Canadian Regulatory Agencies Becoming Bigger Headache for Pipeline Companies

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Researched by Industrial Info Resources (Sugar Land, Texas)--Every regulatory agency has its own stance on pipelines, some being favorable, friendly and welcoming, while others are neutral or even hostile to new pipeline projects. However, as the infamy of pipelines grows through the continuing saga of various high-profile projects, they have become political issues, further complicating their permitting process.

As such, previously neutral entities are beginning to take sides, and the permitting environment in some areas that may have been considered neutral at one point are now becoming less friendly toward these proposals. This is an ironic turn of events, as the crude oil being transported by these lines accounts for a significant amount of investment and even gross domestic product (GDP) in its home country.

Canada's National Energy Board (NEB) is the nation's regulator for inter-province pipeline permitting. Until recently, the NEB has been a known factor when scheduling pipeline projects, which are usually expected to have a year-long permitting process. Some companies were even able to have guarantees of a 15-month regulatory process for larger projects, making their project scheduling much easier. However, there is increased frustration toward the permit process, and a sense of it slowing down.

Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas), through its Trans Mountain Pipeline subsidiary, has been actively seeking NEB permits on the Trans Mountain Expansion Project, which proposes to increase capacity on the Trans Mountain system to 890,000 barrels per day (BBL/d) from 300,000 BBL/d. Originally, this project was scheduled to be permitted this month, thanks to the 15-month expedited regulatory process, and to be ready to begin construction at the beginning of 2016. But that project is still not permitted, having had its expected permit date, and by extension all other key dates, pushed out by six months due to complications with the NEB permit.

Looking at the numbers, it would seem counter-intuitive for regulatory agencies to not pass pipeline permits. In 2014, 8.4% of Canada's GDP was attributed to mining, quarrying, and oil and gas extraction, according to the Canadian government. While provincial governments that do not stand to profit from the extraction of oil and gas to the same extent as Alberta may understandably oppose pipeline projects, with oil and gas contributing to such a large portion of the Canadian economy, why wouldn't national-level regulators be more friendly to the industry?

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.