CALGARY – A $12-billion plan billed as an “historic opportunity” to supply eastern Canada with western crude is moving ahead, with TransCanada Corp. announcing Thursday that it has more than enough support for its Energy East pipeline.
Alberta Premier Alison Redford hailed Energy East as a “nation-building project,” while critics promptly vowed to fight the proposal, which they describe as unsafe and unlikely to deliver on promises of job creation and energy security.
The pipeline will ship up to 1.1 million barrels per day, 900 million of which will come from binding, long-term contracts from shippers, TransCanada (TSX:TRP) said.
It had earlier pitched the pipeline as having a capacity of 850,000 barrels per day, suggesting the appetite for the project was stronger than even it expected.
“This is an historic opportunity to connect the oil resources of western Canada to the consumers of eastern Canada, creating jobs, tax revenue and energy security for all Canadians for decades to come,” said Russ Girling, TransCanada’s president and CEO.
Energy East will deliver crude to refineries in Quebec as well as to the massive Irving Oil refinery in Saint John, N.B. Irving announced Thursday it planned to build a $300-million marine terminal to handle the increase.
Exporting crude to energy-hungry markets such as India – where landlocked Canadian crude would command a better price – is also possible from the East Coast.
It involves retooling part of TransCanada’s underused natural gas mainline to carry oil, plus new lines to carry crude further east.
Redford, who been outspoken in her support of projects that increase access to new markets for her province, issued a statement saying TransCanada’s Energy East fits with the Canadian Energy Strategy.
“My government made a commitment to the project as part of our efforts to build new markets and get a fairer price for the oil resources Albertans own,” Redford said.
“This is truly a nation-building project that will diversify our economy and create new jobs here in Alberta and across the country.”
TransCanada estimates the project will cost about $12 billion excluding the value of its converted Canadian Mainline pipeline system.
The project, with a five-year timeline, was been backed by Redford and the other provincial premiers at their recent annual meeting in Ontario but faces opposition from environmental and other groups.
The Council of Canadians, for one, says it will launch a national campaign to stop the pipeline. The group, which opposes various government policies including free trade, said in a statement that pipeline supporters haven’t proven that the economic benefits outweigh the risks.
Among other things, opponents of pipelines are concerned about the potential risk of spills, which can pollute ground and water supplies and pose an environmental and health risk.
Pipeline supporters argue that the risks can be reduced with proper technology and handling. They also point out pipelines are a safe and effective way to transport large volumes of crude, a vital source of energy used to make gasoline, jet fuel and other products.
Girling said Energy East is one answer to the question of how to move crude oil from Western Canada to refineries and consumers in other markets.
However, Girling also made a pitch for the politically sensitive Keystone XL project – a delayed TransCanada pipeline that would stretch from Alberta to Texas, if it gets the required approvals.
“Energy East is one solution for transporting crude oil but the industry also requires additional pipelines such as Keystone XL to transport growing supplies of Canadian and U.S. crude oil to existing North American markets,” Girling said.
The Harper government has argued that Keystone XL is good for both the United States and Canada but U.S. President Barack Obama has yet to give his go-ahead, which has faced intense lobbying both for and against.
Joe Oliver, Canada’s natural resources minister, welcomed the TransCanada announcement on Energy East but said the federal government would also work to ensure pipelines are safe.
“Initiatives like this could allow Canadian refineries to process more potentially lower priced Canadian oil, enhancing Canada’s energy security and making our country less reliant on foreign oil,” Oliver said.
However, the statement also 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.”
The Council of Canadians said in its statement that the evidence is lacking.
“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.”