Wednesday, December 11, 2013
By Tux Turkel firstname.lastname@example.org
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Energy East advocates, who include some of Canada's leading politicians and corporations, are touting the TransCanada Corp. project as a historic exercise in nation building.
Last week, TransCanada released a study that estimated the pipeline would generate $35 billion in spending and create 10,000 construction jobs across Canada.
Canadian leaders have been frustrated by efforts to move oil south across the United States through the Keystone XL pipeline. They have watched pipeline plans across western Canada for Asian markets fail or stall. Energy East is a must-do project, they say, if Canada is to exploit its energy and economic potential.
"Canadian oil is essentially landlocked to one customer, the United States," said John Herron, president of the Atlantica Centre for Energy. "The effect is, this Canadian commodity is measurably discounted, because it can't be sold on the world market today."
New oil reserves in the United States and shrinking demand mean that Canada needs to sell more crude overseas, Herron said, west to China and east to India and Europe. The Energy East pipeline, Herron said, also will pass refineries in Ontario and Quebec, allowing Canada to receive the added value of exporting refined products.
Line 9, meanwhile, has a leg up because it's an existing pipeline. In approving the first phase, Canada's National Energy Board endorsed the idea of developing underused capacity.
This precedent worries Maine environmental activists. They say that if Line 9 is reversed all the way from Sarnia, Ontario, to Montreal, the Portland pipeline also will seek to reverse its flow and complete the link to the sea, pumping oil-sands crude across Maine for export through South Portland. They express similar fears about a potential connection to Energy East.
These fears helped launch a grass-roots campaign in South Portland this summer aimed at blocking construction of vapor combustion units that the Portland pipeline would need to prepare oil-sands crude for export on tankers. Voters will decide in November whether to make changes to the city's waterfront ordinance that effectively would ban the facility.
KEYSTONE XL FALLOUT
But that vote may not be a deciding factor. Two leading Canadian experts say that while the Portland reversal might make business sense for its owners, shippers aren't likely to sign up. The ongoing fight over Keystone XL has taught them a lesson.
"No one is considering reversing the flow of that pipeline to move oil from Alberta, because the opposition in New England is too strong," said Pierre-Olivier Pineau, a professor and energy policy specialist at the HEC business school in Montreal.
Pineau's observation is echoed by Steven Paget, an investment analyst with FirstEnergy Capital Corp. in Calgary.
"After five years and counting of delays on Keystone XL, there doesn't seem to be any desire to sign up for a similar protest on another pipeline," Paget said.
There also are business reasons why the two Canadian pipelines aren't likely to feed crude oil through Maine.
Line 9 would be expanded to a capacity of 300,000 barrels a day. The Suncor refinery can refine 137,000 barrels a day. The Valero refinery across the St. Lawrence River from Quebec City is rated at 235,000 barrrels a day. It would be supplied by ships from a terminal in Montreal.
The combined refining capacity of these two plants exceeds that of the pipeline, according to Graham White, an Enbridge spokesman, so there's not enough crude to export overseas.
"There are no plans or proposals to ship crude past Montreal," he said.
Reversing the Line 9 flow eastward also makes it impossible for the Portland pipeline to reach a refinery in Nanticoke, Ontario. That unit is owned by Imperial Oil, an Exxon-Mobil subsidiary that is the majority owner of the Portland pipeline.
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