Industry opponents won an opening skirmish Wednesday in the forthcoming battle over environmental approval of the Energy East plan for partial conversion of TransCanada Corp.'s natural gas Mainline to oil service.
The National Energy Board (NEB), for the first time in its 58-year history, agreed to consider "cumulative" greenhouse gas emissions by both "upstream" production and "downstream" consumption of shipments through a proposed pipeline.
The decision to expand the issues list for resuming the suspended review of the C$15.7-billion (US$12.6-billion) project rejected pleas to uphold NEB custom of efficiently focused hearings by the Alberta Department of Energy and the Canadian Association of Petroleum Producers (CAPP).
The ministry and CAPP urged the board to accept that Canadian oil production is under the jurisdiction of the provinces, and that they are working with the federal government on co-operative climate change policies.
The NEB acknowledged limitations on its authority but pointed out that broad national and global actions on carbon emissions touch on its responsibilities for examining the economics, safety and environmental acceptability of projects.
The ruling said, "The Board is of the view that greenhouse gas laws and policies are relevant to its public interest determinations as they may have an impact on existing and potential markets, and the availability of oil or gas to the proposed pipelines."
The ruling also struck a procedural balance by keeping the NEB door open to pro-development interests.
The Energy East hearings issues list includes: "The economic and commercial benefits for Canada, provinces, and local communities, including the impacts on tax revenues at the national, provincial, and municipal levels."
The board will also consider, "The extent to which Canadians will have an opportunity to participate in the financing, engineering, construction, operation, and maintenance of the Project at the national, provincial, and local levels, including employment and other opportunities."
The Energy East issues ruling follows a months-long review of the case that attracted 820 public submissions from across Canada, largely generated by the pipeline project’s role as an enabler for continued growth by Alberta oil sands plants.
Thermal bitumen extraction and associated power plants stand out as the nation’s fastest growing industrial natural gas consumer and greenhouse gas source.
Oil sands emissions are currently 70 million tons of carbon dioxide per year from burning 2.9 Bcf/d for production of 2.4 million barrels daily.
Barring breakthroughs and high investment in environmental technology, government, industry and research agency projections foresee annual emissions of 100 million tons for bitumen production of 3.7 million b/d by burning 4.7 Bcf/d of gas within 15 years.
The Energy East plan calls for converting, to 1.1 million b/d of oil service, 3,000 kilometers (1,800 miles) of surplus gas pipe in TransCanada's 58-year-old Mainline right-of-way spanning Alberta, Saskatchewan, Manitoba and Ontario, plus a new 1,500-kilometer (900-mile) extension across Quebec and New Brunswick to an Atlantic tanker export terminal.
The construction package also includes 279 kilometers (167 miles) of replacement gas pipe titled the Eastern Mainline, in Ontario where the TransCanada network runs full by carrying low-cost imports of shale production from the United States. The NEB's Energy East review includes the capacity and costs of the new gas facilities, which are covered by a settlement between TransCanada and distribution firms in Ontario and Quebec.
Although the issues list decision is a key step, the NEB still sets no dates for resuming the Energy East regulatory review. The proceeding has been suspended since last September, when the original hearings panel resigned over allegations of bias arising from private board meetings with project supporters in Quebec. The new panel faces two more major preliminary hurdles: selecting a formal intervener list from a long lineup of potential case participants, and making a "completeness" ruling on TransCanada's application that will restart the hearings on a legislated 21-month timeline.