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Home>TransCanada Nixes Two Pipelines, Leaving Canada Dependent on U.S. Market

TransCanada Nixes Two Pipelines, Leaving Canada Dependent on U.S. Market

TransCanada Nixes Two Pipelines, Leaving Canada Dependent on U.S. Market

10/06/2017

 By Vipal Monga and Austen Hufford 

TORONTO -- TransCanada Corp.'s decision to end development of two Canadian energy pipelines is another setback for Canadian energy producers, who have been clamoring to get their landlocked oil and gas to markets in Europe and Asia and reduce dependence on the U.S.

Pipeline operator TransCanada announced Thursday morning that it pulled the plug on the Energy East and Eastern Mainline pipeline projects amid the continuing slowdown in the oil sector and a tougher regulatory environment.

Chief Executive Officer Russ Girling said the decisions come after "a careful review of changed circumstances."

A company spokesman declined to elaborate on Mr. Girling's remarks. Last month, however, the company said it would review Energy East's viability after Canada's energy regulator widened the scope of its project review to the potential for increased carbon emissions once the oil is shipped to its final destination.

The 4,500-kilometer (roughly 2,800 miles) Energy East pipeline was planned to run from the oil-rich area in Alberta and Saskatchewan to the refineries of eastern Canada and a marine terminal in New Brunswick, carrying about 1.1 million barrels of crude oil a day. The Eastern Mainline project included new natural gas pipeline and compression facilities largely along the company's existing systems in southern Ontario.

The Energy East pipeline could have allowed producers an avenue to ship oil to Europe and potentially as far as India. That would have broadened the market for Canada's oil exports, almost all of which currently go to the U.S., said Jackie Forrest, director of research for Calgary-based ARC Energy Research Institute.

"We don't have diversity of markets," said Ms. Forrest.

According to the Government of Canada's National Energy Board, Canada exported 3.10 million barrels a day in 2016, 99% of which went to the U.S.

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