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Keystone delay has wider implications for Canada-U.S. trade, Girling says

Russ Girling, chief executive of TransCanada Corp, waits to speak at the annual IHS CERAWeek conference in Houston, Texas March 4, 2014.

RICK WILKING/REUTERS

The lengthy delay in getting a decision from the U.S. government on the Keystone XL pipeline is jeopardizing the broader trade relationship between Canada and the United States, TransCanada Corp. chief executive officer Russ Girling says.

Despite the long history of trade between the two countries, the hurdles in getting the project approved "call into question what the future looks like for that trading relationship," he told a Bloomberg business conference in Toronto.

It is also prompting Canadian businesses to look beyond the United States to other countries, he said, "to ensure that we can continue to develop our resources on our terms and our schedule, not those dictated by our neighbours to the south."

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Mr. Girling noted that his company has waited about 2,000 days since it first made its application for the pipeline, and that is more than three times the usual time it takes to get a decision.

He said he is "disappointed and frustrated" with the delays, and there is still "no clear direction on timing" for when the U.S. State Department will make its decision.

Asked if TransCanada might ask the federal government to file a challenge under the North American free-trade agreement, Mr. Girling said "we've looked at all legal avenues to try to get approval of this pipeline, [but] at this point in time a NAFTA challenge isn't our primary tack for moving this project forward."

Eventually that is a possibility, he said, because NAFTA calls for "fair and equal treatment," and "at this point in time it doesn't feel like we are getting fair and equal treatment."

In an interview after his presentation, Mr. Girling said anyone who belies the approval delay hasn't affected the relationship between the two countries is naive.

"At its very core the North American free-trade agreement … [is about] how energy is going to flow [and] energy security. So when you throw into this an uncertainty around whether or not the United States wants that oil any more, and in what form and how they want to transport it, it affects the relationship."

He said Canada has become complacent about the United States as a market, and overly dependent on it. "I think this is a wake-up call for all industries."

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Mr. Girling said it is clear from the environmental reviews that the Keystone XL pipeline can be built safely, and will have a "degree of safety above any other pipeline that has ever been built in North America."

The key question, he said, is whether the U.S. wants Canadian oil to move across the border in larger quantities.

As for the opposition to the pipeline, he said it is spearheaded by people who want to "keep the resources in the ground," and who have mounted a campaign of misinformation about potential dangers.

"It is a pipeline, for God's sake. It is the safest way to move oil to market," he said. "The real choice is, do you want to move that product by pipeline or do you want to move it by rail? For large quantities over long distances, there is no question that the most responsible thing to do is to build a pipeline."

Mr. Girling said he hopes that most of the issues delaying the decision will be settled by the end of the year. If Keystone XL gets approved by then, it will take two full summers to build, and wouldn't be functioning until the end of 2016 at the earliest.

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About the Author
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

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