Building a pipeline is impossible in Canada and easy in the United States. That is a widely believed story and it may once have even been true. Times have changed.
It has taken too long, but there has been major progress on two new Canadian pipelines: the Trans Mountain expansion and the Line 3 Replacement. They will add about one million barrels a day of export capacity. That’s a big number, given exports were 3.7-million barrels a day last year.
Construction of the Trans Mountain expansion is well under way. New oil is set to flow by late 2022. As for Line 3, the Canadian section started moving oil last year. The long-stalled American section through Minnesota is the hold up. It was supposed to be built this year, but because of new regulatory hurdles, construction is yet again delayed.
All this starts to point toward a surprising reality: It’s Justin Trudeau’s Canada, and not Donald Trump’s U.S., where there is more progress on pipelines, at least ones that have to cross national or internal borders.
That’s not what anyone would have predicted when Mr. Trump was elected. Building Keystone XL, which had been blocked by former president Barack Obama, was one of his signature election promises. Days after his inauguration, he moved to push it ahead, to better connect Alberta’s oil sands with refineries on the Texas Gulf Coast.
Three-and-a-half years later, there is still no Keystone XL – and there may never be. It is just one story in a particularly tough July for pipeline building in the U.S.
First, the U.S. backers of the proposed US$8-billion Atlantic Coast natural gas pipeline gave up. They had Mr. Trump’s support and a favourable Supreme Court ruling, but they had also faced legal delays, which led to ballooning costs, and they feared being hit with more of both.
Then, on July 6, came a double-whammy. A U.S. judge ordered the Dakota Access oil pipeline shut down. The line had been up and running since 2017, but a legal challenge over its environmental review succeeded.
The same day, Keystone XL took a heavy legal blow. The U.S. Supreme Court upheld a lower court ruling that had blocked an environment permit necessary to build across U.S. waterways. That slammed the brakes on construction.
Back in March, Alberta taxpayers learned that they would be paying to jump-start Keystone XL after Premier Jason Kenney invested $1.5-billion cash and provided a $6-billion loan guarantee, effectively covering the majority of construction costs. This page called it a risky bet.
But even we never counted on those risks surfacing so quickly. In May, Democratic candidate Joe Biden, who has the inside track to win the presidency, promised that if elected, he will rescind the pipeline’s presidential permit. Now comes the loss in court over another key permit. Mr. Kenney remains confident – construction of Keystone in Alberta started this summer – but it is clearer than ever that, no matter how much money the Alberta Premier throws at the problem, the pipeline’s fate is largely out of his hands.
Still believe the U.S. is pipeline nirvana? Let’s visit Michigan. Line 5 traverses the state, an essential link moving Saskatchewan oil to Ontario. Michigan in late June sought a shutdown of the damaged 67-year-old pipeline and won in court, although it was partly reopened in early July.
This array of troubles is not at all what pipeline backers expected when Mr. Trump became President. Yet, in Mr. Trump’s fervency to build pipelines, his administration may have exposed projects to greater legal risk by rushing through permits without adequate consideration.
Back in Canada, it’s true that regulatory reviews are long and ponderous. It’s true that Canada has a high bar for meaningful Indigenous consultations. And it is absolutely true that even narrowly cutting corners on those obligations risks being hit with a court order to redo a lot of the work, as happened to the Trans Mountain expansion.
However, what’s also true is that things can get done in Canada.
This country’s regulatory system is still too slow, but its rigour is delivering a better result than south of the border. The all-Canadian Trans Mountain expansion is under construction and will be in service in just more than two years. The Canadian section of Line 3 is finished; the American section is in limbo. While Keystone XL’s northern section moves forward, its southern end remains stuck in purgatory.