Living up to election promises can sometimes be tougher than some politicians imagine, but if Prime Minister Justin Trudeau is true to his word, the $6.5 billion Northern Gateway pipeline could be in jeopardy.
Despite promises that the project would generate $1.2 billion over 30 years in tax revenue for B.C., and create thousands of jobs during construction, Enbridge Inc. (TSX:ENB) has had a tough time selling British Columbia on its plan to build a 1,117-kilometre pipeline from Bruderheim, Alberta to Kitimat.
It has faced opposition even from an otherwise business friendly provincial government in B.C., strenuous opposition from First Nations, and now its one solid ally – a Conservative federal government – is being replaced by one that has promised to kill the project.
Trudeau has been unequivocal on the norterhn Gateway pipeline: “If I win the honour of serving as prime minister, the Northern Gateway pipeline will not happen,” he told CBC earlier this year.
In June 2014, a joint review panel of the National Energy Board (NEB) and Canadian Environmental Assessment Agency (CEAA) recommended the pipeline project be approved, subject to 209 conditions.
The company has been working at ticking off those conditions, including working with First Nations and Metis along the pipeline corridor. The company had planned to see work start on the project in 2015.
Northern Gateway spokesman Ivan Geisbrecht said the company hopes to meet with Trudeau and his new government “to provide an update on the progress of our project and our partnerships with First Nations and Métis people in Alberta and BC.
“We remain confident in the rigor and thoroughness of the Joint Review Panel process. Its careful examination of the Northern Gateway project was one of the most exhaustive of its kind in our country's history.”
Killing a project that has met all the conditions of approval set out by a previous government could have legal and political challenges.
But Brad Hayes, president of the petroleum consulting firm Petral Robertson Consulting Ltd., said the federal government could simply make it tougher for the company to meet all its conditions.
“I’ve got to believe a Liberal government could attach more show-stoppers or conditions, even at this late stage of the game,” Hayes said.
Trudeau appears to have been more receptive to the Kinder Morgan Inc. (NYSE:KMI) plans to expand the Trans Mountain Pipeline, although that project could also face additional hurdles.
The Liberal platform includes overhauling the NEB and CEAA processes.
Jonathan Wilkinson – former CEO of BioteQ Environmental Technologies and recently elected Liberal MP for North Vancouver – has suggested Kinder Morgan’s Trans Mountain pipeline project may need to go back to the drawing board.
“The Kinder Morgan expansion project must satisfy this new rigorous review that its environmental and social impacts can be effectively addressed,” his platform states. “If they cannot be, the project should not proceed.”
B.C. is already viewed as a challenging place for resource industries to do business, said Ken Peacock, chief economist for the BC Business Council. Should a Liberal government kill the Northern Gateway project, it could send a negative signal to the investment community, he said.
“The negative signal it sends to the international capital markets would be unfortunate. The whole challenge of getting large projects across the finish line, that’s going to just increase the perception that it’s difficult to do those kind of projects in Canada.”