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August 2014

Vol. 19, No. 32 Week of August 10, 2014

Maine city girds for battle with petroleum industry

Gary Park

For Petroleum News

A small coastal city in Maine is ready to do battle with any companies that attempt to move crude from the Alberta oil sands through what has been an oil import point for up to 600,000 barrels per day of heavy Venezuelan and other crudes.

The city council of South Portland has set the stage for a showdown with the petroleum industry by voting 6-1 against allowing Portland Pipeline Co. (principally owned by Canadian oil sands producers and refiners Suncor Energy, Imperial Oil and Shell) to reverse the flow of its pipeline.

The council’s zoning bylaw, labeled the “Clear Skies Ordinance,” would prohibit the loading of bulk crude on to tankers at its port, effectively preventing any reversal of the 230-mile pipeline that connects with Suncor’s refinery at the east end of Montreal.

Although rated as the second largest oil port on the U.S. Atlantic Coast, it has seen the facility decline to half its capacity over recent years, partly the result of declining shipments from Venezuela.

A citizen movement mobilized against any move to reverse the flow of the pipeline when Canadian producers received permission from the Canadian government to reverse Enbridge’s Line 9B to allow crude from Alberta to reach the Montreal refinery.

Even if all of the Line 9B capacity of 300,000 bpd was earmarked for export from North America, observers say that would not be sufficient to justify a reversal.

Other export plans

Enbridge and its rival TransCanada have also been working on plans to start exporting crude from the East Coast of Canada and the United States to Europe, the Middle East and Asia.

Portland Pipeline Vice President Tom Hardison told the city council that his company has no plans to reverse its pipeline, but argued the environmental concerns were based on emotion, not fact.

He said in a statement that the vote was “against jobs, energy and the waterfront (and was) the culmination of a rush to judgment led by councilors over the past several months that has ignored plain science in favor of fear, promoted by a vocal group of off-oil extremists.”

Hardison said his company is evaluating several options to challenge this “job killing ordinance,” while the American Petroleum Institute has vowed to take action.

Attorney questions legality

Maritime attorney Len Langer told Reuters that South Portland’s ordinance raises a question of legality.

“The real question here is, can a municipality regulate interstate and foreign commerce? If the answer is ‘yes’ then we’ll see a lot more municipalities more aggressively regulating commerce within their borders,” he said.

South Portland Mayor Jerry Jalbert said the ordinance was simply a local regulation that reflected the concern of citizens that oil sands crude “could be damaging to the community and they have asked us to act.”

Several other municipalities along the pipeline’s route in Vermont and New Hampshire have passed resolutions against the movement through their jurisdictions of “dirty oil” from the oil sands region.

Burt Russell, vice president of operations at Sprague Energy, said the energy industry is constantly evolving and limiting crude oil development could limit the chances of innovation.

He said South Portland has extended its perception of an “imminent risk” posed by the oil sands to all crude.

“That send a signal that if they can do that with this product, they can do it with all other projects,” he said.






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