Ensuring Sufficient Time is Provided for Pipeline Projects to Successfully Meet Conditions

Year: 
2016

On May 6, 2016, the Northern Gateway Project filed a request with the National Energy Board (NEB) to extend the sunset clause on their Certificate of Public Convenience and Necessity until December 31, 2019.[1]

Since 2002, Enbridge has been leading the development of the Northern Gateway Project (the “Project”) with the support of potential Canadian and international shippers. The Project consists of two pipelines extending from an initiating pump station near Bruderheim, AB to a Kitimat, BC terminal.  One pipeline is a 36-inch diameter oil export pipeline, with an average throughput of 525,000 barrels per day flowing west from Bruderheim, ending in Kitimat. The second pipeline proposes 193,000 barrels per day of condensate flowing east from Kitimat to Bruderheim.[2]

In June 2014, the Project received a federal Order in Council granting the Project a certificate for the construction and operation of the Project subject to 209 conditions. The second of these conditions is a sunset clause which requires construction of the Project to commence prior to December 31, 2016. Earlier this month, the Project filed a request with the National Energy Board to extend the sunset until December 31, 2019. The request cited “delay in obtaining approvals from other regulators; judicial challenges to required approvals; and changes in market conditions affecting commercial arrangements.” as reasons for the delay and that the additional time will also be used to build stronger partnerships with First Nation and Metis communities.

Wright Mansell Research was retained to provide an independent assessment of the benefits of the Project from a Canadian public interest perspective.[3]  Their report concluded that the project would result in Canadian oil producers’ revenues increasing by $2.39 billion in the first full year of operations and growing to over $4.47 billion by 2025.

Further, Wright Mansell Research’s report concluded that over a 30-year operating period, Canadian gross domestic product (GDP) would increase by $270 billion. Over the same 30-year period, labour income would be a projected $48 billion, a result of an additional 558,000 person years of employment. Federal and provincial governments would be positioned to collect an additional $81 billion in revenue.

From 2010 to 2013, the Project underwent the most comprehensive review in Canadian history.[4] The Joint Review Panel, tasked with reviewing the project, concluded: “we are of the view that…the Enbridge Northern Gateway Project, constructed and operated in full compliance with the conditions we required, is in the Canadian public interest. We find that Canadians will be better off with this project than without it.”[5]

In order for Northern Gateway to get it right, they should be afforded the extra time needed to thoroughly complete conditions. The company needs to respond thoughtfully and fully to concerns, to develop the Project responsibly in the best interest of all stakeholders involved, and to consider the long-term health and success of our communities, environment and economy.  The project, deemed to be so beneficial to Canada, should be given reasonable preparation time to meet its conditions.

There are other cases of pipeline projects needing additional time to meet provincially and federally set conditions.  Imperial Oil Resources Ventures Limited - Mackenzie Gas Project – submitted a Request for Extension to their December 2015 sunset clause in August of 2015.  The National Energy Board granted a short extension (until September 2016) in order to give themselves a year to consider the actual extension request.[6] 

For various and legitimate reasons, parties engaged in the review and development of large scale infrastructure projects require additional time to ensure thoughtful and well-informed decision making and actions.  As evidenced by the National Energy Board’s internal extension to consider the Mackenzie Gas sunset clause extension application, equally, the same consideration should be provided to pipeline companies to ensure continued responsible development of such critical Canadian infrastructure and satisfaction of important regulatory conditions.

THE CHAMBER RECOMMENDS:

That the Federal and Provincial Governments support a process that ensures Northern Gateway and any other pipeline projects approved by NEB, CEAA and/or BC environmental processes are allowed meet federal and provincial conditions provided they continue to make reasonable investments to achieve project success.

Footnotes

[1] https://docs.neb-one.gc.ca/ll-eng/llisapi.dll?func=ll&objId=2955233&objAction=browse

[5] On Page 72 of the report - Connections: Report of the Joint Review Panel for the Enbridge Northern Gateway Project http://gatewaypanel.review-examen.gc.ca/clf-nsi/dcmnt/rcmndtnsrprt/rcmndtnsrprtvlm1-eng.pdf