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A four-member panel set up last year by Canada’s Environment Minister has said that the country needs a single body to assess new oil pipeline and mining projects, to replace the current system where three separate agencies make decisions about such projects on federal land.
The Liberal government of Canada says people don’t trust the three-agency system and are especially suspicious of the decisions made by the National Energy Board – Canada’s energy regulator and the agency that vets or rejects new oil pipeline projects. According to the panel, there was a feeling that the NEB tended to decide in favor of the energy industry.
The panel recommended the setting up of a single Impact Assessment Authority that would handle energy and mining projects with more attention given to aboriginal communities’ interests and the long-term impacts of any one project.
There is wide opposition in Canada against new pipeline projects, but even a government as liberal as Justin Trudeau couldn’t deny the fact that the country’s existing pipeline network is operating at capacity while crude oil output is rising, as Oilprice reported last September.
This development is putting Canadian oil at risk: as pipeline capacity reaches its maximum, more oil will have to start being transported by railway. The bad news for these producers is that railway transportation of crude is costlier than pipelines, and they will have to increase the discount at which they sell their oil.
Conventional oil production in Canada is declining, and the biggest hopes for the revival of the country’s embattled energy industry are pinned on the oil sands. But Alberta is landlocked, so the heavy crude extracted there needs either pipelines to reach a coast or the U.S. refineries, or railways. This is where oil producers in the oil sands province find themselves between a rock and a hard place.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.