OTTAWA / CALGARY, Alberta (Reuters) – Canada looks set to approve a controversial plan for the expansion of a pipeline this week, they told Reuters, but it is unlikely this decision will help Prime Minister Justin Trudeau to rebuild his support for an election in October.
PHOTO FILE: Steel pipes to be used in the construction of the Kinder Morgan Canada Trans Mountain Expansion Project Pipeline at a storage site in Kamloops, British Columbia, Canada, May 29 2018. REUTERS / Dennis Owen / File Photo
Last year, the Liberal government made the unprecedented decision to buy the Trans Mountain Pipeline at Kinder Morgan Canada for C $ 4.5 billion ($ 3.4 billion) in order to reduce costs. ensure continued expansion to resolve bottlenecks in crude transportation.
Once completed, the expansion would almost triple the capacity of the pipeline from Alberta, a province rich in crude oil, to the Pacific coast of British Columbia. But he has had to face growing protests from environmental activists and indigenous groups.
Trudeau – who came to power with a promise to improve Canada's environmental record – faces a difficult decision. If he approves, it could provoke anger from environmentalists and local residents who fear the project's impact.
If he rejects it, he risks further alienating an energy lobby that accuses him of wanting to destroy their industry as he continues his plans to strengthen environmental assessments of new projects. energy prices while prices are low.
He said that expansion would continue if conditions were good. His cabinet is expected to make a final decision on Tuesday and Finance Minister Bill Morneau is expected to address a business audience on Wednesday in Alberta's energy capital, Calgary.
Two federal government insiders aware of the situation said that there was little doubt that Ottawa would give the go-ahead.
"I'm waiting for an approval. Any other solution would pose serious questions about what we are doing on the energy issue, "said one source, who requested anonymity given the sensitivity of the situation.
A senior government official from Alberta also said that approval was expected. "It's the least the government can do to approve this pipeline," the source said.
However, a senior federal government source insisted that no decision had yet been made and pointed out that Ottawa had the power to postpone the announcement.
The Prime Minister's Office declined to comment.
The firm will need to determine if the project has done enough to gain aboriginal support. An original Liberal-approved expansion plan in 2016 was rescinded by a court that found the government had not consulted enough with Aboriginal groups. Ottawa says it has intensified discussions with Aboriginal communities.
Mark Oberstoetter, an analyst at Wood Mackenzie, said it was more than 50% likely that the government would act with Trans Mountain, knowing that a "refusal" would be a hard story to tell your taxpayer base. .
The Canadian Association of Petroleum Producers anticipates that total investment in the Canadian oil and gas industry will fall by about 10% to C $ 37 billion in 2019 from 2018, highlighting the challenges faced by Canada to recover from the global oil price crash in 2014/15.
But even if approved, construction may not start soon, given the resistance of environmental and indigenous groups.
And an approval would do little to revive the fortunes of the Liberals in Alberta, where the party risks losing its three seats in Parliament in the October vote.
At the same time, it could also enraged voters in British Columbia, where the potential impact of the expansion is more worrisome and the Liberals have 17 legislators.
Significantly, many of these seats are in the Lower Mainland and are connected to the shoreline, which could be affected by the project, said Kathryn Harrison, Professor of Political Science at the University of British Columbia .
"Liberals in British Columbia have significant risks," she said.
Reportage of David Ljunggren and Nia Williams, additional report by Rod Nickel in Winnipeg; Edited by Rosalba O & # 39; Brien