TransCanada cancels Energy East Pipeline

[macdon02]

If I was the conservatives I wouldn't want to win the next election. Where exactly is the money coming from for future govt promises? I'm guessing mining companies are looking at this thinking "when are they gonna change regulation on us?" If there's no stability in govt regulation business will invest elsewhere. Bye bye foreign capital

[helmsdale]

The question is did Trans Canada need Energy East after Trump approved Keystone XL? No doubt regulations added to the cost but what about the declining projections for oil sands production? Several major companies and investors have been cancelling and pulling out of oil sands projects for awhile now because of low oil prices that make the projects not viable. So perhaps the more important reason that Energy East was cancelled was because it wasn't needed?

If the idea of using Canadian oil for eastern Canadian markets instead of imported was a good idea why did this never happen 20-30 years ago when it was easier and cheaper to build pipelines?

We always thought we were in good shape because we could export our surplus oil to the US. All that changed when new technology and the increase in US production have made the US more self sufficient. No one predicted that.

Seen this graph this morning. Seems projected output has been dialed back significantly by CAPP. If, TM manages to get done and doesn't get scuttled by the BC NDP there isn't likely going to be any short term demand for more pipe room.

[sumdumguy]

The principle of this issue as I see it is how the prime minister has failed as a leader to unify this country - his true test as a prime minster in my books. As I say that I ask myself, what are the priorities for a prime minister to make this nation all it can be? While one region is importing middle east oil ( adding to world greenhouse gasses) and exporting Cdn doolars, another region desperately looks for markets and it's not much different in other products. A true "prime minister" would look for every possible way to enable the process so all could reep the benefits of the resource. His attitude to the regions is deplorable.

[Oliver88]

Drama teacher and Quebec got their way on this issue.

[WiltonRanch]

The principle of this issue as I see it is how the prime minister has failed as a leader to unify this country - his true test as a prime minster in my books. As I say that I ask myself, what are the priorities for a prime minister to make this nation all it can be? While one region is importing middle east oil ( adding to world greenhouse gasses) and exporting Cdn doolars, another region desperately looks for markets and it's not much different in other products. A true "prime minister" would look for every possible way to enable the process so all could reep the benefits of the resource. His attitude to the regions is deplorable.

One person does not make a govt. Think JT isn't the only one making a mess. Whatever agenda these guys have it's not boding well for us peasants in the west. I think a lot more resource production will be idled or companies will exit if these guys get another term. It's like what was mentioned before. They don't like instability or being lorded over with the potential of being nationalized or regulated out of business (sask NDP). Lot of this bitumen is high cost and needs a seemless system to get to export. With low prices it doesn't justify to start anything new, and if you're maxed out shipping through current channels why go any further. Currently in this area no big drilling activity but see a few shut in wells getting fired up to feed the upgrader. Companies optimizing paid for wells but not spending anything new. This is the new reality. Low prices, scary govt.

[tubs]

JT wants to tax the small enteperneurs in this country so then he needs no pipeline. there is no incentive to be self sufficient in this country he thinks everybody can work for the government and get a big fat pension. that did not work in east Germany or Russia be d..ass is going to try it again

[the big wheel]

It's just plain short sightedness to not perue a national pipeline. Maybe instead of bombardier maybe should have gotten this going. At some point conditions for this will be a benefit. Although selfie maybe thinks there is no need for it because we ll all be putting up a sail and o catch the wind to move around.
I do however believe the oil companies don't like when they can't control the puppet in power I hope that's not the real reason they didn go ahead.

[Bowerpower]

Pretty pathetic when the east wont approve a pipeline that would benefit the Canadian economy. Let's keep importing war oil from the Middle East. What a joke. What a bunch of pricks. Alberta oil is no good but we'll take your transfer payments. Hypocrites.

[chuckChuck]

Basic economics – not regulation – ended the Energy East pipeline
BENJAMIN DACHIS
Contributed to The Globe and Mail
7 hours ago
October 5, 2017

Benjamin Dachis is associate director of research at the C.D. Howe Institute.

TransCanada Corp. announced on Thursday that it would not proceed with its Energy East proposal to ship Western Canadian oil to Eastern Canada. Widely thought to have been felled by overzealous regulators, in truth the king of Canadian pipeline projects was dethroned by the simple loss of its business case. Happily for Western Canada, natural gas looks to return to the throne of Canadian energy.

The case for Energy East was weakened by the decline in global oil prices since 2014. Between then and now, the forecast for Western Canadian oil production has fallen precipitously. According to data from the University of Alberta's Andrew Leach, the Canadian Association of Petroleum Producer's forecast for production by 2030 is down by more than two million barrels a day.

As the largest of Canadian pipeline proposals, Energy East alone was to represent about 1.1 million barrels a day of shipping capacity from Western Canada. If TransCanada's Keystone XL pipeline gets built – a prospect looking increasingly likely every day – along with Kinder Morgan's pipeline expansion to the West Coast and improvements along the Enbridge system, there would likely be excess pipeline capacity from Western Canada.

With more pipelines fighting over less oil to ship, TransCanada likely saw it would be cannibalizing Keystone XL. Every company would make the same decision: better to make money on one project than lose money on two.

Energy East's final toppling arose from a recent decision by the National Energy Board (NEB), but not for the reason you think.

Many will blame the travails that the NEB went through earlier this year. First, there were protests at hearings. Then, the NEB restarted the process from scratch after some members were accused of bias. That certainly slowed the project.

Others will blame the decision by the NEB to include upstream greenhouse gas emissions in its review of the social cost of the pipeline. Rejecting a pipeline on greenhouse gas grounds could have exceeded the constitutional grounds for federal environmental reviews and intruded into provincial jurisdiction. Counting upstream greenhouse gases against an inter-provincial pipeline would be economically costly without actually resulting in a reduction of emissions.

In fact, the plan's most likely cause of death was an NEB hearing a few weeks ago that resuscitated the economics of an old alternative. The majority of the planned Energy East route to take Western Canadian oil east relied on converting much of the existing infrastructure that has historically shipped natural gas to Ontario.

The pipelines that Energy East was to convert for oil shipping have been transporting natural gas east from Western Canada since the 1950s, and the NEB has been regulating the price of those shipments. Declining natural gas prices as a result of new, cheaper methods of production outside Western Canada meant that shipping the fuel across the continent at the rates set by the NEB wasn't economical.

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Less gas going east meant that the pipeline wasn't running at full capacity. TransCanada then had the bright idea to use the existing pipeline – presumably making it easier to build and get public support – to transport oil instead of gas.

The economics of that plan all changed in late September. The NEB approved a new price plan between TransCanada and natural gas producers that slashed the price that producers paid to send the gas to Ontario. The new price is less than half the old price. Producers in Western Canada, home of some of the most prolific and low-cost natural gas sources in North America, have signed up in droves for the new deal. The new low shipping cost will make western natural gas competitive in the east once again.

The end of the Energy East pipeline doesn't mean the end of Western Canadian oil production. Its cancellation was a symptom – not the key cause – of reduced future oil production.

Although the king of Canadian energy infrastructure projects may be dead, the old regime of Western Canadian natural gas will be restored in its place.

[binthere]

Irving oil and the union long shoremen are the biggest problem not the economics. If economics had anything to do with this bad decision the pipeline would have been a go to put our oil in position to get world price and not crumbs from the states. Great interview today on gormley with Brett Wilson.