Battles over pipelines have created troubles for Canada’s oil sands producers looking to export more product south and west.
Now, a decision by the National Energy Board creates new obstacles for sending oil east, too, to markets in Ontario and the Atlantic coast.
Canada’s energy regulator said Monday that it will launch an oral public hearing for the partial reversal of Line 9, an Enbridge Inc. pipeline that currently delivers crude from Montreal to Sarnia, Ont. In August, Enbridge had applied for an exemption from such scrutiny.
The oral hearing won’t take place until the fall of 2012, meaning a decision on the partial reversal won’t be made for some time.
Line 9 is built to carry up to 240,000 barrels per day. In its original construction, in 1975, the crude flowed west to east; it was reversed in 1999. Now, Enbridge wants to re-reverse part of it, sending oil from Sarnia to North Westover, Ont., which is located between Cambridge and Hamilton.
That partial reversal would allow western Canadian crude to reach two refineries, including one operated by Imperial Oil Ltd., that currently rely on crude imported from the Atlantic. Such imported oil comes from places like the North Sea, the African offshore, and the Middle East, where crude has been trading at levels above the price of North American crudes. That has created a financial incentive to bring cheaper Canadian crude across the country.
The partial re-reversal would not entail the construction of any new pipe. Indeed, Enbridge told the NEB the work will be environmentally benign, and “will not be a cause for public concern.”
Line 9 would also not be intended to carry oil sands crude. Rather, it would transport lighter crudes.
But environmental groups have affixed substantial new scrutiny to pipeline projects, and argued that the pipeline could one day bring oil sands-derived oil to eastern Canada. Critics have targeted pipelines as a way to interrupt expansion of the oil sands. That strategy achieved some success earlier this year when, amid a public outcry, the Obama administration delayed a decision on the $7-billion Keystone XL line that would carry Alberta oil to the Gulf Coast.
At the same time, environmental and first nations groups have engaged in a loud fight against two projects – the Enbridge Northern Gateway pipeline, and the expansion of the Trans Mountain system owned by Kinder Morgan Canada – that would bring new oil flows to the West Coast, where it could be exported to Asia and California.
The Line 9 debate has erupted against that backdrop, and saw numerous landowners and first nations petition the NEB for a review.
“One of our main concerns is the impact this would have in terms of bringing more tarsands oil into Ontario and then potentially into Quebec as well,” said Gillian McEachern, program manager for energy and climate with Environmental Defence.
“It seems clearer and clearer that the industry can’t skirt public scrutiny and public debate about what type of energy future we want.”
Enbridge has acknowledged that the partial reversal may only be the first step. It has in the past examined plans to reverse the entire Line 9 to Montreal – a move that could ultimately allow Canadian crude to reach Atlantic tidewater for export, with the potential reversal of a separate pipeline to Maine.
On Monday, the NEB said it will examine the necessity of reversing Line 9, as well as the pipe’s design and integrity and its potential impact on the environment, first nations and landowners.