Calgary-based Enbridge Inc. is challenging a key claim by pipeline rival, TransCanada Corp., that Quebec refineries will greatly benefit from construction of the $12-billion Energy East project.
In a project description filed Tuesday with the National Energy Board, TransCanada said its 1.1-million barrel per day pipeline would allow eastern refineries to replace imported oil with cheaper domestic supplies from western Canada.
“Access to western Canadian oil will help maintain competitiveness of the industry which is a significant employer in regions where this activity occurs,” the TransCanada document declared.
While the National Energy Board has jurisdiction, Quebec could erect serious hurdles to TransCanada’s Energy East project. The company will submit its plan to the province’s Bureau d’audiences publiques sur l’environnement (BAPE) for review.
Enbridge argues that the Quebec market will have access to nearly all the North American crude it needs as a result of Enbridge's planned reversal of the Line 9 pipeline, which would carry western crude through Ontario to Montreal.
The National Energy Board is set to rule Thursday on Enbridge’s application, and the company clearly expects to win approval for the project, which requires no new pipeline construction.
“It should be very straight forward,” Enbridge senior adviser Stephen Wuori said in an interview after speaking at the annual HIS CERA conference here.
The Line 9 pipeline will deliver 300,000 barrels per day of crude into Quebec, enough to meet 75 per cent of the crude requirements at the province’s two refineries, Suncor Energy Inc.’s 130,000 barrel-per-day plant in Montreal and Valero Energy Corp.’s 265,000 barrel-per-day refinery near Quebec City.
At the same time, both Suncor Energy Inc. and Valero have expanded their ability to receive crude by rail, while Valero has a permit to export low-cost oil from Texas to Quebec by ship.
“Any other project would have to be for markets beyond Quebec,” Mr. Wuori said, in reference to Energy East.
Quebec’s national assembly held its own hearings Enbridge’s Line 9 project, and supported it on the condition that the crude be used in the province. And with an election campaign under way in the province, Premier Pauline Marois could face pressure from environmentalists to take a hard line on Energy East.
With a formal NEB filing expected in mid-summer, TransCanada chief executive Russ Girling said the company is working hard to “get out ahead” of opposition, with a series of community meetings along the pipeline route.
Concerns about the project are being voiced by environmentalists and by municipal officials in places like North Bay, Ont., and Edmunston, N.B. New Brunswick Premier David Alward has endorsed Energy East, which will feed Irving Oil Ltd.’s Saint John refinery and an export terminal at the port.
There will also be an export terminal in Quebec City, part of TransCanada’s efforts to ensure the province reaps benefits from the project.
“Canadians understand – and I include Quebeckers in that – that there are major refineries in Quebec and Montreal that import their oil from around the world and that getting that oil from Canada makes a lot more sense,” Mr. Girling said in an interview.
And he noted that both Suncor and Valero have expressed support for the project. In additional to serving eastern Canadian refineries, Energy East will enable western producers to access markets on the U.S. East Coast – which currently imports 1-million barrels per day – and in Europe and Asia.
Mr. Girling said the pipeline would reduce the risks of moving crude by rail or by tanker up the St. Lawrence River, and that the project would bring thousands of construction jobs and economic spinoffs to the province. "We want to put people to work," he said.
TransCanada has been frustrated by long, politically-motivated delays in the United States over the company’s proposed $5.5-billion Keystone XL pipeline to move oil sands crude to the U.S. Gulf Coast, a project attacked by environmentalists who worry about leaks and greenhouse gas emissions from an expanding oil sands sector.
But Mr. Girling expressed confidence that the Energy East project won’t become a political issue in the Quebec campaign. “This isn’t a partisan issue and shouldn’t get involved in the election cycle,” he said.