Critics of Canada’s energy industry and economic nationalists have been sent the message that markets, rather than politics, are still the drivers of energy policy north of the border through a National Energy Board (NEB) decision overruling objections and approving an export pipeline for oilsands production.
The NEB laid down the law in its second approval of a contested pipeline project since last fall. On the heels of approving conversion of part of the TransCanada system to oil from natural gas, the NEB endorsed an Enbridge oil project by again rejecting protests that expansions of the international delivery grid hurt Canadian employment and supply security.
The NEB made its decisions over vigorous objections by the Canadian Communications, Energy and Paperworkers Union and the Alberta Federation of Labor. The resistance conveyed into the regulatory process fears in Alberta and Ontario that growing energy trade with the United States drains off materials needed by Canadian manufacturers and consumers.
TransCanada’s C$5 billion Keystone conversion project alone will ship 18,000 jobs to the United States by cutting gas delivery capacity and sending out up to 590,000 b/d of oilsands production as unfinished bitumen instead of synthetic oil made by “upgrader” plants, according to a study done for the development’s opponents.
Approval of a C$3 billion Enbridge export project called Alberta Clipper caused the debate over energy trade with the U.S. to boil over into the Alberta election campaign. The province’s incumbent Conservatives, while insisting development of resource processing industry is one of their top priorities, sided with the NEB and refused to intervene with its approval of an export line for 450,000 b/d initially and eventually 800,000 b/d with future additions of pump stations.
Opposition Liberals and New Democrats, thought by some to be growing into a bigger force in the province, if not a potential government, called for government action to protect Canadian interests. But the ruling Tories dug in their heels against critics who also maintain that allowing industry to respond only to markets with rapid expansions of oilsands output also endangers gas supplies by siphoning off increasing requirements for fuel for thermal bitumen production systems.
The Alberta Clipper export route approval said, “When considering the overall public interest the board strives to ensure that Canadians benefit from efficient energy infrastructure and markets.”
The ruling repeated an article of faith enshrined in the 1985 Western Accord on Energy, which ended a long Canadian tradition of gas and oil border controls. The commitment was incorporated into the late-1980s Free Trade Agreement between Ottawa and Washington and finally into the North American Free Trade Agreement, which brought Mexico into the continental market.
The NEB insisted “properly functioning markets will generally produce outcomes in the public interest.” In the particular pipeline case that set off the trade debate, “It would not be in the public interest to deny the project in order to make feedstock available to potential domestic upgrading and refinery projects that may or may not be realized. The evidence does not support the suggestion that the Canadian refining industry would grow if the project were denied,” the NEB said.
The approval also sent a message to all concerned that the board will continue to rely on the economic cornerstones of its decisions on international gas and oil pipeline projects alike since the 1980s. Since Enbridge’s assessments of overall Canada-U.S. supply, markets and transportation capacity emerged as reasonable from challenges during public hearings, the board felt confident in granting an approval that relies on simple basics of current energy trade policy. “The project is supported by industry and can be financed,” the NEB concluded.
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