News: Canada TransCanada Ends Development of Energy East Pipeline Project (Globe and Mail Reporting)
"Basic economics – not regulation – ended the Energy East pipeline -
BENJAMIN DACHIS
Contributed to The Globe and Mail
2 hours ago
October 5, 2017
Benjamin Dachis is associate director of research at the C.D. Howe Institute.
TransCanada Corp. announced on Thursday that it would not proceed with its Energy East proposal to ship Western Canadian oil to Eastern Canada. Widely thought to have been felled by overzealous regulators, in truth the king of Canadian pipeline projects was dethroned by the simple loss of its business case. Happily for Western Canada, natural gas looks to return to the throne of Canadian energy.
The case for Energy East was weakened by the decline in global oil prices since 2014. Between then and now, the forecast for Western Canadian oil production has fallen precipitously. According to data from the University of Alberta's Andrew Leach, the Canadian Association of Petroleum Producer's forecast for production by 2030 is down by more than two million barrels a day.
As the largest of Canadian pipeline proposals, Energy East alone was to represent about 1.1 million barrels a day of shipping capacity from Western Canada. If TransCanada's Keystone XL pipeline gets built – a prospect looking increasingly likely every day – along with Kinder Morgan's pipeline expansion to the West Coast and improvements along the Enbridge system, there would likely be excess pipeline capacity from Western Canada.
With more pipelines fighting over less oil to ship, TransCanada likely saw it would be cannibalizing Keystone XL. Every company would make the same decision: better to make money on one project than lose money on two.
Energy East's final toppling arose from a recent decision by the National Energy Board (NEB), but not for the reason you think.
Many will blame the travails that the NEB went through earlier this year. First, there were protests at hearings. Then, the NEB restarted the process from scratch after some members were accused of bias. That certainly slowed the project". (for more click on this link to read the whole article from the Globe and Mail) https://beta.theglobeandmail.com/report-on-business/rob-commentary/basic-economics-killed-the-energy-east-pipeline/article36500053/?ref=http://www.theglobeandmail.com&
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