Quebec, B.C. take steps to bridge Canada's energy divide

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Quebec Premier Pauline Marois gave a political boost to TransCanada Corp.'s proposed west-to-east oil pipeline, saying she remains open to the project despite heightened concerns about the transport of crude through her province in the aftermath of the Lac-Mégantic disaster.

Ms. Marois's conciliatory stance came as Alberta Premier Alison Redford and British Columbia's Christy Clark agreed to work together to find ways to move Canadian resources to the West Coast for export, although Ms. Clark has not dropped her opposition to Enbridge Inc.'s Northern Gateway pipeline project, saying her five conditions for supporting it have not been met.

The positive signals from Quebec and British Columbia add a constructive tone to Canada's often fractious pipeline politics and represent a win for Ms. Redford, who has been pushing her colleagues to develop a more collaborative approach to energy production and transportation, and environmental policies.

The two provinces remain outside the formal process of a proposed national energy strategy, in which the remaining premiers hope to produce a meaningful plan by next summer. But at the conclusion of their summer meeting in Niagara-on-the-Lake, Ont., on Friday, Ms. Marois and Ms. Clark said they are keen to work co-operatively with other provinces on energy and other matters.

TransCanada, battling to win U.S. approval for its Keystone XL pipeline to carry oil-sands crude to southern U.S. refineries, is eager to take Alberta oil across Canadian soil to the east for refining or export.

The company says it has significant support from producers to convert a portion of its main natural-gas pipeline to carry up to 850,000 barrels per day of crude from Alberta to Quebec and Saint John. The company expects to announce a decision in the coming weeks.

The project has been endorsed by Ms. Redford, New Brunswick Premier David Alward and federal Natural Resources Minister Joe Oliver, but Ms. Marois has been largely silent about it.

However amid vocal opposition, Quebec has said it will hold its own hearings – in addition to continuing National Energy Board hearings – on another controversial pipeline project, Enbridge's plan to reverse the flow of its so-called Line 9 and ship 300,000 barrels per day of crude through Ontario to Montreal.

Some critics in Quebec argue the derailment and deadly explosion of a train carrying crude in Lac-Mégantic illustrates the dangers of transporting crude, whether by rail or pipe.

Asked at a news conference Friday whether the accident that killed 47 people had changed her views about the pipeline proposal, Ms. Marois said she is still willing to consider supporting it.

"We built a working group between Alberta and Quebec – with ministry of finance and various ministries in Quebec that are concerned – to assess the future of this project – the risks associated with it and the mitigation measures that we should have if it happens," she said. "And so in this sense, I did not change my mind; work continues."

While Ms. Marois kept the door open on TransCanada's Energy East project, Ms. Redford and Ms. Clark announced the formation of a governmental working group that will develop recommendations on how to facilitate energy exports and diversify markets through West Coast ports. They said the effort goes far beyond the Northern Gateway issue, though officials will look for ways to help meet British Columbia's concerns about financial benefits, environmental protection and consultation with aboriginal groups.

"We understand in British Columbia how important it is for resources to get to the coast," said Ms. Clark, standing with Ms. Redford. "And Alberta understands that social license is something that is important for the movement of resources."

In Calgary, TransCanada chief executive Russ Girling said the company's Energy East pipeline represents a win for both western producers and eastern refiners.

"We are confident Energy East will garner the binding long-term contracts needed to move that project forward," Mr. Girling told a conference call after releasing second-quarter earnings. "It would be the most efficient and the safest and economic way to transport crude oil to Eastern Canadian refineries, creating jobs, long-term economic benefits across the country, and displace foreign imported oil, making Canada more energy independent."

There is still no clear sign whether the Keystone XL project, which would transport Alberta oil sands crude to North America's largest refining centre on the U.S. Gulf Coast, will be approved by U.S. President Barack Obama. The $5.3-billion project has now become a symbol in the U.S. movement to fight rising greenhouse gas emissions, despite Mr. Girling's attempts to distance the project from the larger environmental debate about the oil sands.

Meanwhile, TransCanada company is proceeding with a host of lower-profile expansions, and posting solid profits from existing operations. It reported second-quarter net income of $365-million, or 52 cents per share, compared with $272-million, or 39 cents, in the quarter last year.