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Conservative Party Leader Andrew Scheer is pledging to revive the Energy East pipeline, joining a clamour of support for the west-to-east project despite there being little evidence that Western crude producers would commit to ship enough oil on the line to make it viable.

In his closing speech at the party’s convention in Halifax last week, Mr. Scheer said a Conservative government would “get Energy East back to the table,” without giving any indication as to how that could be accomplished. The promise came after Alberta’s United Conservative Party Leader Jason Kenney and federal Tory MP Shannon Stubbs spoke at a “Rally 4 Resources” event in Halifax that promoted the revival of TransCanada Corp.'s Energy East.

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However, Western Canadian crude producers are projected to have more than enough export capacity for the foreseeable future with the completion of the three major projects that are currently either under construction or approved by governments in Canada and the United States: the Trans Mountain expansion being taken over by the federal government, TransCanada Corp.’s Keystone XL project and Enbridge Inc.'s expansion of its Line 3 export artery into the United States.

Projections by the Canadian Association of Petroleum Producers and the National Energy Board show pipeline capacity exceeding demand well past 2035, if those three projects are completed.

“Line 3, Trans Mountain, KXL – they’re all viable and if they all go at the right time, they will handle the volume that is available. But what if one of them trips? Then what? None of these are a slam dunk,” said Derek Burney, a former TransCanada director and strategic adviser with Norton Rose Fulbright law firm. Mr. Burney recently published an op-ed in The Globe and Mail calling for the federal government to “fast track” a regulatory review for Energy East, even though the project no longer exists.

To justify Energy East, "you would need a massive uptick in expected production from the oil sands – on the order of one million more [barrels a day] – and you’d need one or both of Keystone XL or Trans Mountain to fail,” said Andrew Leach, energy economist at the University of Alberta. Producers ultimately have to bear the costs of excess capacity through higher tolls, he noted.

For its part, TransCanada said it no longer has a project application before the National Energy Board and is focused on its roster of $28-billion capital projects, including Keystone XL.

The company cancelled the $15-billion Energy East project in October, 2017, after U.S. President Donald Trump revived the company’s proposed Keystone XL project that would carry Alberta crude to the U.S. Gulf Coast. The company encouraged producers who had backed Energy East to transfer their commitments to Keystone XL.

Industry supporters and conservative politicians blame the Liberal government for the demise of Energy East, accusing it of allowing the regulatory process to drag on too long. However, the National Energy Board was forced to disband its initial panel on the project after it was discovered that panel members had met secretly with former premier Jean Charest, then a paid adviser to TransCanada,

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The pipeline was designed the transport more than 1.1-million barrels of Western crude to refineries and export terminals in Eastern Canada. Supporters touted it as a nation-building project that could replace oil imports into Eastern and Central Canada which averaged 670,000 barrels a day last year, including some 80,000 b/d from Saudi Arabia.

Mr. Leach – who receives funding from the federal granting councils for his research – said there is no guarantee that Eastern refineries would replace imports with Western Canadian crude if it was available. That decision would depend on whether additional domestic supply could be easily processed in the refineries, and on transportation costs and price.

Western Canadian Pipeline

Capacity and Forecast Demand

Pipeline capacity and forecast demand

(in cubic metres per day)

1,400

1,200

1,000

800

600

400

200

0

2010

2020

2030

2040

Western Canadian pipeline demand

2014 CAPP

2016 NEB

2018 CAPP

Cancelled

Energy East

Northern Gateway

Current projects

Keystone XL

Enbridge Expansions

Trans Mountain

Existing capacity

Trans Mountain Expansion

(net of refined product capacity)

Rangeland/Milk River

Keystone

Express

Enbridge Mainline

THE GLOBE AND MAIL, SOURCE: andrew leach,

univ. of alberta school of business

Western Canadian Pipeline

Capacity and Forecast Demand

Pipeline capacity and forecast demand

(in cubic metres per day)

1,400

1,200

1,000

800

600

400

200

0

2010

2020

2030

2040

Cancelled

Western Canadian

pipeline demand

Energy East

Northern Gateway

2014 CAPP

Current projects

2016 NEB

Keystone XL

2018 CAPP

Enbridge Expansions

Trans Mountain

Existing capacity

Trans Mountain Expansion

(net of refined product capacity)

Rangeland/Milk River

Keystone

Express

Enbridge Mainline

THE GLOBE AND MAIL, SOURCE: andrew leach,

univ. of alberta school of business

Western Canadian Pipeline Capacity and Forecast Demand

Pipeline capacity and forecast demand (in cubic metres per day)

1,400

1,200

1,000

800

600

400

200

0

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

Cancelled

Existing capacity

Western Canadian

pipeline demand

Trans Mountain Expansion

(net of refined product capacity)

Energy East

Northern Gateway

2014 CAPP

Rangeland/Milk River

Current projects

2016 NEB

Keystone

Keystone XL

Express

2018 CAPP

Enbridge Expansions

Enbridge Mainline

Trans Mountain

THE GLOBE AND MAIL, SOURCE: andrew leach, univ. of alberta school of business

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