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TransCanada cancels Energy East and Eastern Mainline pipeline projects

EBR Staff Writer Published 06 October 2017

North American energy giant TransCanada has scrapped the $12bn Energy East and the Eastern Mainline pipeline projects in Canada owing to lengthy regulatory uncertainties.

Last month, TransCanada sought Canada’s National Energy Board (NEB) for a 30-day suspension of its applications.

The company asked for the timeframe to carefully review the changes brought in by the regulator recently regarding a list of issues and environmental assessment factors.

TransCanada president and CEO Russ Girling said: “After careful review of changed circumstances, we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications.

“TransCanada will also notify Quebec’s Ministère du Developpement durable, de l’Environnement, et Lutte contre les changements climatiques that it is withdrawing the Energy East project from the environmental review process.”

The proposed Energy East pipeline was to be a 4,600 km long pipeline designed to deliver 1.1 million barrels of crude oil per day from Alberta and Saskatchewan to Eastern Canadian refineries and a marine terminal in New Brunswick.

TransCanada’s other project, Eastern Mainline, was to have a new natural gas pipeline constructed along with compression facilities to its existing Canadian Mainline system located in Southern Ontario. The Eastern Mainline project was proposed to become a safe and diverse source of natural gas.

Alberta Premier Rachel Notley said that her government was deeply disappointed with TransCanada’s decision to terminate the Energy East pipeline.

Notley added: “Our government has supported Energy East since the project was proposed. We believe this nation-building project would have benefited all of Canada through new jobs, investment, energy security and the ability to displace oil being imported into Canada from overseas and the United States.

“The National Energy Board needs to send a clear message on what the future of project reviews look like in Canada. Our government understands that deliberation on upstream emissions and land-use integrity is important and must continue.”

TransCanada, according to its CEO, intends to retain its focus on a $24bn near-term capital program aimed at creating growth in earnings and cash flow. With the proposed pipeline projects scrapped, the company will assess its near $1.3bn carrying value which is inclusive of allowance for funds used during construction (AFUDC) since their inception.

TransCanada will not expect any recoveries of costs from third parties owing to the project’s failure to achieve a regulatory decision.

Image: TransCanada will not proceed with the Energy East and Eastern Mainline pipeline projects. Photo: courtesy of TransCanada.