TransCanada moves on another opposed project

TORONTO (ICIS)–As Keystone XL faces likely final rejection by the US, TransCanada announced on Thursday that it is pushing ahead with Energy East, a 1.1m bbl/day oil pipeline project at home that also has sparked controversy.

TransCanada officials said they are amending proposals for the 4,600-kilometre Energy East pipeline project from Alberta to Quebec and to an export terminal in New Brunswick. They stressed that they remain committed to the project, which has drawn opposition from environmental groups and others in Ontario and Quebec.

The company said it would remove plans for a port in Cacouna, Quebec, that environmentalists had opposed over its impacts on beluga whales in the Saint Lawrence river.

“Today’s announcement demonstrates our dedication to listening and delivering a vital infrastructure project that will provide significant economic benefits to all provinces along the pipeline’s route,” said CEO Russ Girling.

TransCanada’s announcement comes after the US State Department this week rejected the company’s request to put the Keystone XL review on hold.

According to US and Canadian media reports on Thursday, the US government is now expected to reject Keystone XL before the Paris climate change summit, which is due to begin on 30 November.

Canadian analysts have said that TransCanada’s request to put the review on hold was a political move to forestall a final veto by the current US administration – in the hope that a Republican administration after the 2016 US presidential election would approve the project.

“Pipelines remain the safest and least greenhouse gas-intensive way of transporting crude oil to market,” Girling said.

“By approving and building the Energy East pipeline we will create the capacity to displace the equivalent of 1,570 railcars of crude oil per day to eastern Canada,” he added.

Energy East could come into service in 2020, subject to regulatory approvals for the amended project.

In related news, TransCanada’s competitor, Enbridge, said on Thursday that it expects to start up its Line 9 oil pipeline project in eastern Canada next month.

The 300,000 bbl/day pipeline will ship crude oil from the Sarnia petrochemicals hub in Ontario to Quebec. It previously flowed in the opposite direction. Canada’s energy regulator, the National Energy Board (NEB) last month gave final approval for the project.

Enbridge originally expected an early 2015 in-service date but the project was delayed because of additional hydrostatic testing. The company had filed the project application to reverse the pipeline’s flow from west to east with the NEB back in 2012, proposing at the same time to expand capacity from 240,000 bbl/day to 300,000 bbl/day.

Quebec refiners and petrochemicals firms have long backed Enbridge and other projects as they are seeking to diversify supply sources, replacing imported oil with cheaper Canadian and US Bakken crude.

Quebec has two refineries, a 137,000 bbl/day plant by Suncor in Montreal, and a 265,000 bbl/day plant by Valero near Quebec City. At Saint John, New Brunswick, where Energy East would end, Irving Oil has a 300,000 bbl/day refinery.

Canada’s oil producers keep citing lack of pipeline capacities as a key factors hampering the industry. Last month, Shell cancelled construction of an oil sands project in Alberta, citing among other reasons the lack of pipelines.

While Canada’s previous Conservative government strongly supported the oil industry’s plans for new pipelines, the new Liberal government has yet to clarify its position.

Prime Minister Justin Trudeau was sworn in this week after defeating the Conservatives in elections last month.

In addition to Energy East, two other planned projects – Northern Gateway, from Alberta to the British Columbia coast, and an expansion of the Trans Mountain pipeline from Alberta to Vancouver – have also met with opposition from environmental and other groups.

Meanwhile, the closest alternative to pipeline shipments, crude-by-rail, became controversial in Canada after a 2013 derailment and explosion of a train bound fro the Irving Oil refinery in New Brunswick destroyed the centre of a small Quebec town and killed 47 people.

(Image: ddp USA/REX Shutterstock)