Western Canada gets an oil outlet as NEB allows Enbridge pipeline reversal

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Enbridge Inc. has won approval to reverse the flow of oil in its Line 9 pipeline between Southern Ontario and Quebec, a contentious project aimed at giving Quebec refiners access to more affordable Western Canadian and North Dakota oil.

The National Energy Board, the country's main energy regulator, said the $110-million project can go ahead provided Enbridge meets 30 conditions it laid out related to safety, public consultation and other issues. The NEB denied the company's request to start operations when it believes it is ready, saying the conditions must be met and the pipeline inspected first.

The project is among several aimed at diversifying markets for Canadian crude oil, which has suffered deep price discounts due to oversupply in its traditional areas of use. Suncor Energy Inc.'s Montreal refinery and Valero Energy Corp.'s plant near Quebec City will be beneficiaries of the pipeline reversal. In recent years, those facilities have run a combination of costly imported oil and increasing volumes of North American supplies that arrive via train.

Line 9 is not the only initiative to get Alberta crude to Eastern Canada. Earlier this week, TransCanada Corp. started the regulatory process for its Energy East pipeline, a $12-billion proposal to move much larger volumes to Quebec and Atlantic Canada by later this decade.

But the approval process for Line 9 highlights the difficult hurdles that such projects must now clear. Although the pipeline has existed since the 1970s, the Enbridge proposal went through a lengthy regulatory process that included a rancorous 10-day public hearing that wrapped up in October. The board shut down the final oral portion of the hearing in Toronto, saying it feared for participants' safety when protesters became disruptive.

In its decision for Line 9, the board said the approval enables Enbridge to react to market forces and provide benefits for Canadians while ensuring it operates in an environmentally sensitive manner. "In approving Enbridge's application, the board has imposed conditions that will enhance current and ongoing pipeline integrity, safety and environmental protection measures to which Line 9 is already subject," it said.

Enbridge said it is reviewing the conditions to determine how much work it will need to put in. Still, it welcomed the NEB ruling. chief executive officer Al Monaco said the company will continue its consultation efforts with communities affected by the project and actions at bolstering safety. "The approval of this project is not the end of the process for us," he said in a statement.

Line 9 extends to Montreal from Sarnia, Ont. With the approval, capacity will rise to 300,000 barrels a day from 240,000. A section between Sarnia and Westover, Ont., near Hamilton, had already received clearance for reversal.

Several environmental groups oppose the reversal, saying it presents major risks of oil spills near populated regions. Following the approval, a coalition called Rising Tide Toronto said it is launching a petition asking people to conduct civil disobedience to disrupt the project.

The company has argued that it had instituted an exhaustive program of inspections and digs to make sure the line could handle the volumes.

Natural Resources Minister Joe Oliver lauded the decision, which essentially returns the pipeline to its original use when it was built during the energy-crisis era nearly four decades ago.

"This will protect high-quality, skilled jobs in Quebec and create market opportunities for Western Canada's oil producers. Furthermore, by replacing higher-cost foreign crude with Canadian crude, the reversal will strengthen Quebec's refining and petrochemical industries," Mr. Oliver said.

The pipeline was first built to carry Western Canadian crude to Quebec. In the late 1990s, its flow direction was changed to East-West when Southern Ontario refineries sought imported oil. In recent years it has been seldom used as the cost of imported crude surged.