Quebec Official Seeks Fresh Pipeline Review
September 14 2016 - 10:40AM
Dow Jones News
OTTAWA—A senior Quebec lawmaker is calling on Canadian energy
authorities to start a new environmental review of TransCanada
Corp.'s proposed Energy East pipeline after conflict-of-interest
allegations forced hearings to be adjourned last week.
"I think it's time to perhaps to take a bit of a break and
relaunch this in a way so we can follow due process and make sure
we look all the issues," Carlos Leitao, Finance Minister for
Canada's second-largest province, said in an interview from New
York City.
The call to hit the reset button on the Energy East regulatory
review comes against the backdrop of a divisive debate about
pipelines and how the economy is at risk without new corridors to
carry landlocked crude oil to non-U.S. markets.
On one side of the debate are environmentalists and aboriginals,
who warn that projects such as Energy East pose a risk to habitats
and make it impossible for the Canadian Liberal government to meet
aggressive carbon-reduction goals. Energy-sector analysts,
meanwhile, warn the lack of pipeline infrastructure means prices
for Canadian crude oil and natural gas will continue to trade at a
discount to U.S. benchmarks—making it difficult to attract
investment in the commodity sector.
The latest setback for Energy East emerged after Canada's
National Energy Board said late last week it would adjourn hearings
into the 15.7 billion Canadian dollar ($11.9 billion) project after
members recused themselves "to preserve the integrity" of the
review. Media reports suggested that panel members met with
lobbyists for TransCanada prior to hearings this fall.
The energy regulator had also suspended hearings late last month
scheduled for Montreal after protesters caused a "violent
disruption," prompting concerns about security.
"We believe the opposition to the project is too much for the
project to overcome," said Robert Hope, energy-infrastructure
analyst at Bank of Nova Scotia, in a note to clients. His firm
estimates a 25% probability that the project, which would carry up
to 1.1 million barrels of crude from western Canada to refineries
in the east, will go ahead.
The energy board said once the government appoints a new panel,
the review process "can and will proceed."
The Quebec government tried to get a court injunction to stop
the Energy East hearings, which it then withdrew after TransCanada
agreed to a provincial environmental review. Energy East is opposed
by the majority of municipal politicians in the greater Montreal
area, as the corridor would run through the northern part of
Canada's second-largest city.
The pipeline "goes through sources of fresh water for three
million people," said Mr. Leitao, who represents constituents from
west-end Montreal. "These things cannot be handled in a cavalier
way and you need to make sure you look at all the safety issues
around this."
A spokesman for TransCanada said the company looks forward to
the energy board's review process resuming, as it wants to conduct
a "respectful and constructive dialogue with Canadians about Energy
East." He added the company continues to speak with municipalities,
landowners and aboriginal communities about the pipeline.
TransCanada was on track to get a final verdict from the
Canadian government on Energy East's fate by mid-2018. Canadian
Resources Minister Jim Carr said Tuesday that TransCanada could now
face a "modest" delay as the government looks to appoint new panel
members.
Mr. Carr added that it is up to the energy board, an independent
agency, to decide whether the review should "have to go back to
square one."
The government launched a review of the country's
environmental-review process earlier this year with an eye toward
boosting oversight.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
September 14, 2016 10:25 ET (14:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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