TransCanada’s Proposed Energy East Pipeline Is Clearly An Export Pipeline Says Report

The report punches a major hole in claims by TransCanada and the federal government that Energy East will be a “nation building” project strengthening regional energy security with western Canadian oil. The 4,600-kilometer proposed pipeline will begin in Alberta and end in Saint John, New Brunswick, crossing through every province in between.

Valero, operator of the refinery in Quebec City, announced this week it has “no firm interest” in the Energy East project because the oil company already has made commitments to receive oil from other sources.

Energy East Will Have A Larger Carbon Footprint than an Atlantic Province

“Energy East will be the largest pipeline in North America. It will increase production in the tar sands by 40 per cent at a time when First Nations living downstream are asking industry to slow down,” says Andrea Harden-Donahue, climate and energy campaigner with the Council of Canadians.

Energy East will carry more oil than TransCanada’s controversial and stalled proposed Keystone XL pipeline (830,000 bpd) and more than the Northern Gateway and Line 9 pipelines combined (525,000 and 300,000 bpd respectively). 

“The greenhouse gas emissions associated with this project alone will be more than the emissions of any Atlantic Canadian province,” Harden-Donahue told DeSmog Canada.

Last month the Pembina Institute released a report indicating Energy East would produce thirty-two million megatons of greenhouse gas emissions, similar to the output of Ontario's recently retired fleet of coal-fired power plants.

Marine Oil Tanker Export Terminals To Play a Big Role in Energy East Project

TransCanada recently submitted its project description for Energy East with the National Energy Board noting the project could serve 3.3 million barrels of oil tanker traffic.   

TransCanada has not denied that some of Energy East’s oil and bitumen would be exported. The pipeline company publicly stated part of the $12 billion pipeline project is to construct two marine oil tanker terminals – one in Quebec and one in Saint John – for the purpose of shipping oil by sea. A proposal for a third terminal has been floated for Nova Scotia as well.

Pipeline Companies Have Little Say On What Happens to Oil at End Destination

“TransCanada has not been forthcoming on how much of Energy East’s oil will be shipped overseas. The report confirms what we have suspected for a long time – Energy East is an export pipeline,” Harden-Donahue told DeSmog from Ottawa.

“It may sound strange to say, but pipeline companies like TransCanada aren't actually in business to supply refineries – they're in business to move crude from point A to point B. Once that delivery is done, their role is over,” says Kath.

Kath says pipeline companies make 'Transportation Service Agreements' with refineries or oil producers to deliver oil to a certain destination. The contracts are about selling space on the pipeline not about what happens to the crude when it reaches its destination via the pipeline. The product could be exported, stored or refined by the shipper.

Refining Oilsands Bitumen

It is unlikely crude shipments from Energy East will displace current and soon-to-be oil suppliers to eastern Canadian refineries, especially if Energy East is shipping oilsands bitumen. As DeSmog Canada reported last October only a specialized refinery can refine bitumen. Eastern Canadian refineries lack the necessary equipment – usually a coker unit – to process large volumes of bitumen.

“Ample supplies of light crude from growing U.S. and offshore production may also dissuade refiners from making costly investments aimed at converting refineries in order to process heavy crude,” concludes the report. Retrofitting a refinery to process bitumen can cost as much as $2 billion.

Jeff Rubin, former CIBC economist, argues the price for bitumen will only increase when oilsands producers can get their product to global markets. At the moment, bitumen is sold at a discount because there is a glut in production and oilsands producers can only sell in North America. Constructing Energy East means bitumen can finally fetch higher global prices, which may be another financial disincentive for refineries in eastern Canada to start refining bitumen.

The report concludes the vast majority of Energy East’s product will be shipped to the U.S. and overseas destinations such as Europe and India.

TransCanada is expected to submit its application for the Energy East project with the National Energy Board sometime this year. The project involves converting a 3,000-kilometre natural gas pipeline in Saskatchewan, Manitoba and Ontario and building an additional 1,600 kilometers of pipeline in Quebec, along the St. Lawrence River, to the pipeline’s proposed end destination in Saint John, New Brunswick.

Image Credit: TransCanada's Energy East: Export Pipeline, Not For Domestic Gain Report