Pipes are laid out in Kamloops, B.C., on March 27, 2017.JONATHAN HAYWARD/The Canadian Press
Amy Janzwood completed her doctorate at the University of Toronto in 2020. She currently teaches at the McGill University Bieler School of Environment. Her research explores the comparative politics of energy and the environment.
Politicians across Canada are considering resurrecting long-dead pipeline projects such as Northern Gateway and Energy East in response to the looming threat of U.S. tariffs. The pipeline industry, however, has not shown the same enthusiasm. If pipeline companies have moved on, why haven’t our politicians?
Pipeline giant TransCanada Corp. (now TC Energy) dreamed up the Energy East project as a contingency to the Keystone XL, another failed project. Energy East was to carry heavy oil from Alberta to New Brunswick for export. It was the only oil pipeline project to be cancelled by its proponent before it even completed the regulatory process. So, what happened?
The project, launched in 2014, required more than 1,500 kilometres of new pipeline, primarily through Quebec. In that province, a history of Indigenous land-based movements and environmental and youth activism, a coalition of environmental NGOs, social justice organizations, and grassroots groups formed in resistance to the project. Even the largest labour federation in the province allied with civil society groups and other trade unions against the project.
Significant opposition resulted in TransCanada cancelling its proposed marine and tank terminal at the Port of Gros-Cacouna in April, 2015. Abandoning the port weakened the proposal even further in Quebec, and two years later TransCanada scrapped the whole project, mysteriously alluding to “changed circumstances.”
While industry negotiations were behind closed doors, several points are clear.
TransCanada faced significant challenges with the project, including falling oil prices and difficulties securing commercial contracts with oil companies. The National Energy Board’s panel, after stepping down amid conflict-of-interest allegations, was replaced and restarted the review process, causing delays and uncertainty. The new panel’s decision to consider the project’s full climate impacts – a first in Canada – added even greater uncertainty for the company.
The project wasn’t “killed” by the federal government as some politicians have argued. TransCanada scrapped the project because of changing commercial dynamics, the bungled regulatory process and staunch opposition.
Since 2014, no new applications for major oil pipeline projects have been submitted to the federal energy regulator. Pipeline companies have shifted focus to other markets or incremental growth.
TransCanada changed its name to TC Energy in 2019 to signal its shift to markets in the United States and Mexico. By the year’s close, TC Energy’s CEO Russ Girling told investors the company would focus on expanding existing infrastructure rather than proposing new megapipelines. Recently, TC Energy reiterated it is “no longer in the oil pipeline business,” after having spun off the relevant division into a separate company.
Perhaps most tellingly, the pipeline industry association closed its doors at the end of 2021 after losing a “critical mass” of its members.
The era of new mega oil sands pipelines is over owing to the changing economics of oil sands production and the immense difficulty of building new megaprojects.
Pipelines are decades-long gambles that burden taxpayers and governments while private investors walk away unscathed.
Take the Trans Mountain Expansion (TMX) project for example. Once estimated to cost $5.4-billion, it is now a whopping $34-billion. TMX was only made possible because the federal government purchased it from Kinder Morgan, whose investors practically skipped away from the sale.
With major questions around the cost for taxpayers or who will ultimately own the project, TMX is still a bad deal for Canadians.
The former CEO of the Canada Energy Regulator recently suggested that the only way to build pipeline infrastructure is for governments to have “skin in the game.” Yet, even the former head of the pipeline’s now-defunct industry association, Chris Bloomer, warned, “I don’t think we should use tax dollars to build these things.”
Pipeline companies continue to expand their capacity by taking advantage of their significant pre-existing network of oil transportation infrastructure. For example, Trans Mountain promises around-the-clock shipping in the Port of Vancouver (despite the risks of increased tanker traffic to critically endangered orcas).
Yet recent political amnesia around pipelines must confront the reality of slower growth of the oil sands and future demand – even the federal energy regulator modelled peak oil production as soon as next year. Pipelines, however, are designed to last decades. The economic case for new, or revitalized pipelines is simply non-existent.
While during these turbulent times, including looming tariff threats, economic diversification is necessary, we must diversify away from oil exports, not double down on delusion – Canadian economic security depends on it.
Amy Janzwood completed her doctorate at the University of Toronto in 2020. She currently teaches at the McGill University Bieler School of Environment. Her research explores the comparative politics of energy and the environment.