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NAFTA Rift Could Be A Boon For Canadian Oil

NAFTA Rift Could Be A Boon For Canadian Oil

President Trump’s plan to renegotiate…

Trudeau Greenlights Two Oil Pipeline Projects

Justin Trudeau

Canada’s Prime Minister Justine Trudeau has approved, conditionally, two new pipeline projects: Kinder Morgan’s Trans Mountain and Enbridge’s Line 3, despite environmentalist opposition to these and all other pipeline construction proposals.

Trudeau did, however, reject one of the pipeline proposals: Enbridge’s Northern Gateway, because of what he deemed were excessive risks. To further quench environmental activists and First Nation fears, Trudeau added that he would introduce a ban on oil tankers along the country’s northwestern Pacific coast.

The approval was to be expected, despite the opposition. As Trudeau himself said, speaking to media after the announcement of the cabinet decision, Canada is currently using its pipeline network at capacity as oil sands production grows. This production is set for further growth, which means that the choice is between more pipelines and trains.

Pipelines have been found to be much safer than trains when it comes to transporting crude oil, with trains 4.5 times more likely than pipelines to “experience an occurrence” as the Fraser Institute puts it in its study of the relative safety of different means of oil transportation.

The government approval, however, does not necessarily mean that Kinder Morgan and Enbridge would be able to go ahead with the construction. According to one observer, there are 59 First Nations opposing the Trans Mountain pipeline, and they can take the matter to court, they can organize protests, and do everything else in their powers to stop the project. As PM Trudeau noted, “governments grant permits, but only communities grant consent.”

Kinder Morgan’s US$5-billion (C$6.8 bln) project will see the original Trans Mountain pipeline expanded by a new, equally long “twin”, which will raise its capacity to 890,000 bpd, from the current 300,000 bpd.

The Line 3 project seems to raise less concern among environmentalists and First Nations, perhaps because it is in fact a project for the replacement of an existing pipeline, effectively reducing the risk of spills. This would cost Enbridge US$5.6 billion (C$7.5 bln).

By Irina Slav for Oilprice.com

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