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OTTAWA AND HALIFAX — TransCanada Corp. is expected to announce Thursday that it will push ahead with a major oil pipeline linking Western Canada with refineries and export terminals in the east, marking a significant step forward for Canada’s goal to tap new export markets.
The Energy East pipeline would deliver some 850,000 barrels of crude a day from Western Canada to Quebec and New Brunswick, serving the three refineries in the two provinces. The project – labelled a “nation builder” by New Brunswick Premier David Alward – has been endorsed by provincial and federal politicians, though Quebec Premier Pauline Marois said last week her province would have to study the proposal once TransCanada releases its detailed plans.
The planned pipeline is a strategic bid to open up new export opportunities for Canadian energy producers eager to diversify their markets beyond the oil-glutted U.S. Midwest. Alberta oil production is surging, but the province faces serious hurdles with other projects aimed at expanding crude-export capacity.
TransCanada’s proposed Keystone XL line connecting western Canadian producers to the U.S. Gulf Coast has encountered opposition among environmentalists and politicial uncertainty in the United States. And Enbridge Inc. is battling to make progress on its highly contentious Northern Gateway route through British Columbia to access Asian markets.
According to sources, TransCanada officials are set to make the announcement in Saint John, N.B., joined by Mr. Alward; Rob Moore, the federal minister for the Atlantic Canada Opportunities Agency, and executives from Irving Oil Ltd., which owns a large refinery in Saint John, provincial and federal sources said.
Industry analysts said several new export options will be needed if producers are going to meet an ambitious target to expand production from 3.2-million barrels per day last year to nearly 5-million barrels by 2020, as projected by the Canadian Association of Petroleum Producers. The Energy East line would not be completed until 2017 into Quebec, and 2018 to Saint John, meaning rejection of the Keystone XL plan or failure to move forward with North Gateway could leave producers increasingly relying on rail over the medium term.
The TransCanada project aims to please both Quebec and New Brunswick by offering their refiners a secure supply of North American crude, which has recently been cheaper than imported sources. It is offering producers the option of exporting through Quebec City or Saint John. The New Brunswick port is ice-free and can handle the world’s largest crude carriers, which substantially reduces shipping costs on long-haul routes to Asia.
Politically, the project has attracted far less opposition so far than either Keystone XL, which has become a prime target for American climate-change activists and a political bone of contention between U.S. President Barack Obama and congressional Republicans, or the Gateway project, which has been opposed in its current form by Premier Christy Clark.
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