TransCanada applies Keystone's lessons to Energy East pipeline

Tue Apr 7, 2015 1:47pm EDT
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By Nia Williams

CALGARY, Alberta, April 7 (Reuters) - After six years battling bitter opposition to its Keystone XL pipeline project in the United States, TransCanada Corp has learned where and when to pick its fights.

Canada's No. 2 pipeline company scrapped plans last week to build a crude oil export terminal in Quebec because it would endanger beluga whales in the St. Lawrence River.

The proposed Cacouna terminal was part of TransCanada's 1.1 million barrel-per-day Energy East plan for a pipeline to take Alberta oil sands crude to Canada's east coast. The project will now be delayed roughly two years as TransCanada rejigs regulatory filings.

Despite the drop in global crude prices, demand for Energy East remains strong with Canadian crude production seen hitting 6.4 million barrels per day by 2030, up from 3.5 million bpd in 2014.

With Cacouna's cancellation, environmentalists claimed a huge victory, but industry players say TransCanada is shrewdly taking a short-term hit in hope of a smoother road ahead.

Besides beluga whales, Energy East was facing other hurdles in Quebec. The province has imposed seven conditions on the pipeline and aboriginal groups are resisting it.

"This avoids having it slowed down a lot more. They really would have had an enormous problem trying to get permission to build in Quebec," said environmental law specialist Dianne Saxe. "My guess is they decided it would be a better economic decision not to stand and fall on this particular hill."

Alan Ross, partner at law firm Borden Ladner Gervais, said scrapping Cacouna will likely speed up the National Energy Board regulatory process.   Continued...