Expedited Reviews are the Solution to Costly Pipeline Obstructionism
A new report by the Vancouver-based Fraser Institute says every effort should be made to expedite pipeline project reviews because continuing delays are costing Canada’s economy and governments billions a year.
It’s what the former Conservative government and the current U.S. government did to rescue energy projects from regulatory and legal jams orchestrated by a growing cadre of opponents.
It would require Justin Trudeau’s Liberal government to back up on hurdles just put in place, such as more consultations on the two major proposed pipelines still in play – the TransMountain expansion and Energy East – aimed at restoring trust in regulators. Complicating matters is that the Prime Minister painted himself into a corner by making ambitious climate change commitments that will be tough to square with oil pipeline approvals, and raising expectations among Canada’s First Nations that no ask is too great.
And yet the path forward proposed in the report by senior director Kenneth Green and senior fellow Gerry Angevine, is a sensible one to clear up pipeline bottlenecks that are depressing Canadian oil prices by 20 to 30 per cent.
The alternative, continuing to stall approvals while trying to earn so-called social license, is damaging the economy, government revenue and investor confidence to a level that no national government should allow.
The report’s roadmap to pipeline approvals includes: making the shortening of the regulatory review process a priority, streamlining it and speeding up decision-making; starting consultations with First Nations before project applications are filed; and, significantly, showing leadership.
“The federal government has an important role to play in ensuring that projects that are clearly in the national interest are approved as quickly as possible, subject to whatever special terms and conditions may be deemed appropriate by review panels and the government itself,” the report says.
“If the legislated regulatory review process with regard to a particular project becomes bogged down and unduly delayed, the government may need to assume a leadership role. This could require working with stakeholders to resolve impasses, or introducing special legislation.”
The report says that if Canada were able to export one million barrels of oil per day to markets accessible from ocean ports — with the lion’s share of heavy oil and bitumen exports continuing to flow to the U.S. — the incremental revenue would be in the billions.
For example, if Canada exported one million barrels of conventional heavy oil and oilsands bitumen per day to world markets at US$60/barrel, additional industry revenues would reach $4.2 billion annually.
The Alberta and Saskatchewan governments would also collect higher royalties if Canadian oil prices got a boost.
Canada is paying another high price for its tough climate change policy, put in place to win public acceptance for pipeline approvals.
Alberta’s 100 megatonne a year ceiling on oilsands greenhouse gas emissions means there is room for another 1.5 million barrels a day of production, leading to total volumes from the deposits of 3.8 million barrels a day, the report says. That growth is expected to be achieved in 2025, representing lost opportunity while competitors continue to produce their oil in growing amounts.
“Beyond 2025, investment in new oil sands production facilities may be limited because of the cost of meeting GHG emissions limits and other new environmental requirements, and oil supply investment alternatives,” the authors say.
The study doesn’t address other implications for Alberta and Saskatchewan of further delays for the TransMountain expansion, which is due for a cabinet decision at the end of the year, and Energy East, which is holding public hearings, particularly after Trudeau suggested he won’t revive the Northern Gateway project after a court quashed its permits.
Their success is now as symbolic to the oil producing regions as their failure is to environmentalists and aboriginals.
Opponents have had the upper hand so far, because there is no cost to saying no.
If the projects keep getting delayed, there will be no the incentive for the two provinces to play along on climate change, or aboriginal reconciliation, or any other policies Ottawa and wants done. Already mired in a painful recession and with alienation growing, at some point Canada’s oil producing regions will have nothing left to lose and it will be their turn to obstruct.