Change Looms for Canadian Oil and Gas

Justin Trudeau’s election as Canadian Prime Minister may signal the start of a new era for the Canadian oil and gas industry. Trudeau, the Liberal party leader, was elected on October 19, and one of the primary points of his platform was banning of oil tankers in environmentally sensitive waters along the British Columbia coast.

In September, Trudeau said that, if elected, a Liberal government would formalize a moratorium on crude oil traffic in British Colombia to prevent potential spills. Trudeau’s victory coupled with the Liberal party winning the majority of the Parliament’s seats may bring these plans to fruition.  

The outgoing Conservative government favored new tanker terminals to export crude oil from the Alberta and Saskatchewan Oilsands.

Trudeau’s proposed ban on oil tankers also places the Northwest Gateway Pipeline project into uncertainty. The new Prime Minister also promised scrap the Conservative party-supported Northwest Gateway pipeline project, which would carry crude oil from the Alberta Oilsands to a tanker terminal on British Colombia’s north coast. The $7 billion Enbridge Inc. pipeline was approved last summer.

“Everyone here in British Colombia knows that the Great Bear Rainforest is not a place for an oil pipeline,” Trudeau said in September.

Environmentalists, many of whom are Liberal party supporters, argue that the pipeline not only threatens the coastline, but also rainforest wildlife and human communities. Seafaring oil tankers associated with the new line negatively impact the coastline directly, and they would have to travel through the Great Bear National Rainforest, a wildlife preserve. This region is also home to several First Nations communities.

Though it was approved more than one year ago, work on the pipeline has been delayed due to construction setbacks. The pipeline’s permits expire at the end of 2016 unless work has begun by that time.  

However, Trudeau has made it clear that he does not oppose all pipelines. Trudeau was a supporter of the Keystone XL pipeline to the U.S. and traveled to Washington to support the project before it was rejected by President Obama.

Trudeau believed the Keystone pipeline posed fewer risks to ecologically sensitive areas than the Northern Gateway.

“It's important that we get our resources to market, but it's also important that we understand that it's not just up to governments to grant permits anymore. We have to get communities to grant permission and that's something that we need to spend more time focusing on,” Trudeau said.

Trudeau’s proposed tanker ban and support for certain pipelines leaves the door open for Kinder Morgan to twin its 50-year old pipeline. Kinder Morgan is currently seeking approval from the National Energy Board to construct a second Trans Mountain pipeline which would triple its capacity. It would also increase tanker traffic in Vancouver’s Burrard Inlet on the South Coast.