|
Support grows for cross-Canada pipeline
Gary Park For Petroleum News
With Canada’s hopes of opening up oil sands crude exports to Asia on a shaky footing, more attention is shifting to the chances of pipelines to end Eastern Canada’s reliance on expensive imports and possibly to open a different route to India and China.
And that sets the stage for another battle between Enbridge and TransCanada, with TransCanada only months away from unveiling plans to pump liquids by converting part of its natural gas Mainline to supply refineries in Ontario, Quebec and New Brunswick.
If TransCanada goes ahead with that plan it also opens the door to Asia’s lucrative markets, while bypassing the controversial projects designed to reach tidewater on the British Columbia coast.
Enbridge, as part of its strategy to access more markets in eastern Canada and the U.S., has indicated it will file with Canada’s National Energy Board later this year to reverse its pipeline from Ontario to Montreal, initially to carry growing volumes of Canadian and U.S. light crude.
Shipping cost issues Laurie Smith, a partner at the law firm of Bennett Jones who helps energy companies resolve their export options, said TransCanada believes it can compete with Enbridge’s Northern Gateway and Kinder Morgan’s Trans Mountain expansion.
He said TransCanada estimates it can ship crude from Canada’s East Coast to China for less than it would cost out of West Coast ports by moving tankers through the Strait of Malacca between Malaysia and Indonesia, then north through the South China Sea.
Also under consideration is the possibility of delivering crude to refineries in Europe, Smith said.
Separately, Korea National Oil Corp’s Canadian unit, Harvest Operations, is exploring whether it could carry crude by rail to the East Coast, then by barges to Harvest’s Newfoundland refinery.
Alex Pourbaix, TransCanada’s president of energy and oil pipelines, was reluctant to get drawn into the possibility of exports from the Atlantic region, giving more immediate priority to serving Eastern Canadian refineries with up to 800,000 barrels per day.
But TransCanada has estimated it could cost about C$8.50 per barrel to send crude from the East Coast to China, compared with the C$5.20-C$8.20 cost of shipping to Shanghai through Northern Gateway.
Political support The notion of a complete cross-Canada pipeline is attracting support from an unlikely source — Thomas Mulcair, leader of the federal New Democratic Party, who is adamantly opposed to filling tankers at British Columbia ports.
He said west-to-east pipelines would give Western Canadian producers higher prices for their crude.
Mulcair said that is a “pro-business, common sense solution” that would create jobs and improve Canada’s energy security.
While seen as an opponent of oil sands expansion, Mulcair said he would not speak against the oil sands sector so long as recovering the environmental cost of developing the resource was enforced through legislation.
Natural Resources Minister Joe Oliver said he has long supported the idea of a west-to-east pipeline, provided there was support from the industry and regulators, although he questioned whether a single pipeline could meet the market needs of Western Canadian producers.
| 