Everything You Need To Know About Pipelines—And Why They’re So Controversial

Pipelines that move oil and natural gas are big business. They’re also a huge source of controversy, drawing complaints from environmentalists (that we need to invest in renewable energy instead) and industry (that we’re not building them fast enough to keep up with our supply) alike.

Add to that the concerns of affected communities and the complicated process of obtaining true consent from First Nations to build on unceded land. The federal government set new controversial standards for pipeline approvals by passing the Bill C-69 in June 2019. Environment Minister Catherine McKenna rejected most of the Senate's "industry friendly" amendments to C-69, which Prime Minister Justin Trudeau claims "would make indigenous consultations optional, exempt oil sands development and pipeline projects from federal reviews and indeed, even block Canadians from having a say on projects."

Also in June, the federal government announced re-approval of the Trans Mountain pipeline. Earlier, the National Energy Board (NEB) decided that despite acknowledging that there would be significant negative effects to the environment, the economic benefits of the Trans Mountain pipeline (which currently runs through Alberta to the British Columbia coastline) are in the "public interest" and should be approved if the company can meet 156 conditions—spanning from environmental protection measures to consultation with affected Indigenous communities. And of course, we’re finally acknowledging that we’re in the middle of an environmental crisis, making any discussion about carbon emissions even more fraught.

“We don’t want the province of Alberta to go down the tubes [economically], it’s bad for the country. But nor do we want to destroy our environment and we’ve got to do something about climate change,” says Nancy Olewiler, a professor of economics and public policy at Simon Fraser University and a commissioner with the Ecofiscal Commission—a group of economists that works “to align Canada’s economic and environmental aspirations.”

Soon after Justin Trudeau was re-elected in this past federal election, he confirmed he would move forward with the Trans Mountain pipeline. A case at the Federal Court of Appeal launched by six Indigenous applicants seeking judicial review of the federal cabinet's second approval of the pipeline was recently dismissed. Trans Mountain Corp. announced they will officially start construction of its pipeline in Dec. 2019 after years of delay. It's set to be finished by mid-2022.

With so much going on, we've pared the controversies down to the basics, and talked to experts about what's at stake.

What do pipelines do and how do they work?

Pipelines carrying all sorts of oil and gas are already everywhere—if your home uses natural gas for heating, for example, it goes through a smaller "distribution" pipeline which disseminates the gas from "transmission" pipelines, which carry either crude oil or natural gas from production to market—natural gas, for example, is often turned into liquified natural gas (LNG) for export via tanker ship. Transmission pipelines are the most controversial kind, and there are already enough transmission pipelines in Canada to wrap around the world 20 times. Essentially, "gathering" pipelines carry crude oil or natural gas from individual wells and production sites to a collection system, which then brings them to a transmission pipeline.  In Canada, this means that natural gas pipelines generally go from natural gas wells drilled in the west to the east coast, and crude oil primarily goes south from Alberta’s oil sands to various locations in the United States.

What crude oil and natural gas pipeline proposals are there in Canada right now, and which are the most notable?

Crude oil—Keystone XL, and Enbridge’s Line 3 replacement

The Trans Mountain pipeline was at top of mind as it awaited government approval for the proposal to expand its volume capacity—it has now been re-approved and will begin construction in December. (Last spring, the federal government negotiated a $4.5 billion price to buy it.) TransCanada Corp. hoped to finish construction of the crude oil pipeline Keystone XL by 2021 but is facing delays from the United States; it would carry oil from Alberta to Nebraska. Enbridge’s Line 3 replacement would carry crude oil from Alberta to Wisconsin, but is facing opposition from the state of Minnesota.

Natural gas—Coastal GasLink is the one you’ve been hearing about

There are currently four LNG-related pipeline proposals (connecting natural gas pipelines that will lead to LNG export facilities) in British Columbia: the Pacific Northern Gas Transmission Pipeline Expansion, Pacific Trail Pipeline, Prince Rupert Gas Transmission, and the Eagle Mountain - Woodfibre Gas Pipeline. The Coastal GasLink pipeline is now active, but drew controversy for how it handled consultation with the Indigenous communities along the pipeline (more on that later).

Which recent major pipeline proposals have been stopped?

The long-delayed Mackenzie Valley Gas Project (which was to run from the Northwest Territories to northern Alberta) was cancelled. Energy East (which was to run from Alberta to New Brunswick) was abandoned, although New Brunswick Premier Blaine Higgs has said it could be revived. Northern Gateway (which was to run from north of Edmonton to Kitimat, B.C.) was rejected in 2016, but the Eagle Spirit proposal (which would run from Fort McMurray to Hyder, Alaska) hopes to replace it.

What are the economic benefits of pipelines?

