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Canada's Multibillion Dollar Pipeline Industry Begins Soul-Searching Conversations On the Future

Canada's Multibillion Dollar Pipeline Industry Begins Soul-Searching Conversations On the Future (Sergey_R / Shutterstock)

Canada's mega $15 billion Energy East pipeline project, which would have carried 1.1 million barrels of tar sands oil per day from Alberta to Canada's east coast for export, is being scrapped by TransCanada due to more stringent environmental regulations imposed by the Trudeau government.

The evolving nature of the Canadian regulatory environment complicates any capital investment decision and the pipeline industry is beginning to cry foul: "The common thread here is that Canada generally has displayed an unwelcoming policy environment and an uncertain approval process," Explorers and Producers Association of Canada president Gary Leach, told the Financial Post, citing other billion-dollar projects that have been cancelled in the past year. "For Canada, I think this is a blow. We are deluding ourselves if we think Canada is a place with a stable, predictable investment climate."

Canada, arguably the trendsetter in major pipeline projects worldwide as recently as last year, is now facing the prospect that none of its eye-catching pipelines will ever be built. This means that the celebrated Keystone XL pipeline, in addition to Energy East, will likely be consigned to the dustbin of history. Only Northern Gateway, written about in earlier publications in this journal, has a reasonable chance of being completed.

Thus Canada will face a dearth of pipeline capacity going forward, which will have profound negative consequences for the energy industry, raising costs, making Canadian crude oil less competitive, placing it at the mercy of its southern neighbor for transport.

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