TransCanada to proceed with 1.1m bbl/day Canada west-to-east pipeline

01 August 2013 16:50 Source:ICIS News

TORONTO (ICIS)--TransCanada has decided to proceed with its 1.1m bbl/day pipeline project to ship oil from Canada’s west to refineries in the east, the Canadian energy infrastructure firm said on Thursday.

TransCanada said that a successful open season confirmed strong market support from oil producers and refiners for the project, with about 900,000 bbl/day of “firm, long-term contracts to transport crude oil from western Canada to eastern Canadian refineries and export terminals".

The pipeline would help lessen western Canada's dependence on US Midwest refineries as a big market - especially as it still remains unclear whether the US will approve TransCanada’s long-delayed Keystone XL project, which would enable Canadian oil to reach US Gulf Coast refineries.

TransCanada CEO Russ Girling said that the project – known as Energy East Pipeline – would give refiners in eastern Canada stable and reliable access to western Canadian oil while “pushing out more expensive crude oil from foreign regimes”. Eastern Canadian refiners currently import about 700,000 bbl/day of crude oil to feed their plants.

However, Keystone XL and other pipeline projects are still needed, Girling added.

"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 US crude oil to existing North American markets," he said.

Energy East Pipeline will have a capacity of about 1.1m bbl/day. It is expected to be in service by late 2017 for deliveries in Quebec and 2018 for deliveries to New Brunswick.

The Canadian dollar (C$) 12bn ($11.7bn, €8.8m) project involves converting existing 3,000km (1,865 miles) of natural gas pipeline capacity to crude oil service, and constructing about 1,400km of new pipeline.

The pipeline will terminate at Saint John, New Brunswick, where TransCanada and Canadian refiner Irving Oil have formed a joint venture to build, own and operate a new deep water marine terminal.

Shipping crude oil via pipeline, rather than rail, gained in public support in Canada following July's catastrophe at a Quebec town, where a train carrying oil to a refinery derailed and exploded.

($1 = €0.75, $1 = C$1.03)

By Stefan Baumgarten