Meanwhile, Canadian pipeline companies, frustrated by regulatory delays, submitted a solitary proposal in the last two years

CALGARY – Frustrated by regulatory delays, Canadian pipeline companies have submitted a solitary natural gas pipeline proposal in the last two years, according to a new report that blasts Canada’s competitiveness.

The Canadian Energy Pipeline Association, a lobby group, and management consultancy Ernst & Young released a report Wednesday that is sharply critical of regulatory overlap, uncertainty and timelines in Canada relative to the U.S., which the report states is now a more attractive place to build pipelines.

Distroscale

The report notes that since 2016, Canadian companies have submitted only one new project for National Energy Board (NEB) approval compared with 14 equivalent applications to the U.S. Federal Energy Regulatory Commission, or FERC.

The NEB proposal is an application from TransCanada Corp. to expand and de-bottleneck its Nova gas pipeline system, which is the largest natural gas pipeline network in Canada but has required maintenance to alleviate pinch points along the system.

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“Over the past several years there has been an increase in the volume, complexity and duplication of regulations imposed on the pipeline industry in Canada,” Ernst & Young’s Canadian oil and gas leader Lance Mortlock wrote in the report.

“This regulatory layering, along with other factors, is decreasing Canada’s competitiveness globally,” he said.

CEPA and EY released the study to coincide with CEPA president and CEO Chris Bloomer’s testimony before the a Senate committee in Ottawa on Thursday, where he will make his organization’s case — once again — that a new law needs to be amended or it will risk further hurting pipeline companies in Canada.

The law, called Bill C-69, would re-organize the National Energy Board, establish the Canadian Impact Assessment Agency and overhaul how major resource projects like pipelines are reviewed in the country.

While Bill C-69 proposes to shorten regulatory timelines, critics such as Bloomer say there are too many opportunities for opponents throughout the process to stop the clock.

CEPA and other industry associations want the bill amended and Bloomer said he would make that case again on Thursday.

“Even before we get to Bill C-69 we have a very uncompetitive regulatory system,” Bloomer said in a Wednesday interview, adding delays for new pipeline projects have led to skyrocketing oil by rail numbers that have now exceeded those in the U.S.

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Data from the U.S. Energy Information Agency shows crude-by-rail movements from Canada exceeded those from the U.S. — even though the U.S. produced 12.2 million barrels per day in March, which is close to three times as much oil as produced in Canada by NEB estimates.

The EIA data shows Canadian producers shipped 408,806 bpd on railway cars in January 2019, compared with U.S. producers shipping 378,000 bpd on railway cars.

Bloomer said he believes regulations of his industry are necessary but believes there is too much overlap between provincial and federal rules that has made the Canadian industry uncompetitive relative to the U.S.

As a result, the energy and pipeline industries are spending more money in the U.S. because of shorter, more certain regulatory timelines, lower taxes, less regulatory overlap between different levels of government and therefore lower costs.

Credit ratings agency Moody’s Investors Service announced Wednesday it was downgrading the debt of TransCanada as it “has experienced challenges executing its large capital projects. The company plans to drop “Canada” from its name and rebrand itself as TC Energy, with a strong focus on the U.S.

Wednesday’s report shows that overall capital spending in the U.S. oil and gas sector has increased 38 per cent since 2016, while capital spending in Canada decreased 19 per cent over the same time period.

Part of the reason for that, Bloomer said, is that Canadian pipeline projects spend twice the amount of time in regulatory review processes in Canada compared with the U.S.

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Photo by Stuart Gradon/Calgary Herald

Canadian pipeline proposals spent an average of 681 days in regulatory reviews before being approved in 2016, which is 91 per cent longer than the 357 days of regulatory reviews they endured in 2009.

By contrast, U.S. pipeline proposals took an average of 336 days to approve in 2017, a 15 per cent increase on the average of 292 days those pipelines spent in the regulatory process in 2009.

While all three active oil export pipeline proposals in Canada have faced multi-year delays, RS Energy Group analysis shows that in just three years, three new oil pipelines from the Permian Basin in Texas have been approved and are under construction. Those pipelines — the Epic Crude Oil Pipeline, the PSX Gray Oak pipeline and PAA Cactus 2 pipeline — will be online in 2020 and carry an additional 2.4 million bpd to the Gulf Coast.

With a file from The Canadian Press