The oil industry in Western Canada was rocked by the recent decision by TransCanada to cancel their application to build the Energy East pipeline from Alberta east to New Brunswick.
There will be a loss of jobs in an industry that has been suffering under depressed oil prices for the last couple of years, and there will also be the loss of tax dollars, not only from the employees who would have been working on this major project, but from the pipeline itself.
This will have the effect of putting a chill effect onto the industry, as oil companies will look at the decision and shy away from making any large investments in any capital projects.
A big part of the reason for the decision was a requirement by the National Energy Board to quantify downstream greenhouse gas emissions, an impossible request as there is no way the company could possibly know what those emissions would be.
As Premier Brad Wall pointed out, other industries in Canada are not treated in the same way, in particular manufacturers in Eastern Canada, who are never asked to quantify how much greenhouse gas will be emitted by their products after they have been bought by the end-user.
The federal government has tried to distance itself from this issue by noting it was the NEB who made the request, but they are not acknowledging that it was the government who asked the regulator to make that change in their environmental assessments of pipeline projects.
The Natural Resources minister also pointed out there will be other pipelines, such as Enbridge’s project, and Keystone XL may yet come to fruition down through the United States. In the meantime, the lack of pipeline capacity continues to hamstring the oil industry in western Canada, which needs to get their oil to tidewater in order to have it shipped to foreign customers.
That lack of capacity may yet have a silver lining for local investors, who are trying to establish Comtrax as a rail hub for shipping out oil and grain, among other commodities, from the Weyburn area. Shipping oil by rail may not be ideal, as some feel it is more prone to accidents and spillage than any pipeline, but with upgrades to the rail system’s safety standards, this may indeed prove to be a profitable venture for local businesses.
The federal government would do well to rethink their approach to the oil industry, because the benefits would extend to all residents of Canada, as will the loss of jobs and tax revenues. — Greg Nikkel
