Pacific Link pipeline to test Canada’s building ambitions, says Tim Hodgson

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Photo by Michelle Berg /Saskatoon StarPhoenixCanada’s plan to build a major oil pipeline to its west coast is a “litmus test” for how quickly the government can get big projects built and attract private sector investment, Energy Minister Tim Hodgson said.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe pipeline, now dubbed the Pacific Link, is expected to transport one million barrels a day from Alberta’s oilsands to a new terminal near Vancouver.This advertisement has not loaded yet, but your article continues below.On Thursday, Prime Minister Mark Carney announced it would be designated as a project of “national interest.” That triggers legislation that effectively deems it approved, and focuses the regulatory process on what conditions should be placed on its construction. The aim is to begin work on it in about a year, and have it shipping oil in the early 2030s.For now, the Pacific Link is almost entirely funded by the governments of Alberta and Canada, but that’s because investors still have significant doubts about the country’s regulatory environment, Hodgson said in an interview with Bloomberg News.“We’re in a world today where the data points that the private sector have around major new oil pipelines is they’re incredibly hard to build in Canada, historically,” Hodgson said, noting past projects have blown past deadlines and budget estimates in large part because of regulatory and political delays.If Pacific Link can defy that trend, private investors will likely be keen to step in with a larger ownership stake, he said. So far, the only private sector company to take a piece of the project is Pembina Pipeline Corp., which has signed up for at least 10 per cent with an option to increase that to 20 per cent.This advertisement has not loaded yet, but your article continues below.The last large crude pipeline built in Canada, the Trans Mountain expansion, ended up costing about $34 billion to build — more than six times the original estimate — and its start date was several years later than originally planned.“This project is the litmus test,” Hodgson said of the Pacific Link. “It is demonstrating to capital allocators in Canada and around the world that we will know how to build major infrastructure projects again the right way.”The national-interest designation is key, he said, because it tells investors that “we are going to give you a clear indication early in the process whether or not the government supports it.”Beyond Pembina’s stake, the Pacific Link will be jointly owned by Canada and the province of Alberta, though the plan is to allow Indigenous groups to purchase at least 10 per cent of the equity.The new pipeline will be developed by Trans Mountain Corp., a firm owned by the Canadian government that operates the only other pipeline in the country that transports oil to a coastal port.However, the “national interest” designation has not yet been tested in the courts, and environmentalists and some Indigenous groups are almost certain to challenge it. Canada has a constitutional “duty to consult” with Indigenous communities affected by large projects, and the legislation is at risk of being struck down if the fast-tracked process falls short of that obligation.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.A decade ago, a federal court blocked Enbridge Inc.’s proposed Northern Gateway pipeline from Alberta to the northern coast of British Columbia, ruling that the government failed to meaningfully consult with Indigenous communities affected by the project.Hodgson said he’s convinced the new law fully complies with that responsibility, as it requires the government to consult both during the pre-listing period, which has already happened, and when setting conditions for the project’s approval.There will be extensive public hearings and meetings with Indigenous communities, and much of it will be run by Canada’s energy regulator, Hodgson said.“It will be a public process, it will be a transparent process,” he said. “It will look at all the typical things you would see: the technical aspects of the project, the environmental, the social, the cultural, the health, safety and security elements of the project.”While some Indigenous leaders appeared alongside Carney at Thursday’s announcement, other groups have already made clear they plan to fight the proposal with all tools available.This advertisement has not loaded yet, but your article continues below.“The Pacific Link pipeline is unique in that it has tossed aside the fundamental pillars of our relationship in terms of respect, in terms of shared communication, and taking up lands in our territories without any form of credible consultation,” Grand Chief Stewart Phillip, president of the Union of B.C. Indian Chiefs, said in a statement.“We have a duty and an obligation to protect our rights to the fullest extent of the law and we have every intention of doing that,” Phillip said.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.