Quebec’s refinery workers are threatening to stand against TransCanada Corp.’s Energy East project if it exports Canadian oil offshore, an early indication that the company’s pipeline path east from Alberta may face difficulties.
On Wednesday, union workers at four Quebec refineries and chemical plants joined a large business coalition in support of plans by Enbridge Inc. to bring Canadian oil to Montreal and Quebec refineries through its Line 9 pipeline.
But Daniel Cloutier, the national representative for the Quebec energy sector with the Communication Energy and Paperworkers Union of Canada, says that support may not extend to TransCanada, which is laying plans to pump oil through natural gas pipelines to Quebec, and possibly to St. John. TransCanada has frequently spoken about the demand it could serve on the U.S. eastern seaboard, and Canadian energy companies have made clear their desire to reach that market.
“If the project is to export the oil outside of Canada, then we’re probably going to be against it,” Mr. Cloutier said.
“It’s very clear for us that the crude oil must be [refined] in Canada.”
Quebec has become an object of desire for the Canadian crude industry, whose expansion ambitions have faced tough opposition in the U.S. and British Columbia. By sending oil east, the oil sands could find new domestic markets. They could also potentially find a coveted way to tidewater, where oil prices tend to be influenced by the international trade, which has operated at a substantial premium to North American crude in recent years.
The route to that tidewater crosses Quebec, which has already proven tricky ground for the energy industry. The province has proposed a ban on hydraulic fracturing, a technique that could be used to produce natural gas there. The Quebec government has not taken a direct stance on oil pipelines, but has said it will hold hearings on their safety; more than a dozen municipalities, including Montreal, have called for that kind of review. Quebeckers are unique in North America in opposing the use of domestic oil, with a recent poll showing some 53 per cent of the province would prefer foreign crude if it came with a lower greenhouse gas profile.
Alberta oil, particularly crude from the greenhouse gas-intensive oil sands, “will be even less appealing to people if they understand that basically we’re just a transit-way for oil to be shipped to international markets,” said Steven Guilbeault, senior director of Equiterre, a Quebec environmental group.
At the same time, the Quebec business community is aligning in a major show of support for the reversal of Line 9, a pipeline that today carries oil west from Montreal to Sarnia, Ont. If the National Energy Board allows oil to flow east instead, Quebec refineries owned by Suncor Energy Inc. and Valero Energy Corp. will gain access to cheaper Alberta crude. Without that access, Royal Dutch Shell PLC closed its Montreal refinery in 2010.
“We’re pretty sure that if Line 9 was reversed, the Shell refinery would still be open today,” Mr. Cloutier said. Reversing that pipeline “is a question of survival for the refinery industry in Quebec.”
To promote the project, four CEP locals have linked hands with a large business consortium in a new campaign that will include a social media strategy and newspaper and magazine advertising to support the Enbridge project. Included in the campaign’s industrial backers are the chambers of commerce in East Montreal and Lévis; the Association Industrielle de l’Est de Montréal; the Quebec Employers Council; and Quebec Manufacturers and Exporters.
Together, they represent roughly “75 per cent of all manufacturing jobs, and maybe half of all the jobs in Quebec,” said Simon Prévost, president of Quebec Manufacturers and Exporters.
Knowing any discussion of importing Alberta oil would stir opposition, they decided to come together to form a stronger counter-attack, and will make their case before the NEB, he said.
“We thought it would be really important to have a coalition and speak loudly from one big voice, speaking for the Quebec economy,” he said.
In 2012, Quebec spent $13.7-billion on crude oil imports. Much of that oil came from overseas, including 28 per cent from Algeria and 16 per cent from the United Kingdom. Nearly 12 per cent came from Atlantic Canada. Some of that spending could be reduced by accessing cheaper Canadian crude, said Mr. Prévost, who argued that the benefits will be broad.
“Any company that can have access to its commodity at a 25 per cent lower price will be able to invest more, to produce more, to put in place new projects. So that’s what we are counting on.”
On Wednesday, North American West Texas Intermediate oil traded for 9 per cent less than the international Brent benchmark. Mr. Prévost acknowledged that he is not aware of any specific projects to expand Quebec refineries if they can access domestic crude, but said: “We think having access to more secure and cheaper oil will certainly help maintain and probably create jobs.”
TransCanada, for its part, also drew some comfort from the industrial support for Line 9.
“It is very positive to see that many important business and community leaders in Quebec are recognizing the benefits that are possible by improving access to Canada’s domestically produced oil for Canadian refineries,” spokesman Grady Semmens said in an e-mailed statement.
“TransCanada’s proposed Energy East Pipeline has the potential to provide as much as 850,000 barrels per day of oil to Eastern Canada and will create jobs and economic benefits across the country.”