Quebec could save up to $3-billion a year buying Alberta's oil instead of importing all the fuel it consumes from Europe or North Africa, according to a new projection.
The savings estimate by National Bank Financial assumes Alberta's oil could physically get to Quebec, which currently isn't the case. But with two projects under consideration, buying Albertan oil is no longer a far-fetched scenario for Quebeckers.
Enbridge Inc. wants to reverse the flow of the pipeline it operates between Sarnia, Ont., and Montreal to send oil eastward. The National Energy Board is holding information sessions on the upcoming hearings this week. TransCanada Corp. is looking into refitting and extending an existing natural gas pipeline through Quebec and all the way to New Brunswick. Assuming the company goes ahead with its plan and gets all the necessary approvals, the pipeline could start moving oil in 2017 at the earliest.
Quebec Premier Pauline Marois, who hopes to decrease the province's reliance on costly imports, is cautiously examining both projects.
Quebeckers are divided over Alberta's oil sands: Many are concerned about the environmental impact, while the business community sees an opportunity to ensure the long-term survival of Quebec's petrochemical industry.
At a meeting with New Brunswick Premier David Alward on Monday, Ms. Marois said Quebec is not opposed to TransCanada's project.
"We however need more information and more detailed analysis to ensure that all the technical, environmental and economical questions of this project are answered in a way that satisfies the interests of Quebeckers," she said in a written statement.
Should both projects go ahead, it is likely that the price difference between Alberta's oil and that of Quebec's imports will diminish. Currently, as Alberta's oil faces export bottlenecks, the province's Western Canada Select crude trades for more than $40 (U.S) a barrel less than North Sea Brent.
"But even if we saved only $1.5-billion instead of $3-billion, that would be very significant for Quebec," said Stéfane Marion, chief economist and strategist at National Bank's economics and strategy Group.
Quebec's oil imports totalled $13-billion at the end of last year. They represent more than 60 per cent of the province's $21-billion trade deficit, according to Institut de la Statistique du Québec figures.
Under Ms. Marois's leadership, the province even has oil ambitions of its own. Oil exploration companies have set their sights on the Gaspé region, on Anticosti Island, and on the Old Harry offshore deposit in the Gulf of St. Lawrence. However these projects are further off than the pipelines that could bring more immediate relief to Suncor's refinery in Montreal-East and Ultramar's refinery in St-Romuald, near Quebec City.
These refineries are having a hard time competing with the refineries located in Sarnia, Ont., which have access to Alberta's cheaper oil.
"If Alberta's oil came east instead of going south, the profits would flow to Canadian refineries instead of going to American refineries," Mr. Marion said.
While this cheaper oil would help the Quebec refineries' bottom lines, this would not necessarily translate into cheaper prices at the pump, however. The prices at which the refiners sell their products to their retail networks or to other retailers, called the loading rack price, is set on the New York Mercantile Exchange.