Alberta sees new viability for eastbound oil pipeline.
by Gillian Steward
CALGARY — Pipeline politics have been whipping us around for over a year now and they are about to get even more intense.
Just last week, Calgary-based TransCanada, which operates one of North America’s largest pipeline networks, confirmed that it is moving right along with plans to convert its natural gas pipeline that stretches from Alberta to Montreal into an oil pipeline that would deliver crude to refineries there and points further east. Not south to refineries in Texas or west to tankers in Kitimat, BC, bound for China but to Montreal, possibly Halifax.
It sounds like good old common sense in a country that has plenty of oil and yet still has to import it from Saudi Arabia and Venezuela for eastern refineries But the economics and politics of pipelines have made it much more lucrative for western oil producers to ship crude oil to the US rather than to eastern Canada.
The economics and politics of pipelines have made it much more lucrative for western oil producers to ship crude oil to the US rather than to eastern Canada.
Until now.
During the past year a number of factors converged like a superstorm: a glut of oil in Alberta thanks to rapid oilsands development; important new sources of oil and natural gas in the US; too many supply bottlenecks; price differentials, and a growing awareness of the environmental issues that can be shipped down a pipeline.
Suddenly, an oil pipeline from west-to-east makes all sorts of economic — and political — sense.
“We’ve now determined this project is both technically and economically feasible,” TransCanada CEO Russ Girling told analysts on a conference call. “Discussions with potential shippers and other stakeholders are underway to determine if this is a project that the market wants to see — and based on early indications, we believe that it is.”
This is a huge turnaround for the oil industry, because until now it never saw an oil pipeline to eastern Canada as a profitable venture. Such a pipeline may have made the country less dependent on foreign oil and given eastern Canadians a break at the gas pumps, but exporting south to the US was much easier and more lucrative.
Politicians have also made a huge turnaround on this issue. In the 1980s, Alberta premier Peter Lougheed vigorously opposed shipping raw crude to refineries in Sarnia, as prime minister Pierre Trudeau envisioned, because it meant Alberta would also being shipping jobs out of the province.
Lougheed wanted more oil refineries and petrochemical plants right in Alberta and the freedom to ship resources wherever they would garner the most return.
Now it’s hard to find a politician who doesn’t support an oil pipeline from Alberta to central and eastern Canada.
Now it’s hard to find a politician who doesn’t support an oil pipeline from Alberta to central and eastern Canada. Alberta Premier Alison Redford thinks it’s a good idea; so does federal NDP Leader Tom Mulcair. Eddie Goldenberg, one of Jean Chrétien’s former lieutenants, is touting the west-east oil pipeline, as is Frank McKenna, former Liberal premier of New Brunswick, former Canadian ambassador to the U.S., and current a member of the board at Canadian Natural Resources, a key oilsands developer. The Senate’s Conservative-led energy committee is also backing a west-east pipeline.
Pipeline politics can be difficult to untangle, especially given all the pressure from the Harper government and the industry to get high-profile projects moving quickly.
Just a year ago, TransCanada’s Keystone XL pipeline was the centre of attention. It would ship bitumen from the oilsands to refineries on the Gulf Coast via six U.S. states. But opposition in Nebraska based on environmental concerns convinced President Barack Obama to withhold approval.
The focus then quickly turned to Enbridge’s Northern Gateway pipeline, which would transport diluted bitumen from Alberta through northern BC and onto tankers bound for Asia. But in a relatively short time this project ran into a barrage of opposition from environmentalists, aboriginal groups and much of the BC populace who believe their province would be assuming all the risk for very little reward. A recent earthquake off the northern BC coast only confirmed most people’s worst fears about oil spills.
So now the focus has shifted to another pipeline project — the west-east line. If nothing else, the whipsawing about where and how to ship oil out of Alberta is a sign of how desperate western producers are to get their oil to market.
So desperate that shipping Alberta crude across the country suddenly seems like a good idea.
Maybe Pierre Trudeau will have the last laugh after all.
About Gillian Steward
Gillian Steward is a Calgary writer and journalist, and former managing editor of the Calgary Herald.
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