Take even a quick glance at a pipeline map of North America and it’s obvious where the oil doesn’t flow in Canada, namely, Ontario, Quebec and the Maritimes.
In fact, the oil does flow, but by rail and truck rather than by pipeline. The one pipe that does run through the east, Enbridge Line 9, traditionally ships African and Middle Eastern oil west from Portland, Maine. For Eastern Canada to get Western Canadian crude, it must transit the circuitous U.S. route. Plans to refit Line 9 to carry oil sands bitumen east have raised concerns about the risks of moving such a toxic and abrasive substance through a 38-year-old pipe not built for that purpose. Even then, the existing line would only take it as far east as Montreal.
Transcanada Corp. raised a big fuss over the summer when it proposed an east-west line that would ship western output directly across Saskatchewan, Manitoba, Ontario