TransCanada Corp finally abandoned construction of its controversial Energy East pipeline on Thursday, taking a C$1 billion blow and handing environmental groups a major victory in efforts to hamper Canadian oil development.
The decision, nearly a month after the company halted regulatory applications for the project in the face of tough official scrutiny, is a blow to the ailing economy of the New Brunswick province and heads off a broader political row over the project.
Canada`s National Energy Board (NEB) granted TransCanada a 30-day suspension on Sept. 8, after the company said it needed to review the impact of new assessment criteria that would consider the C$15.7 billion ($12.58 billion) project`s indirect greenhouse gas contributions.
Energy East, which would take 1.1 million barrels of crude from Canada`s oil heartland of Alberta, would have fetched higher prices for Canadian producers, whose landlocked product trades at a discount to the West Texas Intermediate benchmark.
But its importance has somewhat diminished for TransCanada since the United States this year approved the company`s Keystone XL pipeline, which would run from Alberta to U.S. refineries.
Energy East was up for its second NEB review, after the first stalled last year amid protests by environmentalists and after revelations that regulatory panel members met privately with a TransCanada consultant.
"After careful review of changed circumstances, we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications," TransCanada said on Thursday.
The company said it was taking a non-cash charge of C$1 billion in the current quarter because of the cancellation.
The decision had been substantially priced in to the company`s shares and TransCanada`s stock dipped just 0.25 percent to C$60.76 after opening in Toronto. They had fallen nearly 4 percent since Aug.23 - when the NEB expanded the scope of its assessment.
A judicial review into another project, Kinder Morgan Canada`s C$7.4 billion Trans Mountain pipeline expansion, was launched on Monday, with lawyers and project opponents saying Canada failed in its duty to consult First Nations and other groups.
Shares in Kinder Morgan Canada were flat at C$17.07 in early trading compared to a 0.3 percent rise for Toronto`s S&P/TSX composite index.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)