It’s been almost 18 months since a federal court ruling quashed approval of the Trans Mountain pipeline expansion. It was a decision that blindsided both Ottawa and the Alberta government, and deepened an already healthy sense of cynicism about the country’s ability to build anything big in Canada’s major oil-producing province.
Tuesday’s Federal Court of Appeal decision in favour of the Trans Mountain pipeline expansion will be another marker – a pivot point at which the $7.4-billion-plus project began to seem possible and even likely to many Albertans again.
Unlike the decision in August, 2018 – when the Court of Appeal ruled the Liberal government failed to adequately consult First Nations – the federal court said Tuesday that Ottawa, through a second round of work, has fulfilled its obligation to consult with Indigenous people. The court concluded those communities must be consulted, but don’t get a veto.
Even the most hardened of doubters, a cohort in Alberta who believe the expansion will never actually go ahead, have to acknowledge that Tuesday’s decision is progress for the project.
It could also be the beginning of some slightly better economic news for the province where unemployment is higher than the national average, real estate values keep inching down and office towers sit empty. Currently, the province’s oil production is being curtailed to keep a glut of already discounted Alberta crude off the market. Any positive economic forecasts for Alberta are predicated on the province finding new pipeline capacity to get product to U.S. and international refineries.
Aroon Sequeira, the chairman of Edmonton-based investment bank Sequeira Partners, said that one year ago, most Albertans would not have bet on the project being built. But factors, including the federal Liberal Party’s resolve, during last fall’s election, to build the expansion, as well as court rulings in favour of the project, mean sentiment has shifted.
“People are not thinking complete slam-dunk, but they are thinking the project will be built,” Mr. Sequeira said on Tuesday.
The same day, the Alberta Premier praised the court for its “historic and critical decision, which helps to create certainty about the future of major resource projects." (In 2018, Jason Kenney said the decision that sent the project back for further consultation came from federal judges in an “academic bubble” who “keep moving the goalposts on what is required.")
Mr. Kenney said Tuesday’s decision noted 120 of 129 Indigenous communities potentially affected by the project either support it or do not oppose it, and he went as far as to say that the last significant legal obstacle to the project has been lifted.
The United Conservative Premier added some rare praise for Ottawa, acknowledging the federal Liberals did make the decision to buy the pipeline from Kinder Morgan Inc. in 2018, likely saving the project – which will see the capacity on the only oil pipeline from Alberta to the B.C. coast tripled – from collapsing.
“Frankly, we appreciate that," he told reporters in Montreal, in the city for a trade mission. "I think [federal Liberals] did realize that there has to be at least one project that gets Canadian energy to global markets so we can get a fair price.”
So far, 2020 is providing some hopeful signs for industry boosters. Last month, the Supreme Court dismissed British Columbia’s bid to control the amount of heavy oil shipped across the province, effectively ending the West Coast province’s push to stop the expansion project. On Monday, Enbridge Inc.’s Line 3 expansion and replacement project cleared a key regulatory hurdle in Minnesota.
But Mr. Kenney gave a nod to the fact that potential obstacles to the Trans Mountain expansion project remain. He noted in a statement to media, "We will hold our celebrations until oil is flowing.”
The ruling is not a panacea for the Alberta industry. The Indigenous communities that lost a legal battle on Tuesday have 60 days to appeal to the Supreme Court. Major protests from First Nations and groups opposed to fossil-fuel development and exports are certain as pipeline construction work ramps up in B.C.
And globally, the international oil divestment movement gathers strength by the month. Oil prices are dropping as Chinese crude demand plummets, owing to the fallout from the coronavirus. Alberta and Ottawa are still wrestling over how the decision on the massive Frontier oil sands mine will be made while balancing the competing issues of national unity and action on climate change.
But Tuesday’s federal court decision was good news, Mr. Sequeira said. “Alberta and the energy industry have been feeling pretty beaten up,” he said. “This puts some wind back in the sails of Alberta business.”