Derrick Digest for Dec. 2, 2016: Pipeline approvals put Canada ‘fully in the global energy game’
The Derrick Digest is a weekly collection of curated content, based on events from across the oil and gas industry, that caught our eye at Pennine Petroleum Corporation. We hope you find it just as intriguing as we do.
Dec. 2, 2016
The dithering, the delays and the internal debate, apparently, are over within Canada’s federal government.
Prime Minister Justin Trudeau on Tuesday announced the government’s approval of Kinder Morgan’s Trans Mountain Expansion Project and Enbridge’s Line 3 Replacement Program—while, at the same time, rejecting Enbridge’s proposed Northern Gateway project.
A clear indication, says Canada’s Natural Resources Minister Jim Carr, on where the Trudeau government stands on oil pipelines.
“I think that the decision speaks volumes about what the government of Canada thinks of the necessity of building infrastructure to get our resources to market sustainably,” Carr told the Calgary Chamber of Commerce on Wednesday.
Kinder Morgan’s Trans Mountain twinning project will triple the capacity of the existing pipeline from Edmonton to Burnaby, B.C., to 890,000 barrels a day—and open Canadian oil up to Asian markets.
Enbridge’s Line 3 Replacement Program will nearly double the existing pipeline’s capacity to 760,000 barrels a day—boosting Canadian oilsands access to the heavy oil refining market in the U.S. Gulf Coast.
“Expanding our export markets is fundamentally important for the industry and for the government of Canada,” said Carr. “The Trans Mountain expansion project will make that possible. For the first time Canada will be fully in the global energy game.”
Market value for Canada’s resources
The Canadian energy industry was quick to hail Tuesday’s announcements as one that would kick-start the country’s oil pipeline gridlock.
“Canada’s reputation as a place that can move projects forward took a step forward today,” said Tim McMillan, president of the Canadian Association of Petroleum Producers. “I don’t think we should aspire to always being in a traffic jam on a highway. We want to have an efficient system, which allows us to reach markets in a dynamic way.”
Industry hopes these new pipelines will help erase the traditional price discount faced by Canadian producers.
“Extremely big. I don’t think you can underestimate how big the decision is,” said Canadian Energy Pipeline Association president Chris Bloomer.
Aboriginal Equity Partners ‘shocked’ at Northern Gateway rejection
On B.C.’s North Coast, meanwhile, the Northern Gateway’s 31 Aboriginal Equity Partners said they were “profoundly shocked and disappointed” in the federal government’s rejection of the proposed 525,000-bpd line from Edmonton to Kitimat, B.C.
“We are also deeply disappointed that a Prime Minister who campaigned on a promise of reconciliation with Indigenous communities would now blatantly choose to deny our 31 First Nations and Métis communities of our constitutionally protected right to economic development,” reads a statement released by the AEP.
Northern Gateway—which had been approved by the National Energy Board, only to be overturned in June 2016 by the Federal Court of Appeal—represented an unprecedented partnership with Indigenous groups, says the AEP.
The 31 Indigenous communities held a one-third ownership in the project, and stood to realize $2 billion in economic benefits.