TransCanada drops Energy East pipeline plan

REUTERS

CEO Russ Girling cited non-specific "changed circumstances" for the decision in a brief news release Thursday morning.

But others pointed to the complex regulatory process and mixed messages from the federal government as contributing factors.

October 5, 2017: TransCanada announces it is no longer going ahead with the Energy East pipeline project. The move came after the National Energy Board said its review would now consider indirect greenhouse gas emissions.

CEPA also said that pipelines are the only viable way to get large amounts of oil and gas to market and the country will be missing out on a big opportunity with the loss of Energy East.

"It really is a result of this constant, and I'll say this, drip, drip, drip of regulatory uncertainty that are impacting these kinds of infrastructure decisions".

"But there is no doubt that with the Energy East pipeline project we would have been able to do even more to grow the economy, strengthen education and improve health care in our province".

On the other side of the pipeline debate, a statement from Greenpeace celebrated: "An incredible victory for all the people, environmentalists, municipalities, landowners, unions, First Nations, and everyone who opposed this project". The same logic that killed Energy East should help kill Keystone XL.

Named one of Canada's Top 100 Employers in 2017, Irving Oil operates Canada's largest refinery, in Saint John, New Brunswick, which is located 65 miles north of the U.S. border and has reached production rates in excess of 320,000 barrels per day.

The premiers of Alberta and New Brunswick say they're disappointed by TransCanada's cancellation of the Energy East pipeline, which would have connected their two provinces.


The Canadian Energy Pipeline Association says it is "extremely disappointed with the decision".

"Given the positive signals the federal government has sent to TransCanada over the last weeks ... we believe it is clear that TransCanada is not proceeding with its application for the Energy East pipeline because recent changes to world market conditions and the price of oil have negatively impacted the viability of the project", Gallant said.

The reason for Energy East's cancellation is simple: "New pipelines can't be justified during a time of declining investment in the tar sands, North American pipeline overcapacity, and an unstoppable transition to renewable energy".

The line would have brought western oil as far east as Irving Oil's New Brunswick works - Irving president Ian Whitcomb said in a statement, "This is a sad day for Canada".

The decision, almost a month after the company halted regulatory applications for the project in the face of tough official scrutiny, is a blow to the ailing economy of the New Brunswick province and heads off a broader political row over the project.

The company has said repeatedly that eastern Canadian refiners rely on imports for 86 per cent of their daily needs. Premier Brian Gallant said he believed low crude prices had killed the project.

RBC Capital Markets analyst Robert Kwan said in a report the news was "neutral" from an investor point of view because of market skepticism that the project would proceed.

TransCanada shares were essentially flat at about $61 on the Toronto Stock Exchange as of mid-morning.

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