TransCanada Corp.’s proposed Energy East project has come under fire from environmental groups who say the company is overstating its benefits to eastern Canadians and that the project is primarily aimed at exporting crude.
In a report released Tuesday, the group argued that eastern Canada would bear the risk of oil spills while its refining market is already well-supplied by North American crude from Newfoundland’s offshore and booming tight, light oil fields in the middle of the continent.
“Canadians are being misled about this risky project,” Adam Scott, program manager of Toronto-based Environmental Defence, said. “The evidence is clear that Energy East is primarily an export pipeline. Canadians would have all the risks of the pipeline, but little rewards.”
TransCanada expects to apply to the National Energy Board for a permit this summer, and has been extolling the economic benefits the pipeline would bring, including construction jobs and greater access to lower-cost North American crude for eastern consumers.
TransCanada spokesman Shawn Howard said the company is working with refineries in Quebec and New Brunswick to provide direct access to crude from the pipeline. “Refineries value having a diversity of supply and typically acquire products they need from more than one source and pipeline,” he said.
Mr. Howard added that Deloitte & Touche LLP have prepared a study that laid out the benefits the $12-billion project would offer, including a large number of construction jobs and new marine shipping terminals in Quebec and New Brunswick.
The pipeline would move 1.1 million barrels per day of western crude from Alberta to Quebec, and eventually Saint John, New Brunswick. The company would convert underutilized portions of natural gas pipeline through the Prairies and Ontario, and build a new line from the Ontario-Quebec border.
TransCanada says it has firm commitment for 900,000 barrels per day that would go to refineries or be exported from new terminals in Quebec City and Saint John.
The federal cabinet will make the final decision and Prime Minister Stephen Harper has praised the project as one that would benefit all Canadians, though he insisted Ottawa will not approve any pipeline unless it is safe for people and the environment.
But activists are hoping provincial governments – notably in Ontario and Quebec – will throw up barriers, just as the British Columbia government has opposed Enbridge Inc.’s Northern Gateway pipeline from the oil sands to Kitimat, B.C.
“With the Quebec provincial election under way, we are asking all parties to support the need for an environmental impact assessment as well as participatory hearings on Energy East in Quebec,” Steven Guilbeault, of Montreal-based Equiterre, said.
The report noted that eastern Canada refiners have the capacity to process 672,000 barrels per day of crude, and that much of that is now being supplied by crude from the Canadian east coast, as well as U.S. supply delivered by rail and ship.
Enbridge recently won approval for its plan to reverse the flow and expand the capacity of its Line 9 pipeline, which will carry 300,000 barrels per day of crude into Quebec, satisfying more than three-quarters of the province’s refinery needs.
Both Suncor Energy Inc. and Valero Energy Corp. – with refineries in Montreal and near Quebec City, respectively – 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.
Enbridge senior adviser Stephen Wuori recently told The Globe and Mail that “any other project would have to be for markets beyond Quebec.”
Valero spokesman Bill Day said Tuesday that – with the Line 9 reversal – the company will be able to supply its refinery near Quebec City solely with North American crude. He said he couldn’t comment on its appetite for crude from Energy East “for competitive reasons.”
“But in general terms, refiners always like to have as many supply options as possible,” he said.
The Irving refinery – Canada’s largest at 300,000 barrels per day of capacity – can access 120,000 barrels per day of North American crude through combined rail and barge, as well as increasing quantities of crude imported from Texas. But the Energy East pipeline may be the cheapest alternative.
“The Energy East project is important to Irving Oil's refinery,” company spokeswoman Samantha Robinson said. “It will offer us a broader base of crude oil supply than is currently available to us. We anticipate processing material quantities of crude oil from the pipeline in our refinery.”
Editor's Note: Adam Scott is program manager of Toronto-based Environmental Defence. His title was incorrect in an earlier version of this article.