EDMONTON - New Brunswick Premier David Alward told Alberta's legislature that the proposed Energy East pipeline isn't just about resources, but about growing communities and allowing Canadians to work close to home.
"There are some 15,000 New Brunswickers working outside New Brunswick today in natural resource sectors, and we're not isolated with this story," Alward said in a speech in the legislature chamber.
He said he met and talked to some of those workers on his flights from New Brunswick to the Alberta capital.
"What they say to me is they are blessed to be able to gain that opportunity, but they are looking for the opportunity in a year and a half or so to ply their trade back home."
Alward said his 23-year-old son works in the oilpatch.
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What is the west-east pipeline?
Calgary-based TransCanada Corp., the company behind Keystone, plans to build a pipeline that would ship mostly light oil, but also heavy crude, from oil rich Western provinces across the country the East Coast. The Energy East Pipeline could have the capacity to transport as many as 850,000 barrels of crude oil per day beginning in 2017. The plan is to convert about 3,000 kilometres of an existing natural gas pipeline and add an additional 1,400 kilometres of new pipeline.
What's the argument for a west-east pipeline?
Oil from Western Canada is essentially landlocked, making it difficult to move to international markets, which drives down its price by as much as $40 a barrel compared to the world standard. It is also difficult to ship Western crude across the country to Atlantic Canada, which instead relies on foreign sources of oil, a situation that is less than ideal in a country that has so much of its own oil waiting to be sold. TransCanada says the pipeline could reduce the need to import foreign oil to process at refineries in Eastern Canada, while Natural Resources Minister Joe Oliver argues that the Energy East Pipeline could deliver Canadian oil to large energy consumers in Asia, in addition to making the country less dependent on foreign oil. In addition, a lack of pipelines to export oil has left a glut of oilsands crude sitting in a bottleneck in the U.S. Midwest, which has depressed Canadian oil prices compared to the U.S. benchmark, West Texas Intermediate, which in turn trades at a discount to the cost of Brent crude. Those low prices have cost the Canadian and Alberta governments millions in lost royalties.
What is the status of the Energy East Pipeline?
(Pictured: Russ Girling, president and CEO of TransCanada Corp.)
TransCanada has launched a formal process to solicit long-term commitments from companies interested in having their crude shipped east. The process is open until June and will help the company determine the commercial viability of the project. It says it has already determined the project is technically and economically possible. The company plans to seek regulatory approvals later this year if the current phase is successful. If all goes according to plan, the pipeline is expected to ready for shipments by 2017.
What is the pipeline’s route?
The exact route will be determined after a public and regulatory review, but the starting point would be a new tank terminal in Hardisty, Alta. Three other terminals would be built along the line: one in Saskatchewan, another in the Quebec City area and a third near Saint John., N.B. The line would be about 4,400 kilometres long, including the segment already built for TransCanada’s natural gas line. New sections will need to be built in Alberta, Saskatchewan, Eastern Ontario, Quebec and New Brunswick.
Where will the oil go?
Crude from the pipeline would be shipped to energy-hungry markets in Asia and elsewhere, as well as to refineries and eventually consumers in the Atlantic provinces. The proposed terminals in Quebec City and Saint John would include facilities for marine tanker loading for export. The project would also include delivery to existing Quebec refineries in the Montreal and Quebec City areas, as well as a large Irving Oil refinery in Saint John.
What are the potential environmental issues?
Environmentalists argue the pipeline could put waterways and communities along its route at risk as well as add the potential of a major oil spill on the east coast from export tankers waiting to take the crude abroad. Because oilsands product emits an estimated five to 15 per cent more carbon than conventional oil, refining more of it in Canada would likely increase the country's total carbon emissions. However, the U.S Defence department recently determined that emissions from transporting and using fuel from oil sands was not significantly different from those made with conventional oil.
What are the potential challenges?
Technical issues include relatively small refineries on Canada's east coast that have only limited capacity to refine tarry bitumen and a short-term potential overcapacity if all three proposed pipelines are completed on schedule between 2015 and 2018. But the more immediate obstacle is from environmentalists who warn, among other potential risks, that the plans to convert a gas pipeline to oil could pollute Canadian sources of waters. Vocal criticism from environmentalists and First Nations groups have held up the approval process for both Northern Gateway and Keystone. The project will be subject to public and regulatory reviews.
