Canada added to the onslaught of energy news this week by approving and disapproving oil pipelines. Yesterday’s announcement of two approved pipes will make it possible for Canada to move about 1 MMBOPD to global markets from Alberta’s oilsands.

The Trudeau administration approved Kinder Morgan’s (ticker: KMI) Trans Mountain pipeline and Enbridge’s (ticker: ENB) Line 3, while it rejected the Northern Gateway project.

Trudeau referenced Alberta as a climate leader and said if the two approved pipelines weren’t constructed it would force oil from Canada into railcars.

The Trans Mountain expansion is a twinning of an existing pipeline that will move a mix of oil products from Edmonton to a terminal in Burnaby, B.C., near Vancouver, where it will be exported to markets in Asia. Some of the product is also destined for Chevron’s Vancouver-area refinery, according to CBC.

“If I thought this project was unsafe for the B.C. coast, I would reject it. This is a decision based on rigorous debate on science and evidence. We have not been, and will not be swayed by political arguments, be they local, regional or national,” the prime minister told reporters. The Canadian government has put 157 conditions on the almost $7 billion project.

Kinder Morgan forecasts the expansion will create 15,000 jobs a year during construction, and a further 37,000 direct and indirect jobs for every year of operation. It also estimates expanded operations will deliver an additional $46.7 billion in government revenues for all levels of government in the first 20 years. The bulk of that money, $19.4 billion, would flow to Alberta, according to the report.

Construction is targeted to begin next September, with a tentative start date of December 2019.

Line 3 is an Enbridge project that will transport oil from Hardisty, Alberta through northern Minnesota to Superior, Wisconsin. The project is a replacement pipeline for the existing Line 3 pipeline. The $7.5-billion Line 3 project would nearly double the existing pipeline’s volume to 760,000 barrels a day, CBC said in its report. It would funnel oil into Enbridge’s system that collectively carries 3 MMBOPD into the U.S.

Northern Gateway was essentially put to rest. “It has become clear that this project is not in the best interest of the local affected communities, including Indigenous Peoples,” Trudeau said, describing the local area as the “jewel” of British Columbia.

Reaction

Numerous groups weighed in on the meaning of the action from Ottawa.

“Over the long term, Canada almost certainly needs to expand its pipeline capacity out of Alberta, given the Canadian Association of Petroleum Producers (CAPP) projects that the country’s oil production will rise from 3.8 million barrels per day in 2015 to around 4.9 million barrels per day in 2030. (This figure excludes diluent oil added as a thinning agent to lower the viscosity of heavy oil and bitumen, a process that often adds up to 37 percent volume.) Of this increase, 850,000 barrels per day of new oil sands production is expected between now and 2021 and another 700,000 barrels per day of production is expected between 2021 and 2030. Simply put: Canada needs new takeaway capacity, and a lot of it,” was the summation from Stratfor.

The Gitga’at First Nations issued a press release saying it was celebrating the federal government’s decision not to approve the Enbridge Northern Gateway pipeline and to enact a moratorium on crude oil tankers on the North Coast of BC.

“We look forward to putting Enbridge behind us and sitting down with government to begin implementing an oil tanker ban on the North Coast of BC,” Arnold Clifton, Chief Councillor of the Gitga’at First Nation, said in a statement.

The Prime Minister announced a legislated moratorium on oil tankers would be forthcoming early in 2017.

“We want the security of knowing we won’t face this kind of project again,” said Friends of Wild Salmon spokesperson Des Nobels. “A legislated, long-term crude oil tanker ban covering both oil ports and the passage of tankers will provide that assurance …” Friends of Wild Salmon is a coalition of First Nations, commercial fishermen, sport anglers and conservation advocates.

The Canadian Association of Petroleum Producers issued a statement approving the approval of the Trans Mountain pipeline, saying the approval gives Canada a chance to compete globally, something the Canadian producers have sought, eliminating the idea that the U.S. is its primary customer for energy production.

Canada’s oil pipeline network has the capacity to move 4.0 million barrels per day; last year the system moved 3.981 million barrels per day. CAPP estimates the supply of Canadian oil sands will increase by more than 850,000 by 2021, so total supply will far exceed existing pipeline capacity. Global demand for energy is forecasted to increase by 31 per cent by 2040 and demand for oil is forecasted to grow by 12 per cent. The TMEP approval is one step closer to connecting Canadian supply to new and growing markets abroad, according to the CAPP statement.

“Through West-Coast access to the Pacific Rim, Canada can grow its international trade, create more jobs and prosperity at home and grow its international reputation as a place to invest,” CAPP President and CEO Tim McMillan said in a statement.


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