects shouldn’t require Cabinet approval late in the approval process.

Commitments from politicians that they truly support the hydro-carbon industry should be sought at every opportunity.

Canada needs a competent Energy Strategy

Inter-Provincial barriers should be removed, free trade options encouraged for market access and protectionism should be discouraged.

Follow the Alberta Energy Group at this link http://albertaenterprisegroup.com/