What are the potential political hurdles?
Politicians appear to be lining up behind the idea of a west to east pipeline. Potentially because 3,000 kilometres of the project is already in the ground, the proposal suggests refining at least some of the oil at home, which could reduce high gas prices in Atlantic Canada. The project has the support of the federal government as well as the provinces of Alberta and New Brunswick and support in principle from Quebec. Federal Liberals have also expressed support, and even NDP Leader Thomas Mulcair, who is staunchly opposed to Northern Gateway, has voiced support.
Would this pipeline render Keystone and/or Northern Gateway unnecessary?
According to the industry, all three lines are necessary if Canada wants to meet its export potential in the coming decades. The west-east pipeline would complement, rather than replace, the other two pipelines and build capacity to ship oil west east and south, the industry argues.
What are the benefits for Canada?
Drivers in Atlantic Canada currently pay as much as 20 per cent more to fill up than those in the Western provinces. Among other factors driving prices higher, they are paying a premium to import foreign oil, while Canadian oil sits ready for use. Proponents say the pipeline will create a new domestic market for Western Canadian oil, as well as potentially open a new door for international export. In addition, the project could contribute to job creation and economic growth, with some estimates saying it has the potential to create thousands of jobs during construction and a few hundred permanent positions.
He later added that the long distance New Brunswickers travel to work can be hard on families.
"Canadians want to work and need to work. Canadians want to build prosperity and economic opportunity no matter what region they live (in)," he said.
"Projects like the Energy East pipeline will translate into thousands of jobs in communities across Canada."
Alward and Alberta Premier Alison Redford are backing TransCanada's (TSX:TRP) proposed $12-billion pipeline as critical to boosting the national economy.
The 4,500-kilometre line would ship Alberta crude from a terminal southeast of Edmonton across the Prairies into Ontario, then up to refineries in Montreal and near Quebec City. It would end at refineries at the deepwater port in Saint John.
From there, crude could be shipped overseas by tanker, giving Alberta an outlet for a backlog of oil that the province says is depressing prices and taking a $6-billion bite out of its bottom line this year.
It could also reduce Eastern Canada's dependence on higher-priced foreign oil from countries such as Venezuela and Saudi Arabia.
An economic impact report done for TransCanada estimates the line would add $35 billion to Canada's GDP over 40 years and deliver $10 billion in tax revenues to Alberta, Saskatchewan, Manitoba, Ontario, Quebec and New Brunswick.
It would also create 10,000 construction jobs and 1,000 permanent jobs.
The line must ultimately be approved by the federal government, but already faces challenges in Ontario and Quebec.
Both provinces want more information on the project's effects and on the ramifications of converting an existing 3,000-kilometre natural gas pipeline into one that would carry crude.
Alward said while all projects must meet the highest environmental standards, doing nothing is not an option.
"We are at a crossroads at home in New Brunswick and indeed across our country," he said.
"Canada is at risk of standing still while our competitors around the world are moving forward and making plans to move past us.
"As Canadians we need to think about what that will mean for our grandchildren and their children. Prosperity and opportunity are not inherited rights."
Both premiers are seeking to harvest their province's natural resources to improve their economies.
Redford is also pushing Enbridge's (TSX:ENB) Northern Gateway pipeline that would to take bitumen to tankers on the B.C. coast. A decision from the National Energy Board is expected soon.
She has also made numerous trips to Washington to lobby for TransCanada's Keystone XL line, which would carry Alberta bitumen across North America to refineries and ports in Texas.
U.S. President Barack Obama is expected to decide on the project next year.
Both Northern Gateway and Keystone have faced fierce opposition.
Detractors say the benefits wouldn't outweigh the environmental catastrophes that could result from pipeline breaches. They also say the lines reinforce North American dependence on oilsands crude, which opponents say is more harmful to the environment than conventional oil due to the extra resources needed to bring it to the surface and refine it.
In New Brunswick, Alward has touted the Energy East pipeline along with shale gas development as two ways to advance his province's struggling economy.
The shale gas proposal has met stiff and, at times, violent resistance from protesters who fear the impact on groundwater.
Alward told reporters Thursday he doesn't see concern over the shale gas issue bleeding into the Energy East pipeline debate.
"Yes, there is pushback in development of our (shale gas) resources, but I believe the vast majority of New Brunswickers want to see development take place."