Three years ago, Bank of Nova Scotia’s top executive used his company’s annual meeting to urge Canadian lawmakers to stop bickering and get behind the country’s major pipeline projects.
Little has changed since, with Kinder Morgan Inc.’s Trans Mountain pipeline the latest to hit a snag after the Houston-based company announced a halt to the expansion project. Two other proposed pipelines have been abandoned.
“I’m disappointed," Scotiabank CEO Brian Porter told reporters after the bank’s annual meeting Tuesday in Toronto. “This is really tough stuff, because we’ve been talking about it as a country for a long period of time and nothing has been done."
Porter first raised the issue at the 2015 annual meeting in Ottawa, arguing that Canada’s inability to deliver energy to world markets is detrimental to the economy, the country’s brand and future economic prospects. He said the time for inter-provincial bickering and political indecision has passed.
Back then, efforts by energy producers to get oil and gas out of Alberta’s land-locked oil sands to international markets were stymied by public opposition, legal challenges and political wrangling. That hampered multi-billion-dollar pipeline plans such as TransCanada Corp.’s Energy East and Enbridge Inc.’s Northern Gateway.
Since then, Canadian courts overturned Enbridge’s approval for Northern Gateway in June 2016 and TransCanada pulled the plug on Energy East last year. On Sunday, Kinder Morgan halted most work on its Trans Mountain expansion amid opposition from British Columbia’s provincial government, indigenous and environmental groups. Leaders in Alberta and the federal government have approved and support the US$5.7 billion project.
The Trans Mountain expansion is “very important" for Canada, Porter said.
These setbacks are particularly difficult for those in the oil-producing regions of Alberta, Saskatchewan and parts of British Columbia, said Porter, who leads Canada’s third-biggest bank.
“It’s important to look at the cost of not doing these things for the Canadian economy,” Porter said. “We’re going to lose our competitive advantage on a number of things -- Canada has a productivity issue, it has a competitiveness issue and we’d like to see the project proceed but we understand the difficulties involved."
Canada’s lack of pipeline capacity has weighed on the relative prices producers can garner for their crude. Trans Mountain, along with TransCanada’s Keystone XL project and Enbridge’s expansion of its Line 3 pipeline, was seen as key to helping alleviate those restrictions. The Trans Mountain expansion would almost triple capacity on an existing line to about 890,000 barrels of oil. The British Columbia government opposes the project, concerned about increased tanker traffic and potential spills along the Pacific Coast.
“I don’t know how many tens of thousands of miles of pipeline has been built in the U.S. while nothing has been accomplished here," Porter said.