Tapping Quebec’s oil opportunity – by Shawn McCarthy (Globe and Mail – May 23, 2013)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

OTTAWA – Texas-based Valero Energy Corp. will invest as much as $200-million in its Quebec refinery if Enbridge Inc. proceeds with its plan to reverse its Line 9 pipeline, a project one Quebec business leader described Wednesday as critical to the province’s refining and petrochemical industry.

In a presentation to analysts, Valero chief executive officer Brian Klesse said the San Antonio-based company has committed to take “substantial volume” of light crude from Enbridge’s Line 9, which, subject to regulatory approval, will be reversed to bring oil from western North America to Montreal. Valero will then deliver the crude from Montreal to its refinery near Quebec City by company-owned ships down the St. Lawrence.

Valero plans to invest between $110-million and $200-million to overhaul its handling capacity at the refinery, including increased tankage and new crude-carrying ships, in order to increase access to North American crude. That will provide it with a competitive advantage over Atlantic basin refineries that rely on high-priced imports.

In addition to supporting Enbridge’s Line 9B reversal, Valero is expanding the 265,000-barrel-a-day refinery’s ability to receive western crude by rail and will import up to 50,000 barrels a day from Texas’s prolific Eagle Ford tight oil play.

“I believe that within a year or two, our Quebec refinery will be a North American-supplied refinery where today it is a foreign-supplied refinery,” Mr. Klesse said in a presentation.

Suncor Energy Corp. also expects to virtually eliminate the need for imported crude to feed its 135,000-barrel-a-day operation in Montreal, a city that has seen five refineries close over the past 25 years.

The Enbridge project – along with TransCanada Corp.’s proposed pipeline to Eastern Canada – got a boost Wednesday from Quebec’s Federation of Chambers of Commerce. In a speech at the Toronto Board of Trade, chamber president Françoise Bertrand said the new oil pipelines are crucial for the competitiveness of the refining and petrochemical industry in Quebec, particularly in Montreal’s east end where Royal Dutch Shell PLC closed a refinery just three years ago.

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