TransCanada made the announcement Thursday.
Canadian Association of Petroleum Producers CEO Tim McMillan said the Energy East cancellation would force Canada to rely more on the U.S.to be it's "broker" for oil and gas produced domestically at a time when the North American Free Trade agreement is being renegotiated.
A map shows the proposed route of TransCanada's Energy East pipeline.
Saskatchewan Premier Brad Wall says the reasons for the decision fall at the feet of Prime Minister Justin Trudeau and the federal government.
TransCanada said it needed time to review recent changes announced by the NEB on environmental assessment factors and other issues related to the projects.
Realizing that Energy East would never be allowed if its full climate impact was accounted for, TransCanada has walked away from the project.
The 4,500km Energy East pipeline, which would have carried 1.1 million barrels of oil per day, faced stiff opposition from environmental groups and several municipalities in Quebec concerned about possible spills affecting groundwaters and rivers along its path. Crude oil prices have slipped near $50 a barrel and other commodities are weaker as the US dollar found its footing.
New Brunswick Premier Brian Gallant said in a statement Thursday that he believed TransCanada's decision was based on market conditions, but McLellan disagreed, saying oil companies have learned over the last three years to make a profit at lower prices.
"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 application", company chief executive Russ Girling said in a statement.
Suncor Energy Inc. (TSX:SU), Canada's largest oil, gas and refining company by market capitalization, had hoped Energy East would allow it to replace USA and offshore oil at its 137,000-barrel-per-day Montreal refinery, said spokeswoman Sneh Seetal.
"We are disappointed with this decision", said Ian Whitcomb.
September 9, 2016: The National Energy Board sidelines all three Energy East reviewers following complaints that two of them met privately with a TransCanada consultant the year before and discussed the proposed oil pipeline.
But Adam Scott, a senior adviser at the environmental group Oil Change International, had a different interpretation.
Quebec politicians, along with Indigenous and environmental groups, welcomed the project's demise, branding it as a harbinger of the inevitable death of fossil fuels and a reminder of the need for further green energy development.
The company said it would take a C$1 billion after-tax non-cash charge in its fourth quarter.
"This project was so wrong and so unsafe, its hard to believe it was seriously contemplated", Gretchen Fitzgerald, national program director of environmental organization the Sierra Club, said.