- Plan would almost triple oil flows to country’s West Coast
- Pipeline project seen costing $5.4 billion, online late 2019
The fate of Kinder Morgan Inc.’s plan to triple the capacity of the only pipeline linking Alberta’s oil sands with Pacific markets now rests largely with Prime Minister Justin Trudeau, after two Canadian regulators cleared it of significant environmental impacts.
The National Energy Board ruled that the $5.4 billion Trans Mountain expansion should be allowed with 157 conditions. The Canadian Environmental Assessment Agency said the project wouldn’t add greenhouse-gas emissions from oil production. Both reports released on Thursday will inform the Canadian government’s final decision, due by December. More public support may also be needed for the project to move ahead.
“There are still a couple of hurdles,” Harold York, vice president of integrated energy at consulting firm Wood Mackenzie Ltd., said by phone. “Public opposition could maybe still stall it, if not stop it."
Canada’s energy industry is counting on the expansion of Trans Mountain to carry rising volumes of crude to markets other than the U.S., which is meeting more of its own supply needs. The project has become more urgent after U.S. President Barack Obama rejected the Keystone XL pipeline last year. Other proposals, including Enbridge Inc.’s Northern Gateway and TransCanada Corp.’s Energy East, have been held up amid concerns about increased tanker traffic, spills and climate change.
The Calgary-based NEB said in its 533-page decision document that the Trans Mountain expansion is in the public interest. The panel reviewing the project found that benefits, including market diversification for Canada’s energy industry and jobs created during construction, outweighed burdens such as adverse effects on killer whales tied to increased marine traffic and the risk of spills.
The expansion probably won’t add to the climate impact of the country’s oil production, the Canadian Environmental Assessment Agency said in a separate report. Output already scheduled to come online by 2019 and existing volumes that are currently moving by rail would be more than enough to fill the pipeline, and the carbon emissions tied to that production would occur anyway, the agency said.
Kinder Morgan, North America’s biggest oil pipeline operator, plans to expand Trans Mountain to carry as much as 890,000 barrels a day, from about 300,000. The 1,150-kilometer (715-mile) pipeline runs from outside Edmonton over the Rocky Mountains to Burnaby, British Columbia, near Vancouver. Requests by producers to ship on the line, in operation since 1953, regularly exceed its capacity.
Energy lobby groups including the Canadian Association of Petroleum Producers praised the NEB’s conclusions. Kinder Morgan said in an e-mailed statement that it’s pleased with the recommendation.
The NEB imposed conditions including requirements related to project engineering and safety, environmental protection, consultation with communities affected and marine shipping. For example, Kinder Morgan must file details of earthquake analysis prior to construction and must report to the board on its consultation with indigenous groups during construction and through the first five years of operations. If the federal government gives final approval for the expansion, Kinder Morgan would have until Sept. 30, 2021, to begin construction.
The likelihood of a major spill is very low, though the potential significance of a spill is very high, leading to other conditions tied to emergency preparedness and response as well as safety of the operations, the board said.
The 157 conditions compare with 209 imposed for the 2014 approval of Enbridge’s Northern Gateway.
Even with a federal government approval, Kinder Morgan would face hurdles in winning wider public support. British Columbia Premier Christy Clark has said oil pipelines must satisfy conditions such as providing the province with economic benefits and addressing aboriginal concerns.
Opponents of the pipeline and oil tankers on Canada’s Pacific coast criticized the regulator’s recommendation. The Dogwood Initiative, a Victoria, British Columbia-based environmental group, is pushing for a province-wide vote on oil tanker projects.
Burnaby Mayor Derek Corrigan said that he’s disappointed, though not surprised, by the ruling.
“There’s little that really addresses the major concerns that we have and other communities have about the future impact of the pipeline on our ecology, our environment, our public safety," Corrigan said in an interview with Bloomberg TV Canada.
The Houston-based company’s timeline for startup of the expansion has been extended by about two years to 2019 after the review was halted and started multiple times. Trudeau’s government, swept to power in October, added more requirements for major project assessments, including a greenhouse-gas emissions report and additional consultation with aboriginal communities. The company filed its 15,000-page application for the project in December 2013.