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An aerial view of Irving Oil’s refinery near Saint John, N.B. (Christinne Muschi for The Globe and Mail)
An aerial view of Irving Oil’s refinery near Saint John, N.B. (Christinne Muschi for The Globe and Mail)

Where oil meets water: The final stop for the Energy East pipeline Add to ...

On a point of land jutting into the open waters of the fabled Bay of Fundy, Canada’s long-sought ambition to become a global oil exporter is coming into focus.

Here at Mispec Point, Irving Oil Ltd. and TransCanada Corp. plan to build a $300-million, deep-water marine terminal that would give Western Canadian crude producers their highly coveted direct access to world markets.

Currently, the industrialized tip of the wooded point serves as a hub for Canada’s energy imports.

It is home to Irving Oil’s Canaport facility, though which the company brings crude oil from around the world to feed its Saint John refinery. It’s Canada’s largest, processing up to 320,000 barrels a day.

On a calm day this week, a tanker from Husky Energy Inc.’s White Rose field in the Atlantic was moored offshore, offloading its cargo of crude into submerged pipes that lead to the refinery a few kilometres away in east Saint John.

But the world’s energy flows are changing dramatically, as new sources of oil and the shifting forces of supply and demand give rise to new routes for crude shipments.

Now, as North America’s oil and gas production boom takes off in Alberta, the U.S. Bakken and other areas, Irving is changing its focus at Mispec Point from importing crude to exporting it – to wherever in the world it can get the best price. In building the marine terminal here, Irving and TransCanada aim to end Canada’s dubious distinction of being the only major oil country whose producers do not have access to a deep-water port.

Mispec Point is the planned terminus for TransCanada Corp.’s proposed $12-billion Energy East pipeline – a project that would connect Western Canadian oil producers to the world’s largest supertankers, while providing a much-needed boost to this province’s tired economy.

It was an increasingly urgent necessity that drove Calgary and Saint John together.

The Energy East pipeline is the latest project that aims to break Alberta producers out of their landlocked market, which has resulted at times in logjams and deep discounts for Canadian crude and limits the potential for growth in the booming oil sands. Oil producers surprised even TransCanada earlier this year when they committed to send some 1.1 million barrels per a day of crude down the pipeline to refineries and export terminals in Quebec and Saint John.

Producers have good reason to focus on Energy East. Prospects remain highly uncertain for moving crude from Alberta westward through British Columbia via Enbridge Inc.’s proposed Northern Gateway, or south to the U.S. Gulf Coast through TransCanada’s stalled Keystone XL project that has become a cause célèbre in the battle over climate change in the United States.

Energy East will give western oil companies access to Eastern Canadian refineries, thus expanding their market. But “the real win for TransCanada and producers is to get the crude to Canaport where they can ship it,” Irving Oil refinery manager Mark Sherman said in an interview at the refinery, where he recently played host to Prime Minister Stephen Harper and Alberta Premier Alison Redford.

“Then, basically the world is your ocean as they say, and you can go to India, China, Europe, South Africa, America, the Gulf Coast ...”

Winning over the west

For Irving, the pipeline offers an important new source of lower-cost crude as refineries in the Atlantic basin struggle with high international oil prices, industry overcapacity and weak demand growth for refined products. Under the current plan, few permanent jobs will be created. But for the depressed city of Saint John, a major construction project with the possibility of industrial spinoffs provides a rare bit of good news.

New Brunswick worked hard to get in the pipeline game. When TransCanada first floated the idea of converting a portion of its natural gas mainline to bring western oil to eastern markets, it was Quebec City rather than this Maritime city that was seen as the likely end point.

The New Brunswickers had to persuade Calgary-based crude producers – who are used to dealing with giant international oil companies – to deliver large quantities of crude to Saint John, a hard-scrabble port where a secretive, family-owned business runs a one-refinery operation to feed a regional chain of gas stations.

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