Representatives of the oil and gas industries argue that Canada has the resources, but not enough pipelines to efficiently export them to other markets such as China. Since oil sands—a natural deposit of sand mixed with the heavy crude oil called bitumen—are more expensive to refine, and transporting heavy crude oil by rail is more expensive than pipeline transport, they earn a far smaller profit from American markets. The economic logic stands that if Canadian companies can successfully get their products out to markets with higher demand, they can increase their sale price. Instead, there is a supply bottleneck many say is due to delays in pipeline construction, one of the factors that pushed Alberta's former premier Rachel Notley to order production cuts last December. By the end of January, Notley said that oil’s value had increased enough for the province to increase production again, but there are concerns that the shift has come too late for investors.

Recently Encana, a Canadian giant in the oil and gas sector, announced it would be changing its name to Ovintia and moving its headquarters to the United States. In an interview with CBC's As it Happens, Encana founder Gwyn Morgan said the business climate—including the killing of three other pipelines despite moving forward with Trans Mountain—is an important criteria in what a company like Encana would look at when deciding where to invest.

“We’re not realizing the full value for our products,” says Sonya Savage, then the senior director of policy and regulatory affairs for the Canadian Energy Pipeline Association (CEPA) (she's now Alberta's energy minister). She explained only the existing Trans Mountain pipeline runs west, and there aren't any transmission pipelines east of Montreal.

CEPA, of course, has a vested interest in seeing that pipelines are built, and Savage, along with others in the industry, worry that if the government doesn’t figure out a more efficient regulation process, investors will pull out of more projects in Canada (which has happened, as was the case with British Columbia's Pacific NorthWest LNG project) and go elsewhere for their energy demands. “Keeping our oil in the ground is not going to solve a global issue,” Savage argues.

What are the environmental risks of pipelines?

Science shows humans need to reach zero carbon emissions between 2045 and 2055 to avoid disastrous global warming and researchers warn that we have to phase out fossil fuels entirely soon if we want to keep global warming from rising above 1.5 degrees celsius.

It's possible that China and India might begin to lead the way for post-fossil fuel energy production and significantly move away from fossil fuels. Without a market for oil overseas, Olewiler points out, the export pipeline issue might be resolved entirely.

Given that the burning of fossil fuels is directly connected to climate change, environmental activists are calling for anything from a more aggressive push towards renewable energies to a complete stop to further fossil fuel extraction. Many of the most prominent environmental groups oppose any expansion of the oil and natural industries at all.

“Our basic position at this point is that Canada should not be building more fossil fuel infrastructure until we have a clear plan and start making progress towards meeting our global climate change commitments and reducing our greenhouse gases," explains Jay Ritchlin, the director general for B.C. and Western region for environmental organization the David Suzuki Foundation. "The oil and gas sector is already our largest producer of carbon dioxide emissions and if we continue to expand that, there is almost no way we can get the rest of our economy to do all the reductions that are necessary."

As for the actual pipeline construction part, risks range from water contamination to wildlife habitat disturbances. Both the provincial and municipal governments for Vancouver have vigorously fought against Trans Mountain, for example, because it would end in the Burrard Inlet and increase the tanker ship traffic for exporting the oil. The city filed an evidence-based report on how the project is “not worth the risk” because tanker traffic spills would be devastating to the coastline. Also in B.C., the controversial and recently passed Bill C-48 sets a moratorium on oil tankers carrying large quantities of crude oil along the northern coast to protect the ecosystem. Critics say it is a veiled attempt to shut down the resource sector.

These fears are not unfounded. Recently, an estimated 1.4 million litres of oil spilled from the TC Energy Corp.'s Keystone pipeline in North Dakota. The cause of the spill has not yet been disclosed, but the initial estimate puts it at one of the biggest onshore crude spills in the past decade.

Other proposed pipelines, like the controversial Coastal GasLink proposed for northern B.C., would transport natural gas to become LNG. For a while, natural gas was viewed as one of the better transition fuels as the world shifts towards renewable energy—in part because natural gas evaporates when leaked, instead of leaving hard-to-clean-up spills. However, activists are emphasizing that natural gas isn't a real solution to the climate crisis. U.S. researchers found that methane (also a greenhouse gas) levels released by natural gas are much higher than initially thought. In climate activist Bill McKibben's book Falter, he writes that somewhere between 3.6 and 7.9 percent of methane gas from shale-drilling operations actually escapes into the atmosphere. And while methane produces half as much carbon as coal when it’s burned, if it’s not burned and it escapes into the air before it can be captured in a pipeline, it then traps heat in the atmosphere about eighty times more efficiently than carbon dioxide.

What alternatives are there to pipelines?

