TransCanada going ahead with Energy East line between Alberta and N.B.
Published Thursday, August 1, 2013 8:42AM EDT
Last Updated Thursday, August 1, 2013 9:55PM EDT
TransCanada Corp. is moving forward with its Energy East pipeline project, which aims to transport 1.1 million barrels of Alberta crude per day to refineries and export terminals on the East Coast.
Trans Canada announced Thursday that the response from stakeholders, including oil producers and refiners, “confirmed strong support” for the $12-billion project, and the company will seek the necessary regulatory approvals in order to begin construction.
The pipeline will transport crude from “receipt points” in Alberta and Saskatchewan to refineries in Montreal, the Quebec City area and Saint John, N.B., as well as to two export terminals in Quebec and New Brunswick.
The pipeline will end in Saint John, where TransCanada and Irving Oil will jointly construct, own and operate a deep-water marine terminal. Irving announced Thursday its plan to spend $300 million on the new terminal.
The project is expected to be completed and the pipeline in service by late 2017 for deliveries to Quebec, and 2018 for deliveries to New Brunswick.
TransCanada president and CEO Russ Girling told reporters Thursday that the interest in the project led the company to increase the design capacity from an initial 850,000 barrels per day to more than 1 million.
“This response confirms the overwhelming industry support for innovative solutions to move crude oil to markets in eastern Canada and to elsewhere in the safest, most efficient means possible, which is in a pipeline,” Girling said.
The project, he said, “will create thousands of jobs across our country and bring new revenues and business opportunities to local communities. It will provide a lower-cost source of energy for eastern Canada and reduce our dependence on foreign oil. We will achieve all of this safely and with minimal environmental impacts and with all private-sector funds.”
Approximately 3,000 kilometres of existing natural gas pipeline will be converted to crude oil service, while another 1,400 km of new pipeline will be constructed, the company said.
The plan is still subject to regulatory approvals, but has support from various levels of government. However, it also already faces opposition from environmental groups.
Alberta Premier Alison Redford expressed her support for the project in a statement issued Thursday, saying it fits with the Canadian Energy Strategy.
"My government made a commitment to the project as part of our efforts to build new markets and get a fairer price for the oil resources Albertans own," Redford said. "This is truly a nation-building project that will diversify our economy and create new jobs here in Alberta and across the country."
New Brunswick Premier David Alward said TransCanada’s announcement is “great news for the people of New Brunswick.”
“What we believe today is it’s a new day in New Brunswick, an opportunity for new economic benefits of our citizens, but very importantly the people of Alberta and Alberta producers,” Alward told CTV News Channel.
“And at the end of the day, if they’re able to get greater value for their natural resources, it means more revenue for governments like Alberta and right across the country. And because of that every Canadian, no matter what coast you live on, is going to see benefit.”
Natural Resources Minister Joe Oliver said Thursday he “welcomes the prospect of transporting Canadian crude oil from Western Canada to consumers and refineries in Eastern Canada and ultimately to new markets abroad.”
Oliver said the project would enhance Canada’s energy security.
But he added that the government “will only allow energy project to proceed if they are proven safe for Canadians after an independent, science-based environmental and regulatory review.”
The Council of Canadians issued its own statement, saying it will launch a national campaign to stop the project.
The group argues that the pipeline poses potential environmental hazards, will not lead to energy security for Atlantic Canada as TransCanada claims, and the number and quality of the jobs it will create remains unclear.
“While using an existing pipeline may reduce TransCanada’s costs, it increases spill risks for the many rivers, lakes and communities along the route,” Andrea Harden-Donahue, of the Council of Canadians, said in a statement.
“The disastrous pipeline spills in Kalamazoo, Michigan, and Mayflower, Arkansas highlight the dangers of shipping tar sands crude and using an older pipeline not originally built for carrying oil.”
'Marketplace needs both pipelines'
TransCanada also used Thursday’s announcement to boost its proposed Keystone XL pipeline project, which would transport Alberta crude south to refineries in the U.S. Gulf Coast.
U.S. President Barack Obama is still considering whether to approve the project amid intense pressure from both industry and environmental groups. The Canadian government has long argued for the potential benefits of the Keystone pipeline on both sides of the border.
“Both pipelines are required to meet the need for safe and reliable pipeline infrastructure and are underpinned with binding, long-term agreements,” Girling said in a statement issued earlier Thursday.
When asked if the two pipelines would create excess capacity, Girling said with crude production expected to grow along with both domestic and international demand: “We need to find numerous transportation options to move that crude to market. The marketplace needs both of these pipelines and probably more as we move forward.”
Girling said the Energy East pipeline’s capacity has the potential to replace the 700,000 barrels of crude currently imported by Eastern Canadian refineries per day. However, some oil will also likely make its way to foreign markets, including the eastern U.S., Europe, India and Asia.
Brenda Kenny, president of the Canadian Energy Pipeline Association, said that while the U.S. will always need Canadian energy products, the Energy East project will allow Canada to access higher international oil prices.
According to Kenny, Canada is losing out on close to $40 billion a year by not accessing overseas markets, revenue that represents “a whole lot of schools and hospitals.”
“We need to be able to move up to a place where Canada can secure the best possible value for its products,” Kenny told CTV News Channel. “And ensure that within Canada all regions can access a choice in products, whether those come in from offshore or Canadian crude oil producers at home.”
She said concerns about pollution will be addressed as the company goes through the regulatory approval process, during which environmental assessments and other research will be introduced.
Richard Dixon, executive director of the Centre for Natural Resources, Energy and the Environment at the University of Alberta, said accessing international pricing will be helped along if Keystone is ultimately rejected and Energy East goes ahead.
“We’ve been beholden to one market, we’ve been lazy to tell you the truth, and now we’re being forced to develop a Canadian energy strategy,” Dixon told News Channel.
“We’re being forced to develop alternative energy markets, we’re going after international oil prices, not the discounted price of the United States, we’re capturing back some of that momentum for ourselves. It would be good news for us.”