'Stars are Aligned' for Pipeline

2/12/2013

SAINT JOHN – Former premier Frank McKenna says interest from shippers is the only hurdle left in proceeding with a pipeline extending from Alberta’s oilsands to the Irving Oil’s Saint John refinery.

“Right now it is just following a process, and that process is to establish if there is enough shipper interest and producer interest,” McKenna said. “That is going very, very well.

“I think the crisis in western Canada really gives credibility to the eastern case.”

Delivering a speech entitled Hope Restored – A Future in Energy, McKenna again voiced his support of bringing Alberta crude to the Irving Oil refinery, where it could be processed and shipped overseas.

The staunch proponent of the pipeline said the “stars are aligned” for the construction of the west-east pipeline to come to Saint John, which could result in 5,700 direct construction jobs in Quebec and New Brunswick.

A lack of adequate pipeline capacity has meant Alberta crude hasn’t been able to find its way to the most lucrative markets, with that province eyeing New Brunswick as an access to tidewater in order to get a fair price for its oil.

Conversely, 40 per cent of the country – predominantly Atlantic Canada – relies on costly imported crude rather than cheaper Canadian oil.

Alex Pourbaix, TransCanada Corp. president of energy and oil pipelines, has made similar comments that a proposal for a west-east link has enough commercial backing to push forward.

But he also said shipping interests are now determining exactly how far east the pipeline will go – either to a refinery and port in Quebec City or Saint John.

“Even more jobs would be created in receiving facilities and shipping movements to foreign markets,” McKenna said. “We are going to get this oil pipeline terminating in Saint John, New Brunswick. This is just the first part of the really exciting opportunity that lies in front of us.”

McKenna said greater prospects exist in adding upgrader facilities that process bitumen into synthetic crude oil.

While those facilities are typically located close to oilsands production, McKenna said the cost to build upgraders in Alberta is significantly higher than in New Brunswick – estimating the cost difference to be as much as 40 per cent.

McKenna said Saint John’s port could ship in the modules necessary by tidal water at a reduced cost.

“These projects require billions of dollars in investment and create as many as 5,000 jobs per year,” he said. “It may be the real pot of gold at the end of the pipeline.”

McKenna, who is the deputy chairman of TD Bank, also stated Monday that he has “absolutely no vested interest” in either the pipeline project or the development of shale gas in New Brunswick.

Instead, he said his efforts coincide with the work of Premier David Alward in an effort to reverse the “apocalyptic news” New Brunswick has faced in the last several months: the province now challenged with chronically high unemployment levels, anemic economic growth, an ever-growing deficit, and a demographic time bomb in the offing.

Alward toured the massive oilsands developments and met with key oil industry executives last week in efforts to advance a plan to send Alberta oil east.

The premier said Monday that we will travel to Quebec next week to meet with Premier Pauline Marois to discuss the pipeline project.

McKenna applauded that effort as well as the importance of the provincial Tories, Liberal and New Democrats all endorsing the proposed pipeline.

“The unanimity may very well be the silver bullet needed to win this battle,” he said.

A TD Bank report released in December called for the expansion of Canada’s pipeline network a “national priority” while also listing a pipeline headed east to fuel New Brunswick’s refinery as a part of a pipeline expansion strategy that must go ahead.

John Herron, president of the Atlantica Centre for Energy, said the country’s major pipeline companies are on the verge of a major decision in the wake of momentum to bring Alberta oil east.

“I think this was a very important day for the province,” Herron said after McKenna’s speech. “It has been a little bit bleak of late, but there are windows of opportunity that open from time to time.

“I think there may be an unstoppable amount of momentum now that New Brunswick has clearly captured the attention of very serious companies, majority producers in western Canada, and the provincial government in Alberta.”

He added: “TransCanada seems to be on the brink of making a very bold business decision that will be not only important to New Brunswick but important to the whole country.”