As an alternative to delayed or cancelled pipelines, companies continue to ship by rail, which is less regulated. While Canada has some of the highest standards for pipeline regulations in the world with the National Energy Board regulating all the pipelines that cross provincial borders and individual provincial regulators for those that remain within a province (CEPA also tracks how many pipeline leaks there are every year), rail doesn’t have the same streamlined oversight. “It’s not as efficient, it has a higher environmental footprint to move it by [using] oil than to move it within a pipeline, and it is also not as safe as moving it by pipeline,” says Savage.

Rail also runs the risk of going through more heavily populated areas, as stations tend to run through city centres. Heavy crude from bitumen isn’t as volatile as light oil, so it won’t explode if derailed—but spills still release hazardous chemicals into the air and there are few studies on the long-term health effects of exposure.

However, Ritchlin counters that rail is more flexible for a transitioning economy. “If there is in fact a strong market, you can add cars to the rails. When we start to move away from fossil fuels and we start to move towards more and more renewable energy, then you can reduce the number of cars and you’re not stuck with this embedded infrastructure that can’t do anything else for you,” he says.

There are companies out there working on innovative alternatives. For example, Heart Lake First Nation’s Wapahki Energy company has developed a technology called CanaPux, which turns bitumen into pellets that can be shipped using pre-existing coal ports—and takes away the risk of pipeline leaks or rail and tanker spills.

How are companies consulting with Indigenous communities about pipelines?

The RCMP’s court injunction on the Gidimt'en camp checkpoint drew national attention to the complexities of Indigenous consultation in early 2019. It showed that there are disputes within Indigenous communities as well. In that specific case, Coastal GasLink received approval from the band councils but not the hereditary chiefs. Additionally, because bands were established by the Indian Act of 1876 to assimilate Indigenous forms of government into the colonial Canadian one, not everyone recognizes them as absolute authority. To complicate the situation even more, much of British Columbia is on unceded land—meaning that most of the First Nations in the province do not have treaties with the Canadian government. In the case of the Trans Mountain pipeline project, this led to six First Nations filing appeals with the Federal Court—who dismissed these challenges in February 2020.

Pipeline companies usually have Indigenous affairs departments that work on creating relationships with individual communities. The First Nations that do support projects are looking for equity ownership and “the ability to play a meaningful part in projects’ environmental monitoring and ensuring our lands are protected to the fullest extent,” according to the Assembly of First Nations’ Alberta Regional Chief Marlene Poitras.

By asking for more involvement in the processes, Indigenous communities are looking beyond the “impact benefit agreements” (with promises such as employment and monetary compensation, depending on the specific needs of a First Nation) that companies typically offer.

And the Canadian government has a more formal constitutional duty to engage in consultation with Indigenous communities. When the Charter of Rights and Freedoms was repatriated in 1982, Section 35 was introduced to ensure recognition of Indigenous rights. “Consultation on the part of the Crown must respect our Treaty rights and the United Nations Declaration on the Rights of Indigenous Peoples, which the government has endorsed without qualification,” explained Poitras. “The federal government must understand that they created the Indian Act system and [as] choose, to their detriment, to not fully engage with traditional governance systems that have been or are being revived by our First Nations peoples across this country.”

What’s the deal with Bill C-69?

The bill overhauls Canada’s regulatory review process for major infrastructure projects. In it, the Impact Assessment Act takes into account “the changes to the environment or to health, social or economic conditions” that a pipeline project might cause. It lists new requirements and review panels that would assess how a pipeline might interfere with different acts, such as the Species At Risk Act, which initially crushed approval for the Trans Mountain pipeline expansion because the NEB didn’t assess the impact marine shipping would have on killer whales.

Experts from both inside and outside the industry have pointed to better policy as a potential solution, but they don’t always agree on what that policy looks like. Savage says the bill attempts to tackle wider policy issues such as climate change and global emissions, that are too big to pin on a regulatory review process for pipelines. Instead, she suggests implementing an independent regulator free from too much political interference.

Olewiler thinks having the extra discussion is important. “What industry hates is uncertainty, but the rules for them have changed. They have to get with the new world. You don’t just put a pipeline or an activity wherever you want. It’s getting down and getting a decent dialogue going and getting the issues on the table.”

At Ecofiscal, Olewiler has argued that the fossil fuel transportation debate should shift away from purely economic benefits versus environmental damage towards putting better financial assurance into practice. Similar to insurance, financial assurance policies would ensure that companies commit funds—whether it's through cash deposits, insurance coverage or industry funds—against potential environmental risks in advance of the project. These kinds of policies already exist so future discussions should cover how to make them more effective. “The problem is finding that combination of policy that enables the risky activities to go ahead, because they do generate value and jobs and incomes for people,” she says.

In other words, how can policies effectively put a price on environmental risk up front, and ensure that fossil fuel companies cover it so any consequences don’t fall on society? “It’s hard," says Olewiler. "That's why we're still arguing about all of this.”

With files from Radiyah Chowdhury, the Canadian Press and Maclean's

Originally published February 2019; Updated February 2020.