Doubts are growing over the fate of the Energy East Pipeline after members of the National Energy Board panel examining the project resigned, leaving questions over how the review will proceed.
Analyst Dirk Lever of AltaCorp Capital in Calgary said Monday the pipeline regulatory process has become so “murky” and “messy” due to political pressure that it’s difficult to say whether any pipeline approval can be assured.
“I think everyone just wants to see some clarity on it,” he said. “Certainly from industry, they just want to know what they have to do.”
On Friday, the National Energy Board announced that the three people overseeing the review of Energy East were stepping down following complaints that two of them met last year with former Quebec premier Jean Charest, a consultant for developer TransCanada at the time, to discuss the pipeline.
The regulator also said board chairman Peter Watson and vice-chairwoman Lyne Mercier will not be involved in choosing members of the new panel in order to avoid “an apprehension of bias.”
READ MORE: NEB sidelines Energy East review panel after complaints over private meeting with TransCanada
NEB spokeswoman Sarah Kiley said Monday a temporary chairperson will select members of the new panel, who will decide whether the review will resume in Montreal from where it left off or start all over. The hearings began last month in Saint John, N.B.
“It’s very much dependent on when the new panel is appointed and, of course, they will have a number of decisions to make in front of them, so they will have to revisit the decisions made by the previous panel,” Kiley said.
The NEB is still aiming to have a decision on the $15.7-billion Energy East pipeline project by March 18, 2018, she added.
“However, our key goal as always is to have a meaningful and thorough review so if we need to ask for more time that’s certainly something we’ll consider.”
TransCanada, the proponent behind Energy East, has said it remains committed to the project. Spokesman Tim Duboyce said construction would begin shortly after approval, with the goal of shipping oil in 2021.
When the project was proposed to potential shippers in 2013, TransCanada anticipated oil would start flowing in 2017.
In a report released Monday, credit rating agency DBRS said Canada has just enough pipeline capacity now to handle current production but it will experience a “takeaway gap” of 1.5 million barrels per day by 2030 if production growth meets forecasts.
Report author Ram Vadali said the NEB resignations represent a new hurdle for pipeline projects but he believes they will eventually be approved, if only because their benefits to the economy are numerous.
“It is possible. The framework is in place,” he said. “It’s just how long will these discussions take place? We’re optimistic, cautiously optimistic, that these temporary stoppages will be overcome.”
Not everyone shares those views, however.
On Monday, Scotiabank analyst Robert Hope said already poor prospects of the development seeing the light of day have worsened.
In a note to clients, Hope said he thinks the chance the project will be built has fallen to 25 per cent from 33 per cent, adding that he believes fervent opposition in Montreal makes it politically unpalatable for the federal Liberals to approve it because that may endanger the 33 seats they gained in Quebec during the 2015 election.
The 4,500-kilometre pipeline would ship about 1.1 million barrels of oil per day from Alberta and Saskatchewan to Eastern Canada refineries and a marine terminal in Saint John, N.B.