Energy East pipeline cancellation an opportunity lost for rural Canada

A pipeline worker inspects a pipeline (source: CEPA).

Last week TransCanada Corp announced its withdrawal from the 1.1 million barrel per day Energy East pipeline project in Canada. The cancellation of this $15.7 billion project has created much unrest or satisfaction depending where you live in Canada. The pipeline’s concept was to take oil east for domestic use and exports abroad.

The pipeline was going to provide provinces like Quebec a chance to use Canadian energy instead of importing 85% of their natural resource supply like they do now. Quebec’s oil imports come from the U.S. and from overseas.

Natural Resources Minister Jim Carr, responding to TransCanada Corp.’s decision to drop plans for the Energy East pipeline, said: “This was a business decision.” It is definitely not that simple. Many people are pointing the finger of blame at a thickening regulatory environment and a federal government that lacks follow-through on verbal support of pipelines.

The Energy East pipeline was a major political dilemma for the federal government. It was not popular in Quebec and Liberals need votes in Quebec. So when cancelled, the Liberals took a very accepting stance — almost to the point of “you win some, you lose some. there will be other pipelines, other jobs created and the economy is so strong we don’t need this.” Kinda sad, really.

On RFD-TV’s Market Day Report Shaun Haney spoke with host Mark Oppold about the Energy East project and how its cancellation will hurt rural communities.

Some people are looking at President Trump for the reason energy east has been abandoned. With Keystone XL being revitalized by the Trump administration, the Energy East project may have become more of a backup plan for dealing with the oilsands demand issues. For some it is way too easy to blame Donald Trump for the common cold, but in this case the shoe might fit a little. One less pipeline also means one less competitor for oil that could move south through Keystone.

According to the NDP and environmental activists, there should be no pipelines built. No pipelines at any cost or benefit. This creates an environment that is not going to enable energy infrastructure investment. Having an unbalanced approach to the environment either way creates negatives for the country in the long term. However finding a balance with the fence-walking Liberal government is proving to be challenging on both sides.

The problem is the rural economy in Canada is driven by agriculture and natural resource jobs. There’s much concern that environmental activists and increasing regulations have put a real damper on the resource industries’ ability to thrive and grow. Natural resource development is still a massive opportunity for economic diversification in rural Canada.

The oilfield in Western Canada has provided many farmers winter employment and when commodity prices are bearish in tone like today, the oilfield provides economic support to those that need that secondary income.

No matter who is to blame for the death of energy east, the loss of the project is bound to have much more immediate negative impact on rural Canada over urban Canada. Its a loss of jobs, loss of wealth, missed opportunity for increased energy exports and an opportunity for Quebec to use more domestic energy. Opportunity lost all around.