Kinder Morgan Inc. and Enbridge Inc. won Canadian government approval for two pipeline projects — a boost for the oil industry that could expand exports, open new Asian markets and lift prices for locally produced barrels of crude.
Prime Minister Justin Trudeau approved, with conditions, Kinder Morgan’s Trans Mountain expansion and Enbridge’s Line 3 proposal as he sought to balance environmental protection with the need to expand markets for Canada’s resources. He rejected Enbridge’s Northern Gateway proposal and pledged to enact an oil tanker ban next year on the northwest Pacific coast.
Prime Minister Trudeau said: “The fact is oil sands production is going to increase in the coming years. Because we are at capacity in terms of existing pipelines, that means more oil is going to be transported by rail in the coming years if we don’t build pipelines. That is less economic, it is more dangerous for communities, and it is higher in greenhouse gas emissions than modern pipelines would be.”
A report in Bloomberg Markets (November 30, 2016) stated: “While the two new lines are set to face continuing local opposition, the decisions are a victory for Canada’s oil patch that is suffering from falling oil prices, a transportation bottleneck and over-reliance on the U.S. as a buyer.”
The report observed that the lack of alternative markets has forced producers to sell at a discount to international benchmarks, while congestion on the existing network has increasingly pushed oil shipments onto more expensive rail cars.
Details of the projects in question are:
- The cabinet conditionally approved the Canadian leg of Calgary-based Enbridge’s plan to replace and expand Line 3, a 1,659-kilometer (1,031-mile) pipeline connecting Alberta to Wisconsin. The project is estimated to cost at least $7.5 billion and boost capacity to 760,000 barrels per day from 390,000 barrels.
- The cabinet also approved Houston-based Kinder Morgan’s $6.8 billion, 1,150-kilometer Trans Mountain oil project to nearly triple the capacity of a line running from Alberta to Vancouver to 890,000 barrels per day.
Trudeau concluded: “This is all about demonstrating that we understand that getting resources to market safely, in a way that respects our responsibilities toward the environment, toward future generations, but does it in a way that is anchored in science, not rhetoric.”