Natural Resources Canada is acknowledging that a National Energy Board recommendation in favour of Kinder Morgan’s Trans Mountain pipeline expansion “was based on outdated estimates that fail to account for national efforts to fight climate change,” the National Observer reported Wednesday.
The NRCan comments “raise fresh questions about the quality of a federal review that was initiated by the Calgary-based National Energy Board when the former Harper government was in power,” the Observer notes. “Any change in growth estimates for oil production reopens critical questions about the urgency to approve new pipelines or whether there is time to redo public reviews under a brand new process.”
The case for new pipelines rests on the NEB’s estimate that Canadian oil production will grow from 4.1 million barrels per day in 2015 to 4.9 million barrels in 2020, en route to 6.1 million barrels in 2040, notes Observer Managing Editor Mike De Souza. “But the federal Natural Resources Department told National Observer that those projections depend on projects that have not yet received approval from proponents,” he writes.
“Note, the NEB reference case is based on consultations that were conducted in 2015, and as such does not take into account recent policy changes in Alberta to limit GHG emissions from oil sands projects and increase the carbon price, or proposed policies at the federal level,” NRCan wrote, in an email that predated this week’s announcement of a floor price for carbon by Prime Minister Justin Trudeau.
Independent economist Robyn Allan “has warned that the Kinder Morgan project could harm several oil companies that locked themselves into paying fixed rates for shipping contracts with the Texas pipeline giant several years ago, before the recent plunge in global commodity prices,” the Observer notes. But “all of the companies that signed agreements to ship oil on Kinder Morgan’s pipeline are unable to sound alarms about this threat since their contracts prevent them from speaking out against the project.”