Conservatives want to 'deregulate' Canada's energy framework amid possible delay to Trans Mountain

Expected for early next year, the $30.9 billion pipeline may not be ready until December 2024 after Trans Mountain Corp. learned it may have to divert the original pipeline route to save $86 million in additional costs.

Conservatives want to 'deregulate' Canada's energy framework amid possible delay to Trans Mountain
Facebook/ Greg McLean, Facebook/ Trans Mountain, Facebook/ Steven Guilbeault
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The federal Conservatives are renewing their vision to 'deregulate' Canada's energy framework with a potential one-year delay on the horizon to the Trans Mountain pipeline expansion.

"We don't need an energy transition. We need energy addition," Conservative delegate Maureen McCall told her peers on September 9.

She relayed to her fellow delegates at the Conservative Convention that the status quo doesn't work, nor has it ever worked.

"We must reduce regulatory timelines that attract big investment dollars needed for big resource projects. Right now, it takes ten years [to approve projects like the Trans Mountain pipeline expansion]."

Upon completion, the 300,000 barrel-per-day pipeline expansion would nearly triple the flow of barrels to 890,000 barrels and open access for Canadian crude in Asiatic markets. However, regulatory delays and hefty budget overruns have beset the project.

Expected for early next year, the $30.9 billion pipeline may not be ready until December 2024 after Trans Mountain Corp. learned it may have to divert the original pipeline route to save $86 million in additional costs.

Stk'emlúpsemc te Secwépemc First Nation (SSN) is disputing a proposed change by Trans Mountain to the pipeline route through an area known as Pípsell, reported Global News.

The Nation claims rerouting the pipeline 1.3 kilometres would 'severely jeopardize' a "cultural keystone place" as the Crown corporation would employ a more disruptive construction technique rather than the agreed upon 'micro-tunneling.'

Should the threat of delay manifest, the Explorers and Producers Association of Canada says Canada's regulatory system is to blame.

"It is a concern, there's no question. First, the delay, and second, the cost," said Tristan Goodman, president and CEO of the Explorers and Producers Association.

The federal government purchased the pipeline for $4.5 billion in 2018, but costs have spiralled out of control to $12.6 billion, then to $21.4 billion and most recently to $30.9 billion. 

"But I think the fundamental question is, 'Why?' Why is this happening? And the answer [...], which I think is relatively simple and I don't think is being discussed yet. This is an example of the federal government's regulatory and policy failure," claimed Goodman.

As of writing, the pipeline expansion project has faced environmental opposition and regulatory hurdles — with Kinder Morgan Canada Inc. threatening to cancel the project once upon a time. 

The Canada Energy Regulator will meet with representatives from Trans Mountain and SSN in Calgary later this week to determine how to proceed on the critical energy project.

According to a Fraser Institute survey of senior oil and gas executives last year, 82 respondents said uncertainty in Canada concerning environmental regulations, disputed land claims, and the cost of regulatory compliance are significant impediments to future investment.

Out of the 15 energy jurisdictions in the survey, Wyoming ranked 1st in attractiveness for investment, followed by Texas (2nd) and Oklahoma (3rd). Alberta ranked 12th, and B.C. ranked 14th. 

"The message from investors is clear — Canada's onerous and uncertain regulatory environment continues to hurt the investment attractiveness of the country's oil and gas industry," said Elmira Aliakbari, director of the Fraser Institute's Centre for Natural Resource Studies and co-author of the latest Canada-US Energy Sector Competitiveness Survey. 

On September 9, the Conservative Party of Canada proposed Policy 1070 to "clear hurdles" faced by investors looking to make a splash in Canada.

"The Conservative Party will build a natural resource framework that reconciles resource development with defined consultation timelines and access to international and domestic markets," reads the policy summary.

The sponsoring MP, Greg McLean, says the policy would attract significant investment for critical energy infrastructure.

"This project will provide economic benefits to Canada for decades," said Alberta Energy spokesperson James Snell, creating good-paying jobs in the upstream energy sector that already employs 138,000 residents.

However, tensions between Ottawa and Alberta have soured as attempts to start a dialogue with Ottawa on several energy and environmental issues, including this one, have yet to procure meaningful results.

"We have made it clear that any emission targets we agree to need to be realistic and achievable and must consider energy security, reliability and affordability," said Snell.

"The federal government's stance on petroleum production has deterred investment," reads the Competitiveness Survey. 

"An overall hostility to petroleum companies in Canada that is very palpable in Eastern Canada [has derided] the oil and gas sector." 

Goodman told the Canadian Press that rather than scaring away investment capital by allowing private companies to get bogged down in a regulatory nightmare, the federal government needs to take responsibility for ensuring major infrastructure projects can be built.

"I think that's the main issue that, at some point, the country's going to have to have a reckoning with," he said.

"Or it will spill over into all other aspects of development, from coast to coast. It [Canada's regulatory system] has just become untenable."

In March, McLean asked Federal Environment Minister Steven Guilbeault what factors led to the quadrupling of the project's costs.

Guilbeault deflected and said to request those details specifically from the Ministry of Finance. "I have, but they have yet to respond," replied McLean.

He then pressed the minister over past remarks he made to the detriment of Canada's lone inter-provincial oil and gas pipeline on the West Coast.

"Before being elected in 2019, you said this pipeline gets built […] over your dead body. Now you're in Cabinet, and […] it seems you're in conflict with the finance minister on building this pipeline," said McLean.

"Would you say you are complicit in putting hurdles in the way to stop this pipeline and make it more expensive for Canadian taxpayers?" he asked Guilbeault. 

Trudeau's environment minister said he must review the "premise of the question" before answering.

"To add delays and confusion, your department promulgated new regulations last year in June on migratory birds that delayed construction by potentially three years — new regulation amid construction near Bridal Falls," said McLean.

"We are responsible for protecting species and take that very seriously. The new regulations put out were approved by many," responded Guilbeault.

Trans Mountain Corp. is trying to secure external financing to fund the remaining cost of the project after Deputy Prime Minister Chrystia Freeland said the pipeline would need third-party funding to complete the project, through banks or public debt markets.

"As we committed to Canadians last year, no additional public money will be invested in this project as construction is completed," Freeland told reporters in February 2022.

"The federal government does not intend to be the long-term owner of the project, and we will launch a divestment process in due course."

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