Energy East Pipeline From Alberta To Eastern Canada Going Ahead

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TransCanada Corp (TSX:TRP) has decided to go ahead with its Energy East pipeline project to transport crude oil to Canadian refineries and export terminals as far east as New Brunswick. (Alamy/Getty)
TransCanada Corp (TSX:TRP) has decided to go ahead with its Energy East pipeline project to transport crude oil to Canadian refineries and export terminals as far east as New Brunswick. (Alamy/Getty)

CALGARY - TransCanada Corp. is moving ahead with a $12-billion plan to ship western oil to Quebec and the East Coast — the largest project in the company's history and one it compares to the Canadian Pacific Railway in its economic impact for the country and trade benefits overseas.

The Calgary-based company (TSX:TRP) announced Thursday there is enough interest from customers, at home and abroad, in the proposed Energy East pipeline for the project to go ahead.

Energy East would deliver up to 1.1 million barrels per day to refineries and export terminals in Quebec in late 2017 and New Brunswick one year later.

The project, which still faces regulatory hurdles, has the support of the Alberta and New Brunswick governments but it's not clear yet whether Quebec has been won over.

Critics have already vowed to fight the project, which they describe as unsafe and unlikely to deliver on job creation and energy security promises. That position has, in part, led to repeated delays for another high-profile TransCanada project, the Keystone XL pipeline in the United States.

Of Energy East's expected capacity, some 900,000 barrels per day are covered by binding, long-term commitments from shippers, the company said. TransCanada had earlier pitched the project as an 850,000-barrel-per-day pipeline, suggesting the appetite for the project was stronger than even it expected.

"This is a historic day for TransCanada and a historic day for our country," CEO Russ Girling said, likening it to "bold ventures" such as the Canadian Pacific Railway, the Trans-Canada Highway and the company's own cross-country natural gas mainline.

"Each of these enterprises demanded innovative thinking and a strong belief that building critical infrastructure ties our country together, making us stronger and more in control of our own destiny."

Energy East would involve converting a portion of TransCanada's underused natural gas main line to ship oil 3,000 kilometres from Alberta to its terminus near the Quebec-Vermont border.

Girling said TransCanada is confident it can continue to meet the needs of its natural gas customers once Energy East starts up.

Some 1,400 kilometres of new pipe will be built to Saint John, N.B., where crude can both feed Irving Oil's massive refinery as well as be shipped offshore.

Irving announced Thursday it planned to build a $300-million marine terminal to handle the increase.

New Brunswick Premier David Alward called the project a "game changer" for his province.

"It will change the direction of our province, our economy, the fate of many of our citizens, and it will help create a stronger more prosperous future for all of us."

Another export terminal could be built in Quebec, although the location has not been determined.

Exporting crude to energy-hungry markets such as India — where landlocked Canadian crude would command a better price — is possible from Energy East, said Girling, who confirmed international customers were among those who bid for space on the pipeline.

It could also allow shipments to refineries along the U.S. eastern seaboard — an 800,000-barrel-per-day market — as well as in Europe.

Both the energy industry and the Alberta government have been pushing for new ways to get Canadian crude to the coast, where it can be sold in international markets. The United States is currently Canada's sole customer for crude exports, and proponents of greater pipeline access say it's crucial for Canada to diversify its markets to boost its product price.

TransCanada says the project will also free eastern Canadian refineries from pricey imports from countries such as Saudi Arabia, Nigeria and Libya. That market currently imports some 700,000 barrels per day of crude from abroad.

Not only do those barrels cost more, but they come from countries that lack Canada's environmental regulations, said Alex Pourbaix, TransCanada's president of energy and oil pipelines.

"We can change that, we will change that and the entire country is going to benefit," he said.

Pourbaix added the project is expected to create thousands of jobs during construction and the spinoff economic benefits will be significant.

"Local hotels will house our construction crews, local restaurants will feed them. Our crews will buy supply and equipment from local lumber yards and local machine shops," he said.

The Alberta Federation of Labour agreed Energy East could create jobs — but only if it's part of a national strategy to add more domestic refining and oilsands upgrading jobs. Otherwise, those jobs are in danger of being exported along with the oil.

“We need a strategy to ensure Albertans get the maximum value out of the resources they own," said AFL president Gil McGowan. "Doing so creates more jobs and wealth."

In a statement, Alberta Premier Alison Redford said Energy East is "truly a nation-building project that will diversify our economy and create new jobs here in Alberta and across the country."

The project was backed by Redford and the other provincial premiers at their recent annual meeting in Ontario but faces opposition from environmental and other groups.

"You can't build a nation around a project that will poison water, violate treaty rights and further accelerate a global climate crisis that is already resulting in weather disasters around the world," said Greenpeace campaigner Mike Hudema.

"Given the industry's poor spill record, every community along this proposed route has reason to worry. The same people-power movements that have stalled other ill-conceived tar sands pipeline projects will rise up to tell our governments we need to invest in clean energy, not tar sands expansion."

The Council of Canadians, a group that opposes various government policies including free trade, has launched a national campaign to stop Energy East.

"While there has been a lot of talk about Atlantic energy security, this crude will actually go to the highest bidder. India, China, Europe and the U.S. are in line," said Maude Barlow, the group's national chairperson.

"This would threaten the Gulf of St. Lawrence and the Bay of Fundy, water bodies that must be protected as part of the commons and a public trust, not as a highway for oil exports."

Joe Oliver, Canada's natural resources minister, welcomed the TransCanada announcement on Energy East. However, the statement added that the Harper government "will only allow energy projects to proceed if they are proven safe for Canadians after an independent, science-based environmental and regulatory review."

Note to readers: This is a corrected story. An earlier version incorrectly stated the number of committed barrels of expected capacity.

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