TransCanada says it won't develop Energy East

Monday, October 9, 2017

Canadian pipeline operator TransCanada Corporation has announced a decision not to proceed with its Energy East oil pipeline and a related natural gas pipeline.

In 2014, TransCanada affiliates applied to the National Energy Board of Canada for approvals relating to two proposed pipeline projects to transport "about 1.1 million barrels of oil per day from Alberta and Saskatchewan to the refineries of Eastern Canada and a marine terminal in New Brunswick" and to ensure natural gas supply to utilities in Ontario and Quebec. The Energy East and Eastern Mainline projects entailed about 4,500 kilometers of pipeline, with a proposed cost of C$15.75 billion.

But the Energy East project was controversial, drawing criticism from environmentalists, indigenous community leaders, and some municipalities.  At the same time, growth in oil production from the oil sands has slowed in light of economic and environmental factors.  Meanwhile, another pipeline proposed by TransCanada -- Keystone XL -- is moving forward following President Trump's approval of that project.

On September 8, 2017, the National Energy Board suspended its review of the projects at TransCanada's request, several weeks after the board decided to include direct and indirect greenhouse gas emissions in its list of issues and environmental assessment factors to be considered.  At that time, the Board held that it "will not issue further decisions or take further process steps relating to the review of the Projects until 8 October 2017."

On October 5, TransCanada announced that after "careful review of changed circumstances," it will no longer be proceeding with these projects

According to TransCanada, the projects have an approximate carrying value of $1.3 billion, and the company expects an estimated $1 billion after-tax non-cash charge will be recorded in 2017-Q4.  The press release notes, "In light of the project’s inability to reach a regulatory decision, no recoveries of costs from third parties are expected."

No comments:

Post a Comment