Could Trump Kill Energy East?

With the National Energy Board appointing three new members to the Energy East Pipeline review panel, many of project’s supporters have renewed their hope that the project will finally come through.

But it may not be that simple.

While the Energy East hearings were in limbo, the federal government approved two other pipeline projects: the Kinder Morgan’s Trans Mountain expansion (which was approved by the B.C. government Wednesday) and Enbridge’s Line 3 replacement project. And with United States president-elect Donald Trump saying publicly he would approve the Keystone XL project when he gets in office, some argue Energy East would no longer be needed.

Colleen Mitchell, president of the Atlantica Centre for Energy, says even if Trump approves Keystone XL, she’s confident Energy East will still proceed.

“Energy East was proposed while Keystone XL was still an active project,” Mitchell says. “Offtake agreements have been confirmed, so there is the [understanding] that the market still has the capability to absorb all of this Canadian oil in the international market.”

One of the big goals of Energy East is to transport more oil to east coast refineries to export to global markets like Europe and India. Right now, Canada is pretty dependent on the United States as its biggest oil customer. Mitchell says diversifying Canada’s market will not only increase the quantity of product but the quality too, with Trans Mountain helping bring Canadian oil to Asia, and Energy East expanding east to Europe and beyond.

“By increasing the quantity of Canadian crude to the United States through Line-3 and Keystone XL, you are not increasing the value of the commodity, you’re increasing the quantity,” says Mitchell. “The Trans Mountain and Energy East pipelines, in addition to increasing the commodity quantity, are also giving a potential increase in value. It’s exponentially more valuable to the country to have those two going forward.”

TransCanada Still Committed 

TransCanada spokesperson Tim Duboyce told Huddle in an emailed statement that the company was still fully committed to Energy East, citing it will bring oil to market more safely; generate billions in tax revenue and GDP growth; create jobs and expand the Canadian oil market overseas.

“Energy East remains of critical strategic importance because it will end the need for refineries in Quebec and New Brunswick to import hundreds of thousands of barrels of foreign oil every day while improving overseas market access for Canadian oil,” said Duboyce. “We look forward to the resumption of the Energy East regulatory process and showing why this project is in the national interest.”

The Export Question

Though expanding Canada’s oil market overseas to places like Europe is the big reason cited for Energy East’s importance, opponents of Keystone XL argue the project, if approved, would be used by the United States to buy cheap oil from Canada, refine it in their own facilities, then export it themselves to the gulf and eastern markets. With that market being served by the U.S., one could argue Energy East would be redundant.

The possibility the U.S. could use Keystone XL to export Canadian oil overseas is a real one according to Tim Pickering, a founder and Chief Information Officer at Auspice Capital in Calgary.

“They do have the ability to export oil and ultimately some of that oil may be coming from Canada. We send a lot of oil into the U.S. and being an economic powerhouse and a smart negotiator, they’re going to move that oil where the strongest demand for it lies,” says Pickering. “And whether that will be in America or offshore, once it goes there, it can go elsewhere. The U.S. gulf is the hub so that doesn’t surprise me. There’s not a lot we can do about that.”

But Pickering argues the United States exporting oil east wouldn’t hurt Canada’s chance in the eastern market, just make it more competitive. He says Canada has a strong advantage since many countries worldwide are starting to want oil from more ethical countries. Since America’s oil would be coming from Canada anyways, other countries may want to the original source.

“In the travels I’ve had to Asia for example, there’s definitely a demand for oil from Canada. It may be even possibly above market value. The reasons for that is we have a safe long-term supply and it’s totally different supply source than they currently have access to,” Pickering says. “They may be willing to pay a premium for that kind of supply. Remembering, oil from Canada has a lot less hair on it versus buying oil from Saudi Arabia.”

Though he believes there’s still a good chance Energy East will get the green light, Pickering says the recent project announcements and the possibility of Keystone XL approval may slow the process down.

“I think this is where it’s become politics. I think [the government] tackled Trans Mountain and will have to talk more about Keystone. I think [Energy East] just becomes less of a priority,” he says.

“There’s so much political tension around this issue that I think politically, it’s been put on the backburner and I think it’s up to all Canadians, especially our friends on the east coast with a vested stake in oil production and refineries…we Canadians need to stand up and make sure our voices are heard.”

Strong Opposition and Uncertainty 

Yet not all Canadian’s voices are in support of Energy East. It’s no secret that the project has a lot of opposition from people across the country. Matt Abbott, Fundy Baykeeper at the New Brunswick Conservation Council says the organization follows all of Canada’s pipeline projects closely. He cautions that though a project may have received government approval, that doesn’t mean it will necessarily happen.

“All those projects are far from built. There’s really strong, important civil society opposition to many of those projects,” Abbott says. “We’re seeing it from most importantly indigenous communities speaking very powerfully to their rights. We’re seeing it from municipalities, from environmental groups and from many others…so the two projects that have been approved are far from built. Even if there has been federal approval, there’s still many hurdles to cross.”

When it comes to pipeline projects right now, Abbott says the future is not 100 per cent certain. This applies especially Keystone XL in the hands of incoming president Donald Trump, who’s become notorious for unpredictability and flip-flopping on issues.“There’s still a high degree of uncertainty for me around what Trump is actually going to do. There’s been a lot of claims made, a lot of shifting targets it seems. We’ve heard pretty dramatic statements on a lot of things but we still need to see. I wouldn’t bet on which way the new administration is going to go on a whole host of issues,” Abbott says.

“There would certainly be an impact on the likelihood of Energy East if Keystone XL was approved, but it’s so far from certain for me. Anything Trump is likely to do [is uncertain].”