Hope springs eternal for at least one pipeline approval by year end
Bloomberg is reporting that Prime Minister Justin Trudeau will approve at least one pipeline project in his first term, and that project is likely to be Kinder Morgan's TransMountain Expansion.
There are currently three crude oil pipelines awaiting final blessing from the federal government: the TransMountain Expansion, Enbridge's Line 3 Replacement and Northern Gateway.
Trudeau has confirmed on numerous occasions Enbridge's Northern Gateway will not see the light of day under his watch. The project was approved by the Harper government, but that approval was overturned by the Federal Court of Appeal in June.
Enbridge's Line 3 involves replacing a 40-year-old pipeline, bringing Alberta oil to Wisconsin. The project has received the least backlash and little media attention, making it also very likely to be approved by year end. The new line would add 370,000 bbl/day of crude oil export capacity to the US.
However, Line 3 does not provide direct access to tidewater.
The TransMountain Expansion involves twinning an existing pipeline from Alberta to an export terminal in Burnaby, BC. If built, the line would add 590,000 bbl/day of export capacity to the US and Asian markets. The project has received much opposition from Vancouver area mayors. However, Bloomberg sources think TransMountain has the best chance of being approved since there are only 17 Liberal seats at stake in BC, located mostly in the Lower Mainland.
If approved by the NEB, TransCanada's Energy East wouldn't be ready for federal approval until just before the next election. There are 120 Liberal seats in Quebec and Ontario, making Energy East a political hot-potato for the Trudeau Liberals. The NEB hearings were scrapped last week due to concerns of conflict of interest between NEB panel members and former Quebec Premier Jean Charest. Scotiabank called the project "doomed" and estimates its chance of approval at only 25%. Energy East would bring over 1 million bbl/day to Eastern Canada refineries and tidewater on the East Coast.
Former Alberta premier and federal environment minister Jim Prentice doesn't think one pipeline will be enough. Prentice thinks the country needs about 2 million bbl/day of additional export capacity in order to make Canadian crude competitive on world markets.