NEB's unclear requirements for Energy East put TransCanada in 'tough spot,' says Gallant

New Brunswick Premier Brian Gallant says the National Energy Board's new regulatory requirements for TransCanada Corp.'s proposed Energy East pipeline are not clear and he plans to spend the next few weeks seeking clarity in hopes of saving the suspended $15.7-billion project.

But an industry expert says the track record of suspended projects getting back on track isn't good and losing the pipeline that would carry 1.1 million barrels of crude oil daily from Alberta to Saint John would have "significant consequences" for the entire country.

TransCanada announced Thursday it will suspend its application for the pipeline for 30 days to re-evaluate its viability and may abandon the controversial project entirely.

The regulator, the National Energy Board, confirmed Friday afternoon it has suspended its review of the Energy East and Eastern Maine projects at the company's request.

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During the 30-day period, the NEB will not issue further decisions or take further process steps related to the reviews, including the expanded Indigenous and public engagement activities, spokesperson Marc Drolet said in a statement.

The panel also granted the company's request to extend the deadline to file any available project updates to Oct. 27 from Sept. 15, he said.

TransCanada's request comes on the heels of the regulator announcing a tougher review process for the proposed pipeline.

The NEB expanded the review in August, saying it will consider the project's indirect contributions to upstream and downstream greenhouse gas emissions and will provide "more visibility" to the evaluation of risks associated with accidents such as oil spills.

TransCanada declined an interview request on Friday, but the Calgary-based company said in a news release it wants to do a "careful review" of the new assessment process to gauge its effect on the costs, schedules and viability of the pipeline.

The company has previously said the development and construction phase would create 3,700 direct and indirect jobs in New Brunswick and boost the provincial GDP by $1.2 billion.

In Saint John, which would host a tank farm and marine export terminal at Irving Oil's Canaport facility on the city's east side, the pipeline would inject $297 million into the local economy during construction and once operational, the terminal would generate 97 person-years of employment annually, officials have said.

Suspension of the pipeline is bad news for the province — "there's no sugar-coating it," Gallant said in an emailed statement to CBC News on Thursday night.

But he "can completely understand" TransCanada's position, he told reporters in Moncton on Friday. "I don't blame them.

"The National Energy Board's recent addition to the process for Energy East is not clear and if it's not clear then it certainly puts all of the proponents in a position that they don't really know what information they have to give, they don't really know what they have to sort of prove to be able to get the approvals, and that's a tough spot to put anybody in — a business, a person or a province."

Colleen Mitchell, president of the industry lobby group Atlantica Centre for Energy, said the NEB's additions represent "a fundamental change that will have an impact to all industry and to investment across the country."

"Certainly, it raised the flag as to whether a particular project could bear that extra level of scrutiny."

The precedence for companies putting a project on hold and then lifting that hold are not favourable.- Colleen Mitchell, Atlantica Centre for Energy

Mitchell contends the regulator shouldn't be asking TransCanada to answer for emissions both from the oilsands and from the tailpipes of vehicles. She fears the company will look elsewhere.

"The precedence for companies putting a project on hold and then lifting that hold are not favourable," she said, citing the Eider Rock refinery project by Irving Oil and BP as an example. It was shelved in 2009 because of the economic downturn and the softening of demand for petroleum products.

With major energy projects, there is typically a finite window of opportunity when all of variables align, Mitchell said.

The in-service date for the project was slated for 2020. 

Tories blame Liberals

The New Brunswick Progressive Conservative Opposition and federal Conservatives blamed the halt in the pipeline project on the premier and Prime Minister Justin Trudeau's Liberal government.

PC energy and mines critic Jake Stewart accused Gallant of "playing politics" with Energy East and said it's time for him to "stand up for New Brunswick" on "this very important project."

He said Gallant "jumped at the chance" to support fellow Liberal Ontario and Quebec premiers, Kathleen O'Day Wynne and Philippe Couillard, "in throwing up roadblocks" in 2014, when they imposed a number of conditions on TransCanada before accepting the project.

"It appears Gallant supports Ontario and Quebec having the final say on New Brunswick's energy future," Stewart said in a statement.

"With nothing but negative news on the project (delays, loss of support) over the past nine months … it appears that Brian Gallant is simply in over his head."

The Conservative critic for Atlantic Canada, former New Brunswick MP Rob Moore, said suspension of the project is a "direct result" of requirements put in place by the federal Liberals. In the last election campaign, many of the 32 MPs from Atlantic Canada talked about how important Energy East was to the region, Moore told reporters at a caucus meeting in Winnipeg.

"And now we've seen complete silence as this project has had roadblock after roadblock thrown up in front of it," he said.

Happy to horrified

On the streets of Saint John, the reaction was mixed.

Lynana Astephen, spokesperson for the Red Head Anthony's Cove Preservation Association, said her group is happy.

The proposed project would see 22 oil storage tanks built across the street from her home.

"That beautiful forest and that field would be gone," she said. "Definitely, we're hoping this is a sure sign of the end of this project and we can go on with our lives, like we were before."

Carole-Anne Holmeslauder said she was "mostly against" the project from the beginning because of environmental concerns, which include increased tanker traffic in the Bay of Fundy, "but not enough to get up and hold a placard."

Mike McSorley, however, was "definitely for the project."

"I thought it would be good for the economy," he said.

For Kathy Mazerolle, the suspension spells doom for the city.

"We're done. We're done in Saint John," she said. "We need the work here."

Gallant said he spoke with TransCanada CEO Russ Girling after the suspension was announced and the company is still considering proceeding with the NEB process.

But "there's no doubt that it is possible they won't," he said. "They are indeed considering other options as well."

His government will do everything in its power to see the 4,500-kilometre pipeline built, he said.

"But at the end of the day, it's a private sector business that will make [its] own decisions."

Too many 'roadblocks'

David Duplisea, CEO of the Saint John Region Chamber of Commerce, said he's disappointed TransCanada has decided to look at its options, but he's not surprised.

"It's perfectly understandable because government and the NEB keep moving the goalposts and four years later, there still is no line of sight on any kind of regulatory framework," he said.

We cautioned a few years ago that the project could die just a natural slow death by continuing to put the roadblocks up.- David Duplisea, Saint John chamber of commerce

"We cautioned a few years ago that the project could die just a natural slow death by continuing to put the roadblocks up."

There have been "many roadblocks" on the project, he said.

"Adding the extra regulatory requirements, and then adding the upstream and downstream … . It's just a never-ending."

TransCanada has already spent $1 billion, said Duplisea, $25 million of that in New Brunswick.

Premier stresses project 'merits' 

If the company does pursue the pipeline, which would carry crude to eastern refineries and a marine terminal in Saint John, the New Brunswick government believes it will be approved, the premier said.

The pipeline would contribute to the growth of the Canadian economy and offer higher prices for Canadian producers, whose landlocked product trades at a discount to the West Texas Intermediate benchmark, he said.

It would also help diversify export markets for oil, reduce dependency on foreign oil and offer a safe mode of transporting Canadian oil.

Gallant said the province has never included the Energy East pipeline in its economic or fiscal targets.

"With that said, with the project we could do even more to grow the New Brunswick economy, strengthen education and improve health care services."