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New Brunswick pushes cross-country pipeline as 'game changer'

New Brunswick’s David Alward meets with Alberta leader Alison Redford next month.

Dave Chan/The Globe and Mail

New Brunswick Premier David Alward is headed to Alberta to inject some political momentum into a proposed $5-billion, cross-Canada oil pipeline that he describes as a nation-building project.

The Progressive Conservative Premier will make his first visit to Alberta early next month, where he will meet with his counterpart, Alison Redford, travel to Fort McMurray to tour the oil sands, and visit industry executives in Calgary.

In an interview, Mr. Alward expressed enthusiasm for the proposed TransCanada pipeline project that would bring western oil to eastern Canadian refineries, and perhaps allow for crude exports from the deep-water port of Saint John.

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"This is something that is potentially a game-changer for New Brunswick, but more importantly than just New Brunswick, for all of Canada," Mr. Alward said.

Ms. Redford echoed that enthusiasm in an interview, characterizing the west-east pipeline as "critically important." She added, too, that she believes the project is "quite feasible" and "economically viable" for the industry.

TransCanada Corp. is still pondering the project. It must gauge whether oil companies will commit to ship sufficient volumes to justify the investment. The line – much of it to be converted from an existing gas pipeline – could carry between 500,000 and one million barrels a day of oil.

Mr. Alward's full-throated endorsement of TransCanada's plan contrasts sharply with reaction in British Columbia to the Northern Gateway project. B.C. Premier Christy Clark has thrown up barriers to the pipeline, which would carry oil sands bitumen to the port of Kitimat for export by supertanker.

And it comes as TransCanada faces increased risks to its long-delayed Keystone XL pipeline after President Barack Obama used this week's inaugural address to elevate climate change as a top priority for his administration in its second term. Mr. Obama's speech was "not encouraging" for supporters of the Keystone XL pipeline, federal Finance Minister Jim Flaherty told Reuters news service in an interview in Davos, Switzerland on Friday.

Much is at stake for both Mr. Alward and Ms. Redford.

For New Brunswick, the project could mean jobs, a much-needed economic boost to the small "have-not" province that is lacking in natural resources.

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Under the most ambitious scenario, the pipeline would bring oil from western North America – Canada and the U.S. – to refineries in Quebec and New Brunswick. The Irving Oil refinery in Saint John is the largest in the country but relies entirely on imported oil which is far more costly than North American crude.

The company has said it welcomes any commercially viable effort to provide greater access to North American crude sources, but it has not committed to the pipeline proposal.

Saint John's deep-water port, which can accommodate massive tankers, makes it attractive for large-volume exports.

Ms. Redford, meanwhile, needs to find new markets for Alberta's oil. The lack of pipeline capacity to key markets has driven down the price of Canadian crude and blown a major hole in the province's revenue projections.

The Alberta Premier warn Albertans last week about the province's financial woes, saying sagging oil prices will rob the province of $6-billion in revenue this year.

The politicians are not being asked to provide funding for the pipeline. Nor does Ms. Redford expect to be asked to contribute. But their political backing is important in building public support for the pipeline project – or at the very least avoiding the kind of roadblocks that loom in British Columbia.

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TransCanada's president for energy operations, Alex Pourbaix, said eastern Canada is a logical market for growing North American oil supplies, though the refineries would mainly process light oil rather than diluted bitumen from the oil sands.

The Calgary-based company is considering a range of options, including a smaller-scale project that would stop in Quebec, and a grander vision that would deliver oil to Saint John for both domestic consumption and some export potential.

Ms. Redford and Mr. Alward have also been courting Quebec Premier Pauline Marois to support the project. She faces a determined environmental lobby that opposes new oil pipelines from Alberta, but her province is home to two refineries – one in Montreal and one in Quebec City – that now depend on expensive imported oil.

The Alberta Premier said she met recently with Quebec Finance Minister Nicolas Marceau who "was very optimistic" about the project.

With a file from Rhéal Séguin in Quebec City

 

Finance Minister Jim Flaherty is floating the idea of moving trapped Alberta oil out via pipelines to Churchill, Man., or St. John, N.B., if the Keystone and Northern Gateway projects falter.

"There are lots of alternatives," Mr. Flaherty said Sunday on Global TV's The West Block. "We can explore all of them and it's one of our priorities, major projects to encourage economic growth and exports."

He said those other options include "pipelines to the East to New Brunswick to St. John, pipeline to Churchill, pipeline through the Rockies."

– Barrie McKenna

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About the Authors
Ontario politics reporter

Jane Taber is a reporter at Queen’s Park. After spending three years reporting from the Atlantic, she has returned to Ontario and back to writing about her passion, politics. She spent 25 years covering Parliament Hill for the Ottawa Citizen, the National Post and the Globe and Mail. More

Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

Asia Bureau Chief

Nathan VanderKlippe is the Asia correspondent for The Globe and Mail. He was previously a print and television correspondent in Western Canada based in Calgary, Vancouver and Yellowknife, where he covered the energy industry, aboriginal issues and Canada’s north.He is the recipient of a National Magazine Award and a Best in Business award from the Society of American Business Editors and Writers. More

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