By Scott Haggett
CALGARY, Alberta Aug 1 TransCanada Corp
announced plans on Thursday for Canada's largest
pipeline, a 2,700-mile (4,400 km), $12 billion line to ship
crude from the oil sands of Western Canada to the Atlantic, as
its U.S.-bound Keystone XL project stalls in Washington.
Canada's No. 2 pipeline company said "strong market support"
convinced it to build the 1.1-million-barrel-per-day Energy East
Pipeline, which will bring crude from Alberta to refineries in
Eastern Canada and to a new deepwater oil terminal on the
Atlantic for export from Canada.
The Energy East line will be nearly a third larger than the
850,000 bpd capacity TransCanada proposed in April.
The line, which still needs regulatory approval, could be in
service by late 2017 for deliveries to Quebec and 2018 for New
Brunswick, potentially reshaping the Atlantic Basin oil market
and opening up new markets for Canadian crude.
Customers have already pledged to use at least 900,000 bpd
of the line's capacity, suggesting that producers and refiners
will pay for an export route, while regulatory hurdles delay
pipelines in Western Canada and to the United States.
"It looks like they got far more interest than they were
initially expecting," said analyst Sandy Fielden of consulting
firm RBN Energy in Austin, Texas. "It also solves two problems
for the company as they have this large natural gas pipeline
that has been made largely redundant."
Most of the pipeline will run along an existing TransCanada
gas line, with new construction in Alberta and in Quebec and
But while cross-Canada political support was mostly strong,
environmental groups that have resisted projects to pump crude
across the Rocky Mountains to Canada's Pacific Coast are already
attacking TransCanada's new plan. The government of Quebec,
where memories of a crude oil rail crash that killed 47 are
still fresh, has yet to say if it will support the project.
"The same people-power movements that have stalled other
ill-conceived tar sands pipeline projects will rise up to tell
our governments we need to invest in clean energy, not tar sands
expansion," Mike Hudema, a climate and energy campaigner for
Greenpeace Canada, said in a statement
Proposed pipelines to Canada's West Coast have faced delays
due to objections by First Nations groups and environmentalists,
while the 800,000 bpd Keystone XL pipeline to Texas has been
awaiting U.S. State Department approval for five years.
President Barack Obama is expected to make a final decision
on Keystone XL later this year, but one senator said on Thursday
delaying approval could harm the environment.
"If the Keystone XL pipeline is not approved, Canadian oil
will be shipped across the Atlantic and Pacific oceans on
enormous tankers to Asia, where it will be refined at facilities
with far less stringent standards than any in the United
States," said Senator John Hoeven, a North Dakota Republican.
"We will effectively create more emissions and lose an
opportunity to create jobs and boost our economy."
TransCanada said both Keystone and the Energy East line
would be needed because of rising production from the oil sands
and the Bakken shale-oil field of North Dakota.
"The demand for Energy East is completely independent from
our other long-haul pipeline project, Keystone XL, which is
underpinned by ... 20-year contracts," TransCanada Chief
Executive Officer Russ Girling said at a press conference.
AS FAR AS INDIA
The pipeline should more than replace the over 700,000 bpd
of crude that refineries imported last year, according to
Canada's National Energy Board, and Girling said oil producers
were looking to reach markets as far as India.
"There's a lot of crude that will have to find a home," Al
Monaco, chief executive of rival Enbridge Inc, said on
a conference call.
Canadian Natural Resources Minister Joe Oliver welcomed the
announcement as a way to lower prices for domestic refineries
and reduce their reliance on foreign suppliers.
TransCanada shares rose C$1.08 to close at C$48.01 on the
Toronto Stock Exchange.
TransCanada said it would seek regulatory approvals early
next year. The pipeline, which will be among the world's
longest, will convert 3,000 kilometers (1,900 miles) of an
under-utilized natural-gas mainline system to carry crude oil
through Saskatchewan to Cornwall, Ontario, near the Quebec
TransCanada plans to build about 1,400 kilometers (870
miles) of new line and new export terminals in Quebec and New
Brunswick, including one at Canaport in Saint John, New
Brunswick. TransCanada has formed a joint venture with privately
owned Irving Oil to build, own and operate a new deep water
terminal in Saint John.
TransCanada is also building a storage terminal in
southeastern Saskatchewan that could collect crude from North
Dakota's Bakken field that is now shipped east by rail.
"Obviously, we've had some interest from U.S. parties,"
Girling said. "We'll continue to pursue that."
The line would also diminish the need to ship oil by rail to
East Coast refiners, a trend under scrutiny since the derailment
at Lac Megantic.