(Bloomberg) -- Escalating protests against a Canadian natural gas pipeline are putting shipments of grain, propane, lumber and consumer goods in jeopardy and prompting consternation among executives and lawmakers.
Demonstrators are supporting the Wet’suwet’en Nation, an indigenous group that opposes the construction of TC Energy Corp.’s planned C$6.6 billion ($5 billion) Coastal GasLink project. The pipeline would carry natural gas from Western Alberta to Kitimat, British Columbia, where the gas will be turned into LNG for export.
Cenovus Energy Inc., which ships a significant portion of its crude oil production via rail, said the protests pose a serious threat to the country’s economy.
“There is a significant risk, not just to my business, but to the Canadian economy if these protests continue to shut down ports and shut down rail,” Cenovus Chief Executive Officer Alexander Pourbaix said Wednesday in an interview. The company shipped about 120,000 barrels of crude a day via rail in January, executives said on a call.
The intensifying protests are “of concern,” said Canadian Prime Minister Justin Trudeau, who added that his administration will be engaging with ministers to look at next possible steps. “We recognize the important democratic right, and we will always defend it, of peaceful protest,” Trudeau said to reporters in Dakar, Senegal. “We are also a country with a rule of law, and we need to make sure those laws are respected.”
In a separate statement issued Wednesday, Transport Minister Marc Garneau said “there is time for all parties to engage in open and respectful dialog to ensure this situation is resolved peacefully, and we strongly urge these parties to do so.”
On Tuesday, Canadian National Railway Co. said in a statement it will have to shut down “significant” parts of its network because of the protests.
Blockades near Belleville, Ontario, and between Prince George and Prince Rupert in B.C., have already disrupted passenger traffic as well as shipments of grain, propane, lumber and consumer goods, according to CN.
“It’s not just passenger trains that are impacted by these blockades, it’s all Canadian supply-chains,” CN Rail CEO Jean-Jacques Ruest said in the statement.
The blockade had also halted crude-by-rail shipments to New Brunswick, where the Irving Oil Corp. refinery, Canada’s biggest, is located.
The Western Canadian oil patch has grown increasingly reliant on rail to get crude, Canada’s biggest export, to refiners as far away as the U.S. Gulf Coast.
CN expects to be shipping 250,000 barrels a day by the end of the first quarter, up from 180,000 barrels a day in September, the company said last month. It shipped 36,000 carloads in the fourth quarter -- the most in the company’s history.
CN transports more than C$250 billion worth of goods annually across a rail network of about 20,000 route-miles spanning Canada and mid-America.
Canada’s oil and gas industry has been the target of a rising protest movement, including opposition to the Trans Mountain and Keystone XL conduit projects. The demonstrations are creating a political minefield for Trudeau as he tries to plot a way forward for an industry plagued with bottlenecks while fulfilling his promise to reduce Canada’s carbon emissions.
Trudeau’s government bought the Trans Mountain project in 2018 as a way to get Canada’s crude to tidewater and faces another stark decision in the weeks ahead on whether to approve Teck Resources Ltd.’s C$20 billion Frontier oil-sands mine.
KKR & Co. and Alberta Investment Management Corp. agreed to buy a 65% stake in the Coastal GasLink project in a deal expected to close in June.
--With assistance from Robert Tuttle, Stephen Wicary and Chris Fournier.
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