Keystone XL pipeline faces new challenge in Canada

The Keystone XL pipeline, already approved by regulatory authorities in Canada but facing continuing approvals challenges in the U.S., is now facing a new challenge in the Canadian regulatory arena.  On September 23, the Communications, Energy and Paperworkers Union of Canada (CEP) wrote to the National Energy Board (NEB) to raise concerns about whether Keystone XL has complied with the sunset clause in its Canadian approval certificate.  Condition 22 of Certificate OC-56 reads:

Unless the Board otherwise directs prior to 11 March 2011, this Certificate shall expire on 11 March 2011 unless construction in respect of the Project has commenced by that date.

In its letter to the NEB, the CEP says that it understands:

that the Board made no direction prior to March 11, 2011, and that no construction in respect of the Project had commenced by that date.  Accordingly, OC-56 expired on March 11, 2011, and there is no current approval that would allow TCPL to proceed further with the Keystone XL pipeline. 

The CEP says that when it asked about the apparent expiry of the Certificate, Ms. Saunders of the NEB advised that TCPL had undertaken some earth moving activity and, in doing so, commenced construction of the pipeline.  CEP challenges this assertion in its letter, reminding the NEB that various requirements to be carried out at least 60 days prior to the commencement of construction have also not been completed by TCPL.

The NEB has now issued a letter to the CEP and to TCPL saying that it would like to gather more information about the situation before responding to CEP's letter.  TCPL has the opportunity to file responding comments by October 14.  CEP may file reply comments by October 21.

An interesting development in a controversial pipeline project.  Worth keeping an eye on.

Communications, Energy and Paperworkers Union of Canada appeals Keystone XL approval

CEP Press Release - 04/12/2010

TORONTO -- The National Energy Board has approved a pipeline construction project – Keystone XL – that will result in tens of thousands of current and potential Canadian jobs being exported to Texas along with our oil, says Canada’s energy union, which filed leave to appeal the decision on Friday.

“The oil and gas industry has decided that the enormous economic development associated with upgrading and refining oil sands resources will take place in Texas, not Canada,” says Dave Coles, President of the Communications, Energy and Paperworkers Union of Canada.

The Keystone XL pipeline construction project will export 900,000 barrels of oil per day to the US Gulf Coast -- most of which is unprocessed bitumen from the Alberta oil sands.

“This means the loss of tens of thousands of jobs in the Canadian oil upgrading and refining sector that either exist now, or that would have been created by projects that are likely to be cancelled as a result of the dramatic expansion of oil export pipeline capacity to upgraders and refineries in the U.S.”

Keystone XL was opposed by CEP, the Alberta Federation of Labour, the Sierra Club, and also by Enbridge, Imperial Oil, BP and Nexen.

The companies argued that Keystone XL will create enormous excess export capacity, raise service costs on other pipelines, and increase input costs to Canadian refineries by US$600 million in 2013.

“Not only will this project abandon the enormous opportunity of creating a diversified Canadian oil and gas industry,” says Coles, “but it will seriously undermine the viability of existing refineries.

“Astonishingly, the NEB has signed off on the industry’s plan as being the Canadian public interest.

“The Board has abandoned its mandate to the entirely ill-founded notion that a deregulated export market is in the Canadian public interest.”

The legal argument filed by CEP asserts that the NEB made several fundamental errors of law, and failed to properly exercise its mandate to protect the Canadian public interest.

The National Energy Board approved the Keystone XL pipeline project March 11, 2010, subject to the federal government giving it the final green light. CEP filed its appeal on April 9.

Keystone and its allies now have 20 days to respond to CEP’s application. A decision from the Federal Court of Appeal on whether an appeal will be allowed is expected in May.

The 150,000-member CEP is Canada’s largest union of energy workers, with about 35,000 members who work in the oil, gas and petro-chemical industries.