Like Keystone XL, Energy East caught in a chokehold

Aug. 24, 2015
Another important pipeline finds itself in a chokehold.

Another important pipeline finds itself in a chokehold.

For nearly 7 years, TransCanada's Keystone XL project has waited for border-crossing authorization from the US president.

Now the company's Energy East proposal is ensnarled in a Canadian political campaign.

Energy East, which would carry Albertan oil to Canada's eastern provinces, drew fire on Aug. 13 in an Ontario Energy Board report questioning the project's balance of energy and environmental values.

Energy Minister Bob Chiarelli promised Ontario, crossed by the gas pipeline TransCanada hopes to convert to carry oil, would be an "active intervener" in approval proceedings by the National Energy Board. Otherwise, the province has no jurisdiction.

Populous Ontario has an aggressive green-energy program and therefore high electricity costs and a shriveling industrial base. It runs an unenviable deficit.

The Ontario prime minister is Liberal Kathleen Wynne, outspoken critic of Stephen Harper, Canada's Conservative premier seeking reelection in October. Wynne champions her party's leader, Justin Trudeau of Quebec, in the campaign.

Like that of Ontario, the Liberal government of Quebec has set conditions for the Energy East project that lack official clout but that please environmentalists. Both resistant provinces receive payments to sustain public services under Canada's equalization program.

Harper represents a district in Alberta, a vital source of funds transferred to the have-not provinces, as they are known. There, the 3-months-old New Democratic Party government faces deficits, born of moribund oil and bitumen prices, and is raising taxes.

Albertans have more than general oil-market malaise to blame for their province's fading status as a tax haven.

If the oil sands were better connected to international crude markets, as they should be by now, bitumen prices wouldn't be so heavily discounted against international markers.

The tightening transport bottleneck aggravates price weakness and jeopardizes oil sands projects-a strategic triumph for environmental extremists increasingly adept at exploiting delay.

Keystone XL depends on unlikely approval from a White House loath to resist extremism. Energy East might depend on election results in October.