Energy East Pipeline woes Worry Canada's Atlantic Coast

For years, heavy equipment operator Ashley Underhill has tried to defy the notion that one could only make a good living in Canada's poorer east coast by spending most of the time away from the family in the nation's western oil patch.

One reason Underhill had battled on, working on small private contracts, including snow clearing and wood cutting, was Energy East, a planned 4,600-km (2860-mile) pipeline between Alberta's oil sands and the east coast and the promise of an economic boost it could bring. But the approval for two western pipelines last month dimmed Energy East's prospects and now Underhill is looking to work in the oil sands in western Canada.

"People are really scrounging out here in the Maritimes, looking for work," said Underhill of Miramachi, New Brunswick. "Unless Energy East comes a lot sooner, I'll probably inquire about going out (west)."

TransCanada Corp's Energy East pipeline is projected to bring nearly 5,000 construction jobs to New Brunswick, which is its final destination.

The project was slated to begin in 2017 if approved and enjoys broad support in all Atlantic provinces - New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland and Labrador. But while the government appointed a new panel on Monday for the pipeline's regulatory review, it has yet to say when it will restart the process that was stalled in September. Meanwhile, projects in the west have already cleared key hurdles.

Last month, Ottawa approved Kinder Morgan Inc's Trans Mountain pipeline expansion to the Pacific coast and Enbridge Inc's Line 3 to the United States, making it less pressing to build another export route.

If those pipelines succeed, "is there a need for Energy East in the next five to 10 years? The answer's probably not," said AltaCorp Capital analyst Dirk Lever.

TransCanada spokesman Tim Duboyce said Energy East would deliver Canadian crude to eastern refineries that currently import foreign oil, something other routes could not accomplish. "Shippers remain firmly committed," he said.

New Brunswick's government also firmly backs the pipeline, estimating it would give the province's C$32-billion ($24.11 billion) economy a roughly 10 percent bump. Prince Edward Island's government has said the pipeline would reduce the province's reliance on imports and stabilize fuel prices.

But Energy East faces stiff opposition from environmental groups, particularly in New Brunswick's more prosperous western neighbor of Quebec, which the pipeline would cross. In September, regulatory hearings in the province were suspended after it emerged that panel members met privately with a company consultant.

HEAVY BLOW
A delay or cancellation of Energy East would deal a severe blow to an already struggling region.

"We have lots of outward migration, very little job growth," said David Murrell, economics professor emeritus at the University of New Brunswick. "We're a have-not province, and we need it. It's an all-or-nothing thing," he said about the pipeline.

Joel Richardson, vice-president of the Canadian Manufacturers and Exporters industry group in New Brunswick and Prince Edward Island, echoed that sentiment, saying Energy East would help keep workers in the region. The approvals for the western pipelines would not stem the exodus.

"The risk is very real that we could see more and more workers leaving Atlantic Canada again."

The Atlantic-coast region, where 6.6 percent of Canada's 35 million people live, has been beset by a stagnant economy, westward migration and a rapidly aging population. Unemployment rates for the region ranged from 8 percent in Nova Scotia to 14.3 percent in Newfoundland and Labrador last month, well above the national 6.8 percent average.

The region has depended on the oil-rich west for jobs for years and was hit hard by tumbling crude prices. As prices stabilized this year some oil producers have started gingerly hiring again, though on a smaller scale than during the boom years.

The mood today could not be more different than in 2013, when TransCanada announced the Energy East plan and New Brunswick's Conservative premier fought back tears at a local event, saying the pipeline would "change the fate of many of our families."

The province's current Liberal government also backs the project, but at the federal level the Liberals have been non-committal. When asked about Energy East, Natural Resources Minister Jim Carr would only say the pipeline needed to clear the independent energy regulator first.

"We are not champions of individual projects," he told a Nov. 30 industry event.

Mechanic Rick Blanchard said people in Atlantic Canada were frustrated with decisions they thought favored western Canada and felt Prime Minister Justin Trudeau should have done more to help Energy East navigate a rigorous approval process.

"It would have been nice if it was in our own backyard rather than 4,000 km (2485 miles) away," Blanchard said of the pipeline approvals. "We've lost a lot here in New Brunswick," said Blanchard, who lives in Saint John, the province's largest city.

"There are guys willing, wanting and able to work, and they can't."

By Mitch MacDonald