Earlier this year, the first shipment of Alberta crude oil, an estimated 450,000 barrels, arrived on the east coast, completing an arduous and lengthy 12,000 km trip from British Columbia, through the Panama Canal before ending in Saint John.
On June 18, oil from Calgary-based Cenovus Energy made its way via the Trans Mountain pipeline from the Westbridge Marine Terminal in Burnaby, B.C. to Irving Oil’s refinery in Saint John, which is the largest oil refinery in the country, capable of producing more than 320,000 barrels per day.
Some may call the trip clumsy and unnecessary. Others may call it a circumvention due to provincial and environmental opposition and regulatory logjams. Whatever it is called, it is Irving Oil doing what they need to do to get energy for millions of Atlantic Canadians.
As a result of COVID-19, many changes and shifts in the industry have caused significant uncertainty.
In a world where environmentalism is at the forefront of a lot of issues, it seems odd a ship would travel that many kilometres, emitting its pollution into the atmosphere. A quick Google Maps from Calgary to Saint John is roughly 4,500 km, nearly a third of the commute made by the tanker Cabo de Hornos.
It begs the question of how can shipping Alberta crude through the Panama Canal to Canada’s east coast be better than a pipeline? Surely the Energy East would be a more viable option than another crude tanker going on another 12,000 km journey?
Though this trip on its front could be seen with a negative lens, both Cenovus and Irving Oil celebrated the first-ever transaction between the two companies, saying it’s encouraging to see more Canadian-produced oil refined at a Canadian refinery.
Near the end of April 2021, an “Unnamed Tanker” will make its way to Saint John and is expected to deliver between 350,000 and 1 million barrels of crude oil.
Irving states its company is in discussions with Western Canadian crude producers for the prompt acquisition of crude oil in British Columbia for immediate delivery to its refinery through the Panama Canal, and that they recognize recent events have caused the Canadian economy, more particularly Canada’s energy sector, to be in a state of crises.
Irving also states that it is time for Canada to come together to address the needs of the sector. Their refinery has, for the majority of its 50 years of operations, mostly relied on the United States, Saudi Arabia, Nigeria, and others to get its oil.
Alas, the scrapped project highlights a glaring problem for the Canadian oil and gas sector. A need for an additional export pipeline in Canada is required.
The pipeline lacked support in Quebec and Ontario, and one has to wonder about their feelings on the Panama excursion? Even if Energy East were to be revived, it would take years to complete.
The topic of pipelines in Canada is divisive and cause for polarizing debate. Keystone XL and Trans Mountain are two notable examples. A pipeline to the country’s largest refinery may be in the country’s best interests.
Another question is why does Canada import so much oil when it also produces so much? A big reason is simply that a lot of U.S. production is closer to eastern markets than supplies from Western Canada.
How can this fallacy be remedied, and what are some steps the country can take to become more energy independent and less reliant on imports?
The challenge and crux become how does Canada as a nation, even during a global pandemic that has shown it has no weakness or foe, get more of its most abundant natural resource to other Canadians safely?
One could imagine it’s the goal of the sector to become like that of our neighbours to the south. The U.S. Energy Information Administration projected in February 2020 that the U.S. will export more crude oil and petroleum products combined than it imports until 2050, making them a net exporter.
With the U.S. producing more and more of its own product, Canada is seemingly lagging behind and struggling to get its natural resources to sea and global markets.
Oil demand, though struggling in an arduous 2020, is going to be in high demand for quite some time, and could see upticks in that demand when the virus has ceased. It’s hard to argue against a pipeline being the safest way to transport that oil and gas that the world needs.
Just like Irving said, it’s time for Canada to come together to address the needs of the sector, as well as millions of Canadians.