By Andrea Harden-Donahue
When TransCanada first announced its 4400km Energy East pipeline project from Alberta to Saint John, the spin was all about nation-building.
At their first news conference, CEO Russ Girling compared Energy East to "bold ventures" such as the Canadian Pacific Railway that evoke civic pride. "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," said Girling, as quoted in a Macleans article.
Many pundits and political figures, notably Premier Brad Wall, have bought this hook, line and sinker.
This spin is dependent on the idea that Energy East will see crude produced in the Prairies replace so-called foreign imports to Atlantic Canada.
"It's inaccurate no matter how often the company repeats it. Energy East is an export pipeline, not a made-in-Canada energy solution."
Myth-busting step 1: Understanding refinery capacityThere are three refineries along the Energy East pipeline path:
- Suncor in Montreal with the capacity to refine 137,000 barrels per day (BPD)
- Valero in Quebec City which can refine 235,000 BPD
- Irving in Saint John which can refine 300,000 BPD
If Energy East replaced every drop of oil in these refineries, with a total capacity of 672,000 BPD, a significant 428,000 BPD would still be for export. Energy East would be the largest tar sands pipeline in North America.
But here's the thing, Energy East won't replace every drop -- far from it.Back in 2014 we helped publish a report finding three projected crude oil supplies along Energy East's path towards 2020:
- Enbridge Line 9 reversal 250,000 BPD
- Atlantic Canada offshore 100,000 BPD
- U.S. light crude 200,000 BPD
Enbridge Line 9 reversal has since been approved and is now is unfortunately flowing oil to Quebec refineries despite fierce community resistance to the old pipe, which endangers critical waterways, amongst other critical concerns.
Valero has gone so far as to publicly state it has "no firm interest" in Energy East because it already has commitments for other sources -- notably Line 9. Same goes for Suncor.
When it comes to U.S. imports, the fact is it is cheap light crude and a likely ongoing choice given refineries desire for the best bang for their buck.
This leads to the conclusion that 978,000 barrels of the 1.1 million BPD are destined for export.
The report's conclusion is affirmed by TransCanada's recent filings to the NEB for Energy East indicating the project would see a doubling of oil tanker traffic in the Bay of Fundy, up to 281 a year.
This means at least 800,000 BPD of Energy East's crude is destined for international markets.
Not convinced yet? Let's consider what will be flowing through the pipe. It is a multi-use pipeline which will transport Albertan conventional oil, diluted bitumen and other unconventional oil from the tar sands and Bakken fracked crude from Saskatchewan and the U.S.
The largest and growing portion of this is to be tar sands crude and given the state of refineries in Alberta, it will be unrefined, diluted bitumen. Bitumen produced in the tar sands is becoming increasingly landlocked with pipelines to the West and South being rejected, the high costs of shipping by rail and current export infrastructure nearing its limits.
Outside of the very serious consequences of shipping this toxic mix 4400km to Saint John, the heavy bitumen mixed with light, toxic diluents to flow through the pipe requires special equipment to refine. The three refineries along the route can't, and don't appear to have clear plans to invest in the expensive equipment.
Myth-busting step 2: Understanding where crude in Eastern Canada comes from
This argument playing on Canadian patriotic sentiment is often combined with trumped up stats about where Atlantic Canada's oil currently comes from.
TransCanada consistently states that Eastern Canadian refineries are dependent on oil imports from so-called 'foreign countries.' In this promotion piece, they state Eastern Canada imports 634,000 BPD. They go on to source this NEB document stating "Leading importers include Saudi Arabia, Iraq, Norway, Algeria and Angola."
This is an interesting tactic. If you look at their source, you can clearly see just over 300,000 BPD of this is actually imported from the U.S., not these so-called foreign countries.
This is consistent with the useful take-down Environmental Defence's briefing provides comparing TransCanada import numbers to more up-to-date Statistic Canada numbers, concluding, "TransCanada's claim [that Eastern Canadian refineries import 86 per cent of their oil from foreign imports] is false. And it's inaccurate no matter how often the company repeats it. Energy East is an export pipeline, not a made-in-Canada energy solution."
Further evidence of the extent to which TransCanada bends the truth to frame its narrative, the same slick document then goes on to put a price on the imports from these four countries, $8 billion, stating this is enough to cover the, "average annual salary of 15,000 Canadian teachers."
What utter nonsense.
Not only am I unconvinced Prairies crude flowing in Energy East would displace these crude imports, this is like suggesting the crude flowing through Energy East would be provided for free, allowing these funds to flow to more laudable recipients.
It goes on to say Canada spends $26 billion on oil imports per year, and how this is money that could "finance about half of Ontario's entire 2015-2016 health care budget," or "pay for New Brunswick's health care budget for 10 years." This is misleading, at best.
If this was REALLY about Canadian oil for Canadians...
Like Gordon Laxer argues in his new book, if this was really about a patriotic goal of achieving greater energy security by supplying Canadian oil to Canadians, why aren't we talking about diverting current exports from Newfoundland to the U.S. to meet Atlantic needs?
As Laxer argues, existing production sits around 200,000 BPD which, combined with easy conservation and efficiency measures, can meeting Atlantic Canadian supply -- no need for a 4400km pipeline carrying some of the most carbon-intensive and threatening crude to waterways.
Follow HuffPost Canada Blogs on Facebook
MORE ON HUFFPOST:
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.
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.
(Pictured: Russ Girling, president and CEO of TransCanada Corp.)
In October, 2014, TransCanada formally applied to the National Energy Board to make the Energy East pipeline a reality. The NEB has 15 months to review the project and make a recommendation to Prime Minister Stephen Harper.
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.
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.
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.
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.
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.
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.
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.
Follow The Council of Canadians on Twitter: www.twitter.com/CouncilofCDNS