By Christopher Williams

Prior to the global recession, Irving Oil Limited planned a new $10-billion refinery, and a second nuclear reactor was touted by the province, but both projects fizzled. However, the energy buzz returned on August 1, with TransCanada Corp. and Irving Oil Limited announcing a $12-billion pipeline from Alberta, and a new marine terminal in Saint John. This time, the proposed projects offer significant economic prospects for the entire country.

The Energy East concept proposes to convert underutilized sections of Calgary-based TransCanada’s mainline to deliver western crude to Quebec by 2017. The next year, a 1,400-kilometre pipeline extension would carry 1.1-million barrels of crude oil per day from Alberta and Saskatchewan to refineries in Quebec, and finally to Saint John, where a new $300-million Canaport Energy East Marine Terminal will be constructed through a joint venture of TransCanada and Irving Oil Limited. Energy East Pipeline has several major components: converting an existing natural gas pipeline to an oil transportation pipeline; constructing new pipelines in Alberta, Saskatchewan, Manitoba, Ontario, Quebec and New Brunswick to link up with the converted pipe; constructing pump stations and tank terminals, and construction of marine export facilities in Saint John, N.B. The planned starting point is a new tank terminal in Hardisty, Alberta, a pivotal petroleum industry hub just over 100 kilometres from the Saskatchewan border.

“This new marine terminal, located in deepwater that is ice-free year round, will be able to load Canadian oil onto the world’s largest crude-carrying vessels and transport it to refineries around the world, including the United States, Europe, India and other destinations,” said Paul Browning, President and CEO of Irving Oil Ltd. “We believe the marine terminal is just the first of many investments, not just for Irving Oil but for many companies to take advantage of the fact that we are bringing a whole new industry into Saint John, which is crude oil export,” Browning said.

The proposed pipeline would serve new export markets and feed the Irving refinery, but which objective would take precedence is still under discussion. Browning says Irving Oil could use up to 20 per cent of the refinery’s current 300,000 barrel-a-day capacity to process blended bitumen from the west. “But we are certainly taking into account how much crude will be coming our way and we’ll be looking for opportunities to build a business around that,” he said.

Some experts predict Energy East will drive a Saint John refinery expansion such as the addition of a new hydrocracker unit to convert heavy oil residuals into value-added products. In 2000, Irving installed a similar $1.5-billion “King of Cats” upgrade where massive new components were offloaded at the port from specialized heavy lift vessels. It is estimated that an upgrade to handle bitumen at the refinery could each bring an additional $5 billion in investment not to mention longer-term jobs to bring home New Brunswickers working out west.

On August 1, Browning welcomed Prime Minister Stephen Harper who spoke to refinery workers about the national benefits of the project. “I think the growth of the Canadian energy industry right across the country has potential benefits for all Canadians, not just here in Atlantic Canada, but Quebec as well,” Harper said.

Alex Pourbaix, TransCanada’s President of Energy and Oil Pipelines, says that while specific numbers are not yet available, he expects the “spend” in both Quebec and New Brunswick in terms of new construction to be in the billions of dollars, and the jobs will be in the thousands. Prime Minister Harper also noted his optimism for Quebec benefits from the energy industry during his New Brunswick stopover.

Quebec Premier Pauline Marois has said little about the TransCanada pipeline proposal. Undoubtedly, she is still reeling from the agony of Quebec’s Lac-Mégantic community, where railway cars carrying crude to Saint John derailed and exploded in July, killing at least 47 people. However, she has stated her government currently has working groups assessing the Energy East project.

Jim Quinn, President and CEO of Saint John Port Authority calls Energy East the most exciting nation-building project Canada has seen in a long time. “New Brunswick is importing a resource from Alberta and Saint John will have an energy export for the world,” he says enthusiastically. “As Canada increases its exports, it’s good for the federation by increasing national revenue and contributing to equalization payments.” Quinn says quick action in realizing the opportunity shows what Canadians can do when they come together. “Our political leaders have shown responsible determination, from local MLAs to provincial Premiers, and New Brunswick’s former Premier Frank McKenna caused the whole dialogue to occur.”

Will Energy East become embroiled in protests from environmentalists and aboriginal peoples, as did the proposed Northern Gateway and Keystone XL pipelines? There is very strong support for the pipeline in New Brunswick, but with a project this large, and crossing provincial boundaries, opposition may arise from different corners, for different reasons. The Council of Canadians, a group that opposes various government policies – including free trade – has launched a national campaign to stop Energy East. Aboriginal groups are also speaking up. “Whenever I see or hear something in the mainstream media commenting on benefits for all Canadians, I know that what it really means is for white Canadians and does not include Indians.” says Dan Ennis, a resident of Tobique First Nation in northern New Brunswick. New Brunswick Green Party Leader David Coon is disappointed by the fervor over development of Alberta’s oil sands. “If we are going to avoid the worst consequences of climate change, we can’t be investing in major new infrastructure projects that will expand fossil fuel production,” said Coon in response to the Energy East Pipeline announcement.

Some see the Energy East concept a strategic masterstroke in the wake of an unwelcome reception of Enbridge’s proposed Northern Gateway Pipeline and highly unpredictable outcome of the Keystone XL approval process, which could well result in two major proposed export routes not being available to carry Canadian crude to markets. Canadians and Americans not being able to agree on constructing pipelines to carry the oil would have serious negative consequences for Canada’s merchandise trade balance, balance of payments, and the value of the Canadian dollar, thus affecting us all. In addition, Canada’s reputation and credibility as a reliable and dependable destination of foreign investment were at stake, particularly with Asian investors. Energy East has provided an alternative shipping route for Canadian oil, and has put pressure on the U.S. to approve Keystone XL, if it wishes to be assured of increasing volumes of Canadian oil. TransCanada CEO Russ Girling commented that “Energy East is compatible with the company’s stalled Keystone XL line. The marketplace needs both of these pipelines, and probably more.”