Approval of Enbridge’s Line 9 applauded by Quebec refineries

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The owners of the two Quebec refineries readying for shipments of Western Canadian crude say the National Energy Board's decision to approve Enbridge Inc.'s Line 9 project will provide a long-awaited boost to their bottom lines.

"It's a project that we've been waiting for," said Julie Cusson, director of public and government affairs in Canada for Valero Energy Inc., which is looking to replace pricey feedstock imported from the U.S. Gulf Coast, as well as Europe and Africa, with cheaper Canadian crude.

"For us it's a big change because with Line 9, half of our supply will now come from Western Canada," Ms. Cusson said of the Jean-Gaulin 265,000-barrel-per-day refinery in Lévis, Que. "Now, for the first time in our history, we have access to the Canadian product."

The Enbridge Line 9 plan would see the flow of the pipeline reversed, from westward to eastward, to bring 300,000 barrels a day of Western Canadian and U.S. Bakken oil to Quebec. Running between Southern Ontario and Montreal, Line 9 will carry mainly light crude oil once in operation. But shippers will be permitted to ship heavy crude such as diluted bitumen, sourced from the oil sands.

The project will use existing pipeline, with no new pipe added. Still, it will add badly needed transportation capacity for Canadian oil producers in a period when the industry is struggling with both low oil prices and the inability to get approval for pipelines that would allow access to new markets. Environmental groups have targeted pipeline approval processes to slow the growth of Canadian oil sands production – and in tandem, the growth of climate-changing greenhouse gases.

Suncor Energy Inc. spokeswoman Sneh Seetal called Line 9 "critical infrastructure" that will give the company's 137,000 barrel-per-day Montreal refinery access to North American oil, including the option of taking heavy crude from its own oil sands operations. The 400-worker refinery processes primarily conventional crude but can also handle light, sour and heavier grades of oil, and Ms. Seetal said feedstock supply decisions will be based on availability and prices. The Enbridge project will provide "supply options for our Montreal refinery, which in turn will enhance the long-term competitiveness of that refinery," she said.

Enbridge had planned to start Line 9 operations last fall but was delayed by a number of new safety conditions imposed by the NEB. On Wednesday, the Line 9 project cleared the last pre-operational hurdle with the NEB, when the regulator approved hydrostatic tests – which involve filling the pipe with water at high pressure to ensure there aren't any leaks – submitted by Enbridge.

However, it's still unclear when the reversal project will begin operations. Enbridge spokesman Graham White said the pipeline company still has technical preparations to complete.

Earlier this year, both Valero and Suncor pressed the NEB to speed the decision-making process for Line 9. Ms. Cusson said Thursday that Valero has invested $200-million in upgrades at its terminal and refinery in anticipation of approval. The refinery, which processes light and medium crude oil, and can also handle oil sands crude that has been upgraded to a transportable form, currently receives a small amount of Canadian oil by rail.

"It's a really good decision for us from a competitive standpoint," she said of the NEB's decision.

However, Line 9 opponents have questioned whether the reversal will bring the economic benefits its backers promise, and have zeroed in on the risks and costs of a pipeline rupture in an urban area or a water body.

The NEB has imposed conditions for when the pipeline becomes operational, including biweekly ground patrols for leaks and quarterly integrity testing. Enbridge is also required to limit the pressure of the pipeline for its first year of operation.

At Enbridge, Mr. White said the safe operation of Line 9 is the company's top priority, and the water pressure tests will help "provide reassurance and technical evidence to the public."