Throwback Thursday: Pipeline Decision Teaches Lesson

Originally printed in The Calgary Herald, October 6, 1966


By Jim Armstrong

pearson_pic_678pxThere is a lesson to be learned· from the Trans­ Canada Pipe Line story.

It was a black day August 25 when Prime Minister Pearson announced it was not in the nation’s interest to allow Trans Canada Pipe Lines Ltd. to build a second pipeline through the United States to move Western Canadian gas to Eastern Canadian markets. In arriving at that decision, Mr. Pearson obviously looked up at his pride and joy – the Maple Leaf flag – and was overwhelmed with a spirit of nationalism. At that time, economics were damned.

For a week after, the total petroleum industry was in a state of shocked silence. No one would comment on the decision, except to say “we have to study it further.”

Then a change took place. Canadian Petroleum Association, Independent Petroleum Association of Canada and Canadian Association of Oilwell Drilling Contractors – the three major industry associations – simultaneously came awake. The Canadian Chamber of Commerce added its weight. All of these groups, and others, came out with strong, blistering statements against the federal government decision. They told the Pearson government in very strong terms exactly what they thought and spelled out the serious economic implications of insisting on a second gas transmission line be built north of the Great Lakes to continue serving the eastern market.

Provincial premiers added their support to the industry cause. Most of the nation’s newspapers took the side of the industry, and the petroleum press lashed out with large type at Mr. Pearson and his cabinet.

Never, in the history of the petroleum industry, was such a united front presented. Never had the industry pulled in unison so strongly and openly to dispute a decision already brought down by a government. And it can safely be assumed what appeared in public print was only a fraction of what took place in private discussions.

There is no question that the Liberal government made a mistake at the end of August. It has, however, corrected that mistake by reversing its own decision – a rarity among governments. In order to get the decision reversed, Trans­ Canada Pipe Lines had to only promise the government its northern all-Canada line would remain the main operation and agreed never to dispose of its interest in Great Lakes Transmission Co. – the U.S. leg – without approval of the federal government.

These are not concessions to the government on the part of Trans Canada, but simply proper assurance that it has no intention of selling out the nation. They will not hamper Trans Canada’s operations and expansion plans, for they do not change the original proposal. They were points that worried the federal government, and now have been cleared up and a good decision to allow the line south of the Great Lakes has been made.

This is where the lesson is to be learned. There are times to speak up and be heard by the masses. The petroleum industry, normally, is very reluctant to do this. However, the Trans Canada proposal proved to be the exception and possibly taught the industry that if good, intelligent, well­ thought-out statements are made in a time of crisis, more can be gained than lost. To convince a government to reverse a decision is a rare win in diplomacy and salesmanship. By speaking out the industry gained the kind of support across the nation it would never have realized by remaining still.

Trans Canada can now meet its last hurdle with a positive, well-balanced approach. It is to be hoped the initial international damage done in Washington has been repaired.

Trans Canada can now present its Canadian licence to the authorities in Washington. The license contains no basic changes from the original application, therefore the proposal before the Federal Power Commission in Washington should stand as is. It is now entirely up to the U.S. whether the line will be built.

The FPC will now continue its procedure to arrive at a decision of its own. A staff report -critical to all proposals submitted and which actually presented a plan of its own – is in. It is expected FPC examiner, William Levy, will now complete his report and recommendations. The FPC will then be in a position to: 1) accept the examiner’s decision; 2) make one of its own; or 3) call for a rehearing – which is a rarity.

An answer could be expected within a month, although what it will be is very difficult to predict. Observers have always felt that the FPC could turn the project down, as many U.S. interests have opposed building the line.