April 2016, Vol. 243, No. 4


Pipeline Industry Needs Clarity About Canada’s Regulatory Process

Recent polling suggests Canadians recognize that pipelines are the safest way to transport oil, that the National Energy Board garners a significant amount of public trust and that Quebeckers would rather get their oil from Alberta than Saudi Arabia. And still we find ourselves engaged in a political debate around public acceptance and regulation.

The recent discourse around pipelines has focused on the regulatory process and the NEB itself. This has led to a policy expanding the regulatory process for two new pipelines intended to bring Canadian oil to world markets. The changes would allow for additional consultation and input on upstream impacts on climate change – key considerations Canadians want addressed. However, it’s unclear how these new processes will be factored, along with the NEB’s findings, into the decision that would follow from cabinet.

Recently, in Calgary, Natural Resources Minister Jim Carr clearly stated that the decision ultimately will be a political one. Not long afterward, however, comments by Prime Minister Justin Trudeau seemed to be signaling some welcome pragmatism. Trudeau indicated that he is responsible for ensuring Canadian resources get to world markets and that there does not need to be a complete consensus on pipelines decisions.

Industry needs to trust the fairness and predictability of this process to continue to risk billions of private investment dollars dedicated to building critical national infrastructure projects. This lack of clarity, potentially setting aside a stringent regulatory assessment and recommendations, would erode confidence in an overall process essential to capital markets.

Enhancing the NEB’s mandate to include both climate change considerations and comprehensive consultation with indigenous peoples are necessary steps. The level of resources used in management systems, as well as a reconsideration of the governance model, is both timely and necessary as Canada seeks to modernize its energy regulator. A credible, well-funded, independent regulator, enforcing a strong set of regulations, is essential for public trust and business confidence.

However, Canadian values and our way of life will not be well-served by balancing the interests of our nation as a whole against short-term political considerations. While there is always room for continuous improvement, Canada has a robust and rigorous regulatory framework that has worked well for almost 60 years. The “one project, one review” approach places accountability for the science and fact-based review of project proposals in a single regulatory agency. This is a proven model the world over.

There is a deep need to have a rational and unified, national dialogue on energy, the environment and the economy, setting out a long-term vision for our country. This should start with areas where Canadians agree – the need for a strong, diversified economy, the need to protect the environment, and to better engage and to be fully inclusive of First Nations considerations.

Our country will make the transition to a more sustainable and diverse energy economy. In the interim, Canadians must receive full value for our oil and natural gas resources to ensure we can sustain our way of life today and to fund our transition to a lower-carbon economy in the future. This is not an either/or conversation – we can do this.

Pipelines have been fundamental to the development of Canada’s way of life, to our energy sector and to Canada’s economic success for over 60 years. The Canadian Energy Pipeline Association (CEPA) represents 12 major pipeline companies operating 117,000 km of mainline transmission networks across Canada. These companies transport 1.2 billion bbls of oil and almost 3 Tcf of natural gas per year with a 99.999% safety record. In 2015, Canada’s mainline transmission system had zero significant incidents. That’s why pipelines are recognized as the safest way to transport energy and why new transmission pipelines will also be safe.

Author: Chris Bloomer is a geoscientist who started his career with Shell Canada, was most recently CEO of Connacher Oil and Gas Ltd. Prior to that, he was a senior vice president and COO and director with Petrobank Energy and Resources Ltd. This article was originally published as a letter to the editor of the Toronto World Telegram.

Trudeau Responds, Sort Of

Prime Minister Justin Trudeau used a speech in Vancouver, BC to a clean tech conference on March 3 to make a direct pitch for the expansion of Canada’s oil and gas sector – a direction he later appeared to dial back in response to media questions, according to a report by the Canadian Press.

Trudeau began meetings on climate policy with provincial and territorial premiers by heralding the promise of jobs and opportunity in a low-carbon economy. He announced two new funds, totaling over $125 million, to help municipalities and spur clean innovation by promoting climate-friendly infrastructure projects and assist with their design.

But in recognition of the growing tensions bubbling just under the surface of a country divided by natural resource wealth, the Liberal prime minister attempted to quarantine the divisive politics of oil sands and pipeline expansion. “But we must continue to generate wealth from our abundant natural resources to fund this transition to this low-carbon economy. The choice between pipelines and wind turbines is a false one. We need both to reach our goal. As we continue to ensure there is a market for our natural resources, our deepening commitment to a cleaner future will be a valuable advantage.”

It was not an applause line in this green coastal city. Trudeau is in Vancouver to make good on an election pledge to meet with the premiers within three months of the Paris climate conference. But his promise to set new emissions targets for the country and create a pan-Canadian climate policy has morphed into finding an agreeable roadmap toward building a policy framework.

Even that process-heavy goal appears under stress. Saskatchewan Premier Brad Wall continues to torpedo any talk of carbon pricing, and there was talk of Saskatchewan not participating in a proposed federal-provincial working group looking at carbon price models.

“We know that fossil fuels will continue to be burned around the world, certainly as a transition energy, until we get to renewables. That’s a fact,” Wall said, adding that oil and gas will continue to be “a central part of economies around the world.”

“Do Canadians want to be a part of meeting those fossil fuel needs? That’s the question we have to ask ourselves,” said Wall. “And if the answer to that is yes, then we have to build some pipelines.”

Trudeau’s efforts to give Wall and Alberta Premier Rachel Notley some breathing room on pipelines immediately ran into opposition here. A question-and-answer session at the conference took a fast detour when the first question to the prime minister noted that the global climate has already warmed by one degree Celsius.

“How can we have the Energy East pipeline even on the table?” demanded Ziya Tong, host of a science program, to scattered hoots and applause from the audience.

Trudeau responded that “we all know we have to get beyond fossil fuels, but we are simply not there yet.” The issue emerged again during Trudeau’s subsequent news conference.

“One of the responsibilities of any and every Canadian prime minister is to get our resources to market,” he said. “Canada has natural resources and we need to develop those as part our economy and part of our growth.”

To do so responsibly and quickly during the transition of the next half century is the trick, said Trudeau, and that is the conversation that’s taking place at the Globe conference and among the premiers during their meetings here.

“There is little substitute for sitting down together,” he said. Trudeau concluded the news conference by denying his government is creating conditions for more fossil fuels to be burned. “Actually, what we’re trying to do is decrease consumption of oil and gas. That’s where the investments in renewables, the investments in clean tech, are such an important part of our vision for the future.”

By Chris Bloomer, President, CEO, Canadian Energy Pipeline Association

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