(Adds analyst comment)
By Nia Williams
CALGARY, Alberta, April 22 (Reuters) - TransCanada Corp
TRP.TO agreed to submit to a Quebec environmental review of
its Energy East pipeline on Friday, avoiding a potential legal
battle with the province by putting the controversial project
through an extra round of scrutiny.
The resolution removes a potential hurdle but also
introduces another approval process for the nearly 2,860-mile
(4,600 km) cross-Canadian pipeline, which will carry 1.1 million
barrels per day of crude from Alberta's oil sands to the
country's Atlantic coast.
TransCanada is pushing to build Energy East after U.S.
President Barack Obama last year blocked the cross-border
Keystone XL crude pipeline. His decision was a victory for
environmentalists and a blow to TransCanada after a seven-year
battle for approval.
In a statement, Quebec Environment Minister David Heurtel
said TransCanada had filed a project notice agreeing to an
environmental impact study, prompting the province to suspend
its efforts to get a permanent injunction against the company.
Quebec will completely withdraw its injunction application
once the study is approved, the minister said.
TransCanada spokesman Tim Duboyce said the company had
initially been "quite perplexed" by Quebec's request in early
March to submit to provincial environmental law because Energy
East is subject to federal regulations.
"We will provide the environmental impact assessment in the
form they are looking for in addition to a comprehensive one
that has already been filed with the federal regulator the
National Energy Board," Duboyce said.
Quebec filed a motion seeking an injunction against the
pipeline in early March to ensure the project complied with
provincial environmental law, saying it acted after TransCanada
ignored two letters in 2014 requesting an evaluation.
Greenpeace campaigner Keith Stewart said the pipeline would
now undergo a much more detailed review process.
"The odds of this getting built just went down a couple of
notches and the scrutiny that it's going to be subject to went
up several notches," Stewart said.
However, FirstEnergy (NYSE:FE) Capital analyst Martin King said
because Energy East is an inter-provincial pipeline only the NEB
can approve or reject it, meaning Quebec should not be able
block the project on environmental grounds.
"It's basically a trade-off, they (TransCanada) are saying
'Drop the injunction and we will allow the environmental
assessment to go ahead, even though it's not legally required',"
King said.
(Additonal reporting by David Ljunggren in Ottawa and Allison
Lampert in Montreal; Editing by Bernard Orr and Tom Brown)