The federal government has announced its second approval of the Trans Mountain pipeline expansion, with plans to put shovels back in the ground this construction season.
Prime Minister Justin Trudeau made the announcement June 18, alongside Environment Minister Catherine McKenna, Finance Minister Bill Morneau, Natural Resources Minister Amarjeet Sohi, Transport Minister Marc Garneau, and Fisheries Minister Guard Jonathan Wilkinson.
Tuesday's long-awaited decision to reapprove the contentious project comes nine months after the Federal Court of Appeal ripped up the original federal approval, citing incomplete Indigenous consultations and a faulty environmental review.
Trudeau said the project will help to solve a core economic challenge for Canada, which relies on the U.S. to buy most of its energy resources, often at large discounts. The pipeline's expansion will create thousands of middle class jobs across Canada, Trudeau said.
"We want good middle class jobs now, and good middle class jobs for our kids," Trudeau said. "We need to create wealth today to invest in the future."
The government bought the pipeline and expansion project in August 2018, after first approving the twinning of the pipeline in 2016 only for it to be stymied by regulatory and legal challenges.
The National Energy Board released its reconsideration report on the expansion in February, finding the project remains in the national interest and imposing 156 environmental and regulatory conditions should be approved. Earlier this month, the federal government wrapped up extended consultations with indigenous groups ordered by the courts.
Trudeau said he is sympathetic to concerns about the environment and the need to transition to cleaner sources of energy, but says that in order to fund that transition, Canada needs to take advantage of its natural resources while they are still needed. As such, the Liberals will require that every dollar in federal revenue coming from the project be reinvested in clean energy and green technology.
That includes an estimated $500 million a year in new annual corporate tax revenues once the pipeline is in service, as well as any revenues from the promised sale of the entire expanded pipeline back to the private sector.
Trudeau says construction will restart this construction season, but there is no specific date yet. Trans Mountain Canada will have to apply a second time for all the necessary federal, provincial and municipal permits before breaking ground.
Two Fort St. John pipeline contractors have been selected to build nearly one-third of the 1,100-kilometre expansion through southern B.C.
Surerus Pipeline, which shares a 50% stake with London-based J. Murphy & Sons in the Surerus Murphy Joint Venture, was selected to build 180 kilometres of pipeline between Black Pines and Merritt. Fort St. John’s Macro Industries and France’s Spiecapag have a joint venture selected to build 85 kilometres of pipeline in the Coquihalla-Hope area.
The contracts are valued in the hundreds of millions of dollars. Shares in Macro Enterprises closed at $4.30 on Tuesday.
“This is good news for B.C., Alberta, and all of Canada," Peace River North MLA Dan Davies said in a statement. "It is a shame that the BC NDP government has been constantly fighting this critical piece of national infrastructure. And to what cost? This is a good day for all of us!”
Premier John Horgan is expected to speak to Ottawa's decision later Tuesday.
Meanwhile, Morneau is scheduled to meet with the Economic Club of Canada in Calgary on Wednesday to deliver a speech about "the importance of helping the energy sector grow, and how the government's plan to invest in the middle class is building a better future for all Canadians."
Trudeau is scheduled to travel to Washington tomorrow afternoon after a caucus meeting and question period. Trudeau will attend a reception hosted by Ambassador of Canada to the United States David MacNaughton tomorrow evening.
The existing Trans Mountain pipeline is a batched pipeline than can move a variety of petroleum products, including crude oil and refined fuels. But currently more than half of the crude oil that moves on the pipeline ends up going to Washington State, via the Puget Sound spur line.
About 20% of the product that flows on the Trans Mountain pipeline in 2014 was refined products. That dropped to about 10% in 2018, according to IHS Markit and National Energy Board.
About 15% is light sweet crude to the Parkland Fuels refinery in Burnaby. Waterborne crude exports have varied from 10% to 20% of the pipeline’s capacity.
With the expansion of the pipeline, a new, second line would be dedicated strictly to heavy crude oil from Alberta, which could free up the existing batched line for more refined fuels and potentially more crude for the Parkland refinery.
More than $1 billion worth of Alberta crude was exported by oil tanker via Vancouver in 2018, with China accounting for about one-third of the sales, or 6.3 million barrels.
The U.S. was the biggest buyer, at 10.7 million barrels, valued at $855 million.
— with files from Business in Vancouver, Canadian Press
Email Managing Editor Matt Preprost at email@example.com.