Proposed project would bring crude to refineries in Quebec, Saint John
CBC News | Apr 2, 2013 9:28 AM ET
TransCanada Corp. is seeking firm financial commitments from companies seeking to ship crude oil from Western Canada to refineries in Eastern Canada.
The Calgary-based company announced on Tuesday morning a bidding process that will allow interested producers to make binding commitments for space on the pipeline. Companies will have from April 15 to June 17 to enter into long-term commitments to use the pipeline.
The open-season process follows a successful expression-of-interest phase and talks with potential shippers.
TransCanada said if the next phase is successful, it plans to start seeking regulatory approvals later in 2013, and the oil could start flowing to Eastern Canada by late 2017.
The proposal would be to convert 3,000 kilometres of the company’s natural gas pipelines to allow for crude oil to be transported. The company would also be looking at building 1,400 kilometres of new pipeline from Quebec into Saint John.
The pipeline could carry between 500,000 and 850,000 barrels of crude oil per day from Alberta and Saskatchewan to the eastern refineries, according to the company.
Premier David Alward called the west-east pipeline proposal an historic initiative. Alward made the comments in front of the Irving Oil refinery in Saint John on Tuesday. (Robert Jones/CBC)
Federal Natural Resources Minister Joe Oliver said on Tuesday TransCanada’s announcement was a “positive step.”
“We welcome such proposals, because they can generate thousands of Canadian jobs and long-term economic prosperity — particularly in Quebec and the Maritimes — for generations to come,” Oliver said.
The federal minister said the proposed pipeline project must meet a series of regulatory reviews.
If the project moves forward, Oliver said it would be an important piece of energy infrastructure for Canada.
“Pipelines moving oil from Alberta to Quebec to New Brunswick would be among the most expansive and ambitious stretches of energy infrastructure in the entire world and would contribute to the energy security of Canada and all of North America,” he said.
Officials from the Saint John-based Irving Oil Ltd. have said in the past their refinery could handle western crude oil.
The Irving Oil refinery is the largest in Canada and can process 300,000 barrels of oil per day. Saint John also has a deep-water port and a liquefied natural gas facility.
Oliver said he has recently toured the Irving refinery and the Ultramar refinery in Levis. The federal minister said he plans to tour Suncor’s refinery in Montreal in the coming weeks.
3 days in Alberta
New Brunswick Premier David Alward responded to TransCanada’s announcement on Tuesday morning during a news conference held at the Irving Oil headquarters, calling it an “encouraging step forward.”
The New Brunswick premier said the pipeline proposal is a “historic initiative” for both the province and the country.
“We envision New Brunswick as Canada’s next energy powerhouse and Saint John as the anchor of that powerhouse,” Alward said in front of more than 30 Irving Oil employees.
“If we proceed, this project will strengthen our national and provincial economies and create jobs and economic growth today and for generations to come,” he said, suggesting the project has the potential to be as important to Canada’s economic future as the railway was in the past.
Alward said the pipeline will create high-paying jobs in New Brunswick and will keep workers in the province instead of heading to western Canada to find employment in the oilsands.
“I want to see the day when the mother or father, the son or daughter leave their New Brunswick home in the morning to go to work in the development of natural resources, they will return for dinner that night, not three or four weeks later,” he said.
Alward spent three days in Alberta in February talking to Alberta Premier Alison Redford and oil executives about the possibility of the west-to-east pipeline.
The project has the possibility of creating 2,000 jobs during the construction phase of the pipeline and a few hundred refining jobs after, according to some estimates.
Alberta has been interested in the project, because oil from that province is now being shipped to the United States, where there is a glut. That means oil producers are getting $20 to $40 less per barrel than the world price.
Those lower prices translate into lower royalties for the provincial government, and that is causing a potential multi-billion dollar deficit in Alberta. A pipeline to the Irving Oil refinery would allow Alberta producers to charge the higher world price.
A new pipeline would also alleviate Canada’s dependence on foreign oil and increase the value of Canada’s crude oil through shipping to world markets from the deep-water port of Saint John, said Alward.
Port Saint John president and CEO Jim Quinn welcomed the prospect of playing an integral role in bringing Canadian crude to global markets.
“This opportunity for Saint John and our port is phenomenal,” Quinn said in a statement.
The port, which for 50 years has been handling petroleum cargo for both import and export, currently handles the largest oil tankers in the world, as well as the largest crude carriers, he said.
TransCanada Corp. may build 1,400 kilometres of pipeline, extending its capacity into Saint John. (Courtest of TransCanada)