TransCanada hits the pause button on Energy East
TransCanada has filed a request with the National Energy Board (NEB) seeking a 30-day delay in its Energy East Pipeline and Eastern Mainline Project applications. The company says it needs the extra time to review "significant changes to the regulatory process" released by the NEB a few weeks ago.
As part of the federal Liberals' plan to "restore confidence" in the Canadian regulatory process, TransCanada has been asked to measure direct and indirect upstream and downstream emissions from the 1.1 million barrels of crude carried daily in the line, which the company has called "completely redundant and unnecessary." The NEB also asked for "more visibility" into the company's spill mitigation plans and potential impacts of a line rupture.
TransCanada warned it will need to take an impairment charge on incurred costs should Energy East be shelved. Energy East has an estimated price tag of $16 billion, although the company did not confirm how much has already been spent. Aside from Energy East, TransCanada has $24 billion worth of projects on the books in the near term.
The 4,500 km pipeline would carry Alberta and Saskatchewan crude into the Maritimes, displacing foreign oil imports and increasing exports overseas. Canadian refineries currently process about 600,000 bbl/day of foreign crude, about half destined for Irving Oil's refinery in New Brunswick. Energy East terminates in Saint John, NB where TransCanada and Irving Oil have formed a 50/50 joint venture to build a new deep water marine terminal. NB Premier Brian Gallant has already expressed dismay over the potential loss of jobs and revenues in his province.
Rumours are rampant that the project will be shelved in favour of constructing Keystone XL. The $10 billion Keystone expansion is a much shorter route to a much bigger market, delivering Canadian crude to the Gulf Coast, which has a refining capacity of almost 10 million bbl/day. However, the project was left for dead after President Obama vetoed the pipeline and Hillary Clinton, who was widely expected to win the 2016 US election, had no plans to overturn that decision.
TransCanada has extended its open season on Keystone XL until October 26, 2017.
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