• Canada's Energy East Pipeline Project
  • December 19, 2014
  • Law Firm: Preti Flaherty Beliveau Pachios LLP - Portland Office
  • A subsidiary of Canadian energy company TransCanada has proposed a crude oil pipeline running 4,600 kilometers from Alberta and Saskatchewan to Saint John, New Brunswick. The proposed Energy East Pipeline Project would enable Western Canadian crude oil to be shipped east across six Canadian provinces, expanding economic opportunities for refining and export -- but like other major pipeline projects, the Energy East project faces regulatory hurdles.

    On March 4, 2014, Energy East Pipeline Ltd., a wholly owned subsidiary of TransCanada Oil Pipelines (Canada) Ltd., proposed the project which entails the conversion of about 3,000 kilometers of existing natural gas pipeline to an oil transportation pipeline, new pipelines in Alberta, Saskatchewan, Manitoba, Ontario, Québec and New Brunswick, and marine facilities that enable access to other markets by ship. If built, the $12 billion project could carry up to 1.1 million barrels of crude oil per day.

    The major motivation behind the line is the relative surplus of Western Canadian crude oil, including fuel produced from the Alberta oil sands. While Alberta and Saskatchewan produce substantial oil, relatively little capacity to ship that crude to refineries means relatively low prices for producers. Meanwhile, refineries in Quebec and Atlantic Canada currently receive 86% of their crude oil from foreign sources. TransCanada pitches the Energy East project as giving these Eastern Canadian refiners access to "reliable, low-cost Western Canadian crude." The developer also points to positive economic development impacts, including about 10,000 jobs and an estimated $35 billion added to Canada’s gross domestic product over 40 years, as well as the relative safety of shipping oil by pipeline as opposed to by rail or truck. Notably, the project also allows TransCanada to make better use of its existing natural gas pipeline system, which has excess unused capacity.

    Like the Keystone XL pipeline in the U.S., the Energy East project faces opposition from both local siting concerns and global worries about the environmental impacts of "tar sands" crude production. Some have also expressed concerns that the project would disrupt natural gas flows to Canadian consumers, although TransCanada has said that it has plans to build more lines to meet any increased demand.

    Under Canadian law, interprovincial pipelines are federally regulated by Canada's National Energy Board (NEB). According to its website, TransCanada expects final regulatory approval in the fourth quarter of 2015, with the project commissioned and placed in service in 2018. How the regulatory process plays out will affect when -- and whether -- the Energy East pipeline project moves forward.