On Tuesday, the Canadian government approved expansion of the 66-year-old Trans Canada crude oil pipeline that it bought last year for CAD $4.5 billion from Kinder Morgan Canada. Hoping to appease energy supporters ahead of the October federal election, the Liberals angered environmental activists despite also declaring a climate emergency this week.
The Liberal government previously approved the expansion in 2016 but that decision was overturned last year after a court ruled the government had not adequately consulted indigenous groups. Though Ottawa expects legal challenges to this latest approval, construction will resume shortly. This is expected to take two and a half years and could be in service by the second half of 2022.
The project triples Trans Mountain’s capacity to carry 890,000 barrels per day from Alberta’s oil sands to British Columbia’s Pacific coast and alleviates congestion on existing pipelines and diversify exports away from the United States. Western Canada’s oil production has expanded faster than pipeline capacity, causing a glut of crude to build up.
Prime Minister Justin Trudeau has been under intense pressure from both western Canadian Premiers and energy supporters who accuse him of doing too little for the oil industry, and from environmental groups who wrongly see the oilsands as a highly polluting source of crude production.
Trans Mountain still requires various permits and route approvals in British Columbia, where that province’s far-left New Democratic Party government opposes the project. BC Premier John Horgan said his government was “disappointed” with the federal government’s decision but would not unduly withhold construction permits. However, the BC government plans to appeal a recent BC Appeal Court ruling that the provincial government cannot restrict the flow of oil on pipelines that cross provincial boundaries.
The Canadian Energy Pipeline Association said in a statement that the decision will help create billions in economic benefits across Canada as it allows Canadian oil to reach higher-paying international markets. Alberta Premier Jason Kenney, a frequent critic of PM Trudeau, said, “This is now a test for Canada to demonstrate to the rest of the world we are a safe place in which to invest. We will measure success not by today’s decision but by the beginning of actual construction and more importantly by the completion of the pipeline.”
The pipeline is a vital conduit to help Canadian oil reach higher-priced international markets. According to a National Energy Board filing, eighty percent of the expanded pipeline’s total capacity has been contracted to companies including Suncor Energy, Canadian Natural Resources, and Exxon-owned Imperial Oil. Numerous indigenous groups have said they are interested in investing in it.
Trans Mountain has stockpiled about 30 percent of the pipe it needs and would resume construction where it left off a year ago, at the Westridge Marine Terminal in Burnaby, BC, and between Edmonton and Jasper, Alberta.