Enbridge workers weld pipe just west of Morden, Man., on Aug. 16, 2018.JOHN WOODS/The Canadian Press
Canada should declare pipeline projects in the national interest if it is serious about widening its energy-market access in the face of U.S. tariffs, says the chief executive of oil and gas transport giant Enbridge Inc. ENB-T
Greg Ebel said Tuesday that Canada’s current regulatory environment makes it impossible to build a pipeline like its Northern Gateway project, which was abandoned almost 10 years ago after Ottawa revoked its permits.
“The ability to actually get anything done would take significant legislative changes,” Mr. Ebel told reporters following the company’s investor day event. The only way that might happen, he said, would be for the government to deem the projects in the national interest or to declare an energy emergency.
Enbridge President and CEO Greg Ebel, pictured in February 2023.FXC/Supplied
“If this is the significant crisis that I know many Canadians feel that it is, then you would think you’d want your lawmakers actually making laws to address that.”
In February, U.S. President Donald Trump’s threat to impose 10-per-cent tariffs on oil and gas imports reanimated conversations about the need for pipelines – such as the long-shelved Northern Gateway or Energy East projects – to access overseas markets. Canadian Natural Resources Minister Jonathan Wilkinson, for example, said the country should have a national conversation about whether a new east-west oil pipeline is needed given the protectionist threats from the United States.
Northern Gateway, a $7.9-billion, 1,177-kilometre pipeline proposed by Enbridge in 2006, would have carried oil from Alberta to British Columbia’s northwest coast. The project was called off in 2016 after Prime Minister Justin Trudeau’s government cancelled its permits.
Mr. Wilkinson said Tuesday that slapping retaliatory export tariffs on Canadian energy and resources remains an option, though Ottawa first wants to apply pressure on the Trump administration to reconsider its decisions. He added that the government is also “looking for unanimity” with provincial and territorial leaders on its next steps.
Enbridge CEO says more federal support needed before company considers new pipeline projects
Mr. Ebel said he doubts the volume of shipments on Enbridge’s pipelines between Canada and the U.S. will shrink any time soon in the face of tariffs, given how much refiners south of the border rely on Canadian crude.
Canada is by far the largest foreign energy supplier to the U.S., and numerous refineries, especially in the Midwestern states, are designed to process the gooier crude grades from Alberta’s oil sands.
“It would be very difficult for them [refiners] to find other sources of supply and, equally so, very difficult for the producers in Canada to be able to find other sources of demand.”
On Tuesday, Enbridge announced a $2-billion investment into its Mainline pipeline through 2028 to improve the reliability and efficiency of the system in the face of increased demands for space. Even if a trade war rages, Mr. Ebel said those spending plans can be spaced out to meet expected supply growth.
“Producers will still move forward. They’re not going to stop sending product to the United States,” he said.
While Mr. Ebel acknowledged that any trade dispute is cause for concern, he added that Canada and the U.S. are deeply integrated on both an energy and economic basis.
“I don’t think that actually is going to change under any political scenario on either side of the border,” he said.
Canadian oil and gas stocks dropped on Tuesday, with the S&P/TSX Capped Energy Index down 1.1 per cent to its lowest level in more than a year. Among the industry’s big names, Suncor Energy Inc. was down 3 per cent, Cenovus Energy Inc. was off 4 per cent and Imperial Oil Ltd. sank 1 per cent.
The Canadian Association of Petroleum Producers said the trade war and potential economic hit underscores the importance of opening up more markets for oil and gas.
Lisa Baiton, president and chief executive of the fossil fuel lobby group, said in a statement that it’s difficult to predict exactly how the application of a 10-per-cent tariff on Canadian oil and natural gas will affect supply, demand and trade patterns.
But she said Canada must “act with urgency” to secure greater global market reach, given that the relationship with its closest friend, ally and trading partner has “fundamentally changed.”
Chris Severson-Baker, the executive director of the Pembina Institute, an environmental think tank, countered that governments should avoid “kneejerk reactions” to the tariffs, such as expanding oil and gas infrastructure.
Instead, Canada must be strategic and responsible about which projects and industries are developed, and recognize that the global shift to low-carbon energy will simultaneously address energy security and affordability concerns.
“Canada, with its abundant natural resources – including its ability to generate lots of clean, low-cost electricity to power the industries of the future – has the preconditions to thrive in this emerging clean economy,” he said in a statement.
With reports from Jeffrey Jones and Matthew McClearn