The National Energy Board will assess how Canada's climate-change policies will affect crude production as it reviews whether to recommend approval for TransCanada's Energy East pipeline, the regulator said Wednesday.
In a statement, the NEB broadened the normal scope it uses to determine whether the controversial pipeline proposal would be in the public interest. The TransCanada proposal has generated regional tensions, as mayors and other politicians in Quebec voice opposition to a project that Alberta and Saskatchewan see as an important economic lifeline for their struggling oil industries.
The board said the hearing panel would enhance its evaluation of oil-spill scenarios, including cleanup and preventive programs. It will also consider how construction of the pipeline would affect greenhouse-gas emissions (GHG) from the production of the crude flowing through it and how government climate-change policies would affect the commercial viability of the $15.7-billion project.
TransCanada's Energy East pipeline would carry 1.1 million barrels per day of western Canadian crude to refineries and export terminals in Quebec and New Brunswick.
The expansion of the scope of issues to be addressed has raised concerns in the industry, with the Canadian Energy Pipeline Association arguing the broad questions about GHG emissions and climate-change policy should be decided separately from the project assessment.
"While it is appropriate to address the direct GHG impact of a pipeline project through the NEB process, upstream and downstream impacts are appropriately dealt with in the context of the Pan-Canadian Framework on Clean Growth and Climate Change," the association said, in reference to the federal-provincial agreement signed last December. "The NEB's quasi-judicial process, which requires a balance of socio-economic, safety and environmental matters, is not the appropriate venue to address broader public policy issues."
A spokesman for TransCanada said the company would "take the necessary time to review the issues list and understand the potential impacts on the project."
The regulatory review was put on hold almost a year ago after revelations that NEB officials met privately with interested parties in Quebec, including former premier Jean Charest, who at the time was on contract with TransCanada.
Three panel members recused themselves last September. A new group had to be appointed, and they determined that initial stages of the hearing process had to be redone to address any concerns about bias.
The NEB has yet to conclude that TransCanada's submission is complete. Once that happens, the panel will have 21 months to complete its work and make a recommendation to the federal cabinet, which will then have six months to reach a decision. The NEB recommendation would come just months ahead of the next federal election, scheduled for October, 2019.
Some analysts are questioning the need for Energy East, particularly if one or two pipeline projects now being started actually get completed. With global crude prices stuck at around $50 (U.S.) a barrel, production growth in Western Canada is slowing down and will level off after 2020, when several expansions currently under way are completed.
In a podcast published this week by Columbia University's Center on Global Energy Policy, Houston-based analyst Rusty Braziel said Canada likely needs just one new pipeline project to handle the increased volumes expected over the foreseeable future – unless prices rebound to $70 (U.S.) a barrel.