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Paul Browning, left, president and CEO of Irving Oil, Arthur Irving, chairman of Irving Oil, and Stefan Pohlod, president of Energy East Pipeline at TransCanada at the Irving refinery in Saint John as they announce TransCanada’s plan to ship oil east to the refinery. The Ontario government wants assurances that the province will benefit economically the project, and says it will intervene in regulatory hearings as well to ensure the Calgary-based pipeline company addresses safety and environmental concerns for the Ontario section of the pipeline. (David Smith for The Globe and Mail)
Paul Browning, left, president and CEO of Irving Oil, Arthur Irving, chairman of Irving Oil, and Stefan Pohlod, president of Energy East Pipeline at TransCanada at the Irving refinery in Saint John as they announce TransCanada’s plan to ship oil east to the refinery. The Ontario government wants assurances that the province will benefit economically the project, and says it will intervene in regulatory hearings as well to ensure the Calgary-based pipeline company addresses safety and environmental concerns for the Ontario section of the pipeline. (David Smith for The Globe and Mail)

ENERGY

TransCanada’s eastern path hits snag in Ontario Add to ...

The Ontario government wants assurances that the province will benefit economically from TransCanada Corp.’s pipeline project to ship crude from Alberta to refineries and export terminals in eastern Canada.

“There is a lot of concern that the majority of the oil … will be for export, and that Ontario will only be a conduit to facilitate oil from tar sands to go to foreign markets,” Energy Minister Bob Chiarelli said in an interview Wednesday.

Ontario’s Liberal government will intervene in regulatory hearings as well to ensure the Calgary-based pipeline company addresses safety and environmental concerns surrounding its proposed oil pipeline.

Ontario’s concern may throw up another hurdle for TransCanada before starting the $12-billion project. Some industrial gas users in Ontario and Quebec have argued that the loss of capacity on the gas pipeline will limit their access to the fuel and drive up transportation costs, thereby undermining their competitiveness.

With ringing endorsements from Alberta, New Brunswick and the federal government, the Calgary-based pipeline company announced earlier this month it would transform portions of its main west-to-east natural gas line to serve western oil producers eager to develop new markets.

The possible reduction of natural gas service in Ontario will be part of the project‘s assessment by the federal government, Mr. Chiarelli said. TransCanada says it will ensure gas customers who are willing to lock into long-term contracts receive service, though costs may escalate if new capacity is needed..

The province does not assert the right to block the pipeline, Mr. Chiarelli said, explaining that regulation of interprovincial pipelines falls under the exclusive jurisdiction of the federal government. “The only control we have over the TransCanada pipeline is to be an intervenor at the National Energy Board,” he said.

TransCanada is proposing to convert a portion of its main gas line from Alberta through Ontario, and build new pipeline through Quebec and New Brunswick to deliver 1.1-million barrels per day to eastern markets and export terminals. It will also partner with Saint John-based Irving Oil Ltd. to build an export terminal in the Bay of Fundy.

New Brunswick Premier David Alward has touted the pipeline proposal as a “nation building” project that would bring employment to his struggling province. Ontario Premier Kathleen Wynne and Quebec’s Pauline Marois have been more non-committal, though neither have thrown up the kind of roadblocks that British Columbia has placed in front of Enbridge Inc.’s Northern Gateway pipeline project.

B.C. Premier Christy Clark has issued a list of five demands that must be met before her government is willing to support the Northern Gateway pipeline, including ensuring her province receives a “fair share” of the economic benefits. While Ms. Clark has taken a hard line, it’s not clear whether she can actually block pipeline construction.

The Parti Québécois government has promised to hold separate hearings on Enbridge’s plan – now being reviewed by the National Energy Board – to reverse an existing pipeline in order to move western crude through Ontario to refineries at Montreal and Quebec City. And Ms. Marois will face pressure to hold a separate review of the Energy East project.

Mr. Chiarelli said the Liberal government has endorsed Alberta’s call for a national energy strategy that would facilitate the transportation of oil and gas across the country, but on the condition that it be done safely with benefits flowing to all provinces.

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