Recently, Prime Minister Justin Trudeau and his cabinet approved two major pipeline expansions including Enbridge’s Line 3 pipeline and Kinder Morgan’s controversial Trans Mountain pipeline, while rejecting Enbridge’s Northern Gateway. The decisions followed a number of recent environmental policy announcements by the federal Liberal government designed to show that it is committed to combatting climate change, which includes an accelerated coal phase-out and a national floor price on carbon emissions starting in 2018. The decisions highlight the Liberal governments attempt to balance Canada’s environmental commitments with its national interests in getting resources to market.
The Trans Mountain Expansion Project (“TMX”) is a proposal by Kinder Morgan to expand the existing Trans Mountain pipeline system between Edmonton, Alberta and Burnaby, British Columbia. It would include approximately 987 km of new pipeline, new and modified facilities, such as pump stations and tanks, and the reactivation of 193 km of existing pipeline. It would also include the expansion of the marine terminal in Burnaby, BC. In May 2016, the National Energy Board (“NEB”) had concluded that the TMX was in the public interest and it recommended that the Federal Governor in Council (“GIC”) approve the TMX, subject to 157 conditions. Borden Ladner Gervais (“BLG”) had discussed the NEB decision in Positive Recommendation - National Energy Board Conditionally Approves Trans Mountain Expansion Project.
The Enbridge Line 3 Replacement Program (“Line 3”) is a proposal to replace 1,067 kilometres of Line 3 pipeline between Hardisty, Alberta and Gretna, Manitoba, with 1,096 kilometres of new pipeline. Enbridge proposed to operate the replacement pipeline at the original pipeline’s capacity of 760,000 barrels of oil per day. The majority of the Line 3 replacement pipeline will be constructed within a right of way that parallels and overlaps existing Enbridge pipeline rights of way, including the Enbridge Mainline corridor. In April 2016, the NEB issued a report recommending that the GIC approve Line 3, subject to 89 conditions.
The Enbridge Northern Gateway Project (“Northern Gateway”) is a proposal to build and operate two pipelines and a marine terminal. The pipelines would run 1,178 kilometres between Bruderheim, Alberta and Kitimat, British Columbia, where the marine terminal would be built. In December 2013, a Joint Review Panel, an independent body, mandated by the Minister of the Environment and the NEB, recommended that the GIC approve Northern Gateway, subject to 209 conditions.
The approval of the TMX and Line 3 expansions could boost pipeline capacity by more than 1.1 million barrels per day. However, Kinder Morgan and Enbridge must still abide by the binding conditions set out by the NEB. Some of the conditions include emergency preparedness and response, protection of the environment, consultation with those affected by the projects, including Indigenous communities, socio-economic matters, safety, and integrity of the pipeline. In addition, with respect to the TMX, the NEB required that Kinder Morgan detail plans to reduce and offset carbon emissions generated from the construction of the pipeline. However, the regulator did not specify how to offset those emissions.
The decisions by the Liberal government indicate that while it is serious about combatting climate change, the approval of the pipeline projects are in Canada’s national interest in getting its resources to market. The Prime Minister noted that the TMX would create 15,000 new middle-class jobs, the majority of them in the trades, but it would not have been approved without the government of Alberta’s own carbon-pricing efforts and cap on oil sands emissions.
While the Liberal government has approved the TMX and Line 3, areas to watch include whether the B.C. government – which had previously raised concerns respecting the Project – or parties opposing the Project including municipalities, environmental and certain First Nation groups will seek legal action in respect of the federal government’s recent determination. BLG will be closely monitoring any further developments.