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NEWS: Harper government backs west-to-east pipeline proposals

The Harper government is backing two west-to-east pipeline project proposals that would carry oil from Alberta to Atlantic Canada. And as reported by the Canaidan Press, Natural Resources Minister Joe Oliver “said that while initial plans are for piping non-oilsands crude from Alberta to the East, he expected that eventually the pipelines could carry bitumen from the oilsands.” Oliver also appears to back the export potential of the pipelines by saying, “The west coast of India is closer to the east coast of Canada than the west coast of Canada is to India on the other side.”

TransCanada
Description
“TransCanada Corp. wants to convert an existing, underused natural gas line to bring oil from Western Canada to Quebec and New Brunswick. It would be up to the National Energy Board to approve such projects, and TransCanada has not yet formally submitted the proposal for scrutiny. Irving Oil owns a refinery in Saint John with a current capacity of about 300,000 barrels per day. If the conversion goes ahead, the pipeline could move upwards of one million barrels per day and benefit the Irving refinery.”

Harper government support
“Oliver says he gave a tentative nod to (this) proposal in a meeting with industry giant Irving Oil. ‘I met with Arthur Irving (Irving Oil’s CEO) and expressed the support of the government of Canada, in principle, for this initiative,’ Oliver said… Oliver said industry participants have built a solid business case for the proposal, and he supports it, so long as it passes the necessary regulatory hurdles. ‘We in principle are very supportive and are encouraging the market participants to pursue it,’ said Oliver. ‘To the extent that there are regulatory reviews, of course we respect that, and our support would be contingent on those reviews coming out positive.'”

An export pipeline?
Last Sunday, federal Finance Minister Jim Flaherty appeared to back this proposal too as well as signal the pipeline could be used for exports. Flaherty said on Global TV’s The West Block, “There are lots of alternatives. We can explore all of them and it’s one of our priorities, major projects to encourage economic growth and exports. (Options include) pipelines to the East to New Brunswick to St. John, pipeline to Churchill, pipeline through the Rockies.” While Flaherty hints at the “exports” aspect of this pipeline, newspaper reports appear to reinforce this likelihood:

– “The company is considering a range of options, …including a grander vision that would deliver oil to Saint John for both domestic consumption and some export potential. …Saint John’s deep-water port, which can accommodate massive tankers, makes it attractive for large-volume exports.” (The Globe and Mail, January 2013)

– “(The pipeline would give) the energy industry to access Asia’s lucrative markets. …It is shorter to reach India’s west coast refining hub via Canada’s east coast than it is to ship oil off the west coast, Laurie Smith, partner at Bennett Jones LLP, said in an interview. …Further, the Eastern Canadian route extends to China by moving tankers through the Straight of Malacca between Malaysia and Indonesia and then north through the South China Sea. Shipping oil to major refining facilities in Europe, such as the Netherlands’ Rotterdam, are also under consideration, Mr. Smith said.” (The Globe and Mail, October 2012)

– “Crescent Point Energy Corp. has ‘had conversations’ with potential European buyers, said Trent Stangl, the company’s vice-president of marketing and investor relations. …Eastern Canada is ‘a nice market for light,’ he said. ‘But it’s also good if you can get port access, so that you can get beyond the East Coast and into the international markets, whether they happen to be Europe or in Asia.'” (The Globe and Mail, January 2013)

Enbridge
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“Another proposal would see Enbridge Inc. expand capacity on some pipes in the Great Lakes region and reverse the flow of another line between Montreal and southern Ontario — the so-called Line 9 pipeline that currently brings imported oil to a refinery in Sarnia, Ont.” The pipeline would deliver a proposed 300,000 barrels of western oil to Montreal, home of Suncor Energy Corp.’s refinery. While the Line 9 reversal has been positioned as a pipeline that would carry light crude oil sourced from regions other than the tar sands, CBC reported in November, “In its latest document filed with the NEB, the pipeline company says they would like to ship heavier crudes — like oilsands bitumen — at a later date.” Enbridge has also stated that diluted bitumen (dilbit) could be shipped on Line 9.

Harper government support
Oliver appears to have endorsed this pipeline project in November 2012. At that time, CBC reported, “The reversal of a pipeline between Sarnia, Ont. and Montreal to carry Western crude oil east is an exercise in good public relations, says Oliver. Enbridge’s Line 9 would show eastern Canadians the benefits of Alberta oilsands development, argues Oliver. ‘Certainly, we have found that the farther away the resource is the less people are comfortable with it. If you bring the resource to them, they’re helping to develop it, it creates added value in Canada,’ he added”

An export pipeline?
There are fewer concrete suggestions that the Line 9 reversal would lead to an export pipeline, but there are still concerns.

– “Enbridge is in talks with Valero Energy Corp. and other refiners about reversing the flow of a pipeline to ship Canadian crude to the U.S. East Coast, said Chief Executive Officer Patrick Daniel. Enbridge is talking to ‘all’ refiners on the East Coast and in the Maritime provinces in eastern Canada about the possibility for the company’s Line 9, Daniel said in an interview.” (Bloomberg, October 2011)

– Environmental Defense, the Pembina Institute, Equiterre, the Vermont Natural Resources Council and the Natural Resources Council of Maine are raising concerns that the Line 9 reversal is one step in the revival of the Trailbreaker project which proposed to carry oil from Montreal on an existing 236-mile underground pipeline across Vermont to Portland and the US market.

– Given the opposition Enbridge is facing with its Northern Gateway export pipeline proposal, and the speculation that the construction of this pipeline will be stalled for years or stopped entirely, it has been argued that Enbridge using an existing pipeline for eventual export purposes faces fewer regulatory hurdles. Natural Resources Minister Joe Oliver has stated, “You don’t have the issue of the construction and the potential environmental impact which has to be assessed. …In terms of the surrounding area through which it goes there’s no (environmental) impact.”

– And while it’s speculation, the same market dynamics would hold true if Enbridge were able to extend Line 9 to Atlantic Canada or the United States – that the lucrative markets of India, China and Europe are as accessible from the East Coast as the West Coast.

Today’s Canadian Press article is at http://www.ctvnews.ca/politics/energy-minister-solidifies-federal-acceptance-of-west-to-east-oil-pipeline-1.1140119.