Trans Mountain approval eases oilpatch angst, for now

After the Trans Mountain expansion project was approved the first time, Ray Zerviniordered extra inventory, hired more staff, and considered expanding store hours. Considering the sheer size of the multi-billion dollar project, he ramped up his business as the shop is listed as one of Trans Mountain's preferred suppliers in the area.

"There's just an enormous amount of opportunity for us to sell product for this project," said Zervini, president of Canyon Cable in Hope, B.C.

Of course, construction never did begin in earnest after the federal government first approved the project in 2016.Many of those supplies, like specialized welding rods, are collecting dust on store shelves and Zervini has had to adjust work schedules for his employees. Store hours were never extended.

Speaking beforethe second approval of the pipeline by the federal government Tuesday, Zervini said the delays have been frustrating.Like many in the oilpatch, he's anxious to see pipes put in the ground.

"We'll be ecstatic," said Zervini. "It's good for our business, it's good for our community of Hope and it's going to be good forthe economy around here."

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For an industry that's felt likeit's been stuck in neutral, or worse,for several years now, Tuesday's news was welcomed as astep forward even for those who still seea long journey ahead for the industry's recovery.

"The approval of the pipeline is a positive development," said David Yager, an energy industryconsultantand a former chairman of the Petroleum Services Association of Canada.

"I just don't think people fully understand how deep the hole is that we're trying to dig our way out of. It's the first five rungs on a hundred-rung ladder."

There was concern in the industry, at least prior to Tuesday'sannouncement that Ottawa would bury the project with further regulations or kick the project down the road with further delays.

Instead, there'stalk of getting shovels in the ground sometime this year. That seems like no small thing, even if it comes without a precise start date. Earlier this spring, the president of Trans Mountain Corporation saidif the project got approval in May or June, there could be full crews working on the right of way this fall.

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After previous false starts on this and otherprojects, skepticism remains. Until the line is built and moves oil to the B.C. coast,there will be concern about future delays.

Across the sector, people will be watching closely for when work begins.

"A positive decision moves the ball down the field a little bit," said Samir Kayande, a director with RS Energy Group in Calgary, speaking prior to Tuesday's announcement.

"It really depends on how quickly you can put steel into the ground and get the pipeline construction actually started."

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Proceeding with the Trans Mountain pipeline expansion project is viewed as important for Canada's oilpatch for a number of reasons.

For one, a lack of pipeline capacity has been a big issue for the sector for some time.Basically,oilsands production is growing but the pipes aren't getting any bigger.

Things came to a head last fall when a glut of oil caused in part by pipeline bottlenecks led to big discounts on Canadian crude. Beyond the impact on the industry, this also had an impact on provincial royalty revenues.

People with ties to the industry hopethat Ottawa's approval project could at least signal better days ahead. Still, industry experts have cautioned that while the project is important, it's not a quick fix.

Kevin Birn, an analyst with IHS Markit, said while the project is being built, Western Canada willkeep pumping more oil out of the ground than it can move to marketby pipeline.

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"We should continue to expect an increased role in the importance of crude by rail in the system as well, and probably a little bit of concern about the system as a whole in terms of the ability to get crude to market," Birn said.

The most immediate impact of Tuesday's decision from an employment perspective may be construction jobs along the project's route. Once it begins, total construction time would be 30 to 36 months.

However, few people would anticipate it will be clear sailing from here.

The project has been met with strong resistance from the B.C. government, environmental groups and some Indigenous communities along the route. Among their concerns are the increased tanker traffic, pipeline leaks and climate change.

More protest and legal battles are expected, including the B.C. government's plans to appeal a recent court decisionthat effectively killedthe province's attempt to impose laws that would stop the Trans Mountain pipeline expansion.

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The Union of B.C. Indian Chiefs is vowing to make sure the pipeline is never built.

For now, the sector is enjoying a good day in the battle for new pipelines.

And for those communities along the pipeline route who are excited about increased business, it was also a day to enjoy.

"Hotels will be full, restaurants will be full, gas stations will be full," saidWes Bergmann, the owner of Blue Moose Coffee House in Hope, B.C.

"Everybody comes through Hope. Whether you're a highway or a pipeline, you have to come through Hope."