TransCanada said on Thursday that it would not be proceeding with two pipeline projects designed to carry oil from Alberta and Saskatchewan to Canada's East Coast, a month after the company sought a 30-day suspension of the project applications to review changed regulatory circumstances.
In early September, TransCanada asked for a 30-day suspension of its application for the Energy East project. The company said back then that it wanted to review the National Energy Board's August decision to toughen the pipeline project assessment procedure.
In a statement, TransCanada suggested last month that it might shelve the project overall if the new assessment procedure turns out to be too taxing on costs, schedule, and the viability of the project.
At the beginning of this year, the regulator canceled all decisions the panel had made over the last two years and appointed a new one. At the same time, NEB itself is under intense scrutiny on criticism that it is playing in the oil industry's field.
In today's press release, TransCanada's president and CEO Russ Girling said:
"After careful review of changed circumstances, we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications."
TransCanada expects to book an estimated US$801 million (C$1 billion) after-tax non-cash charge in its fourth quarter results, following the decision to scrap the project.
The decision was not entirely unexpected one, given the fact that the company had sought a 30-day suspension and hinted that it might decide not to proceed with the project. Nevertheless, it deals a blow to the oil and gas producers in Alberta and Saskatchewan who had hoped to get more markets for their oil, while it's a win for environmentalists who had sought to stop the project.
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The Canadian Energy Pipeline Association (CEPA) said that it was "extremely disappointed" with the loss of a critical pipeline project. Alberta Premier Rachel Notley said:
"The National Energy Board needs to send a clear message on what the future of project reviews look like in Canada."
"This decision highlights the importance of diversifying market access and the subsequent national priority that must be placed on the Trans Mountain expansion project," Premier Notley added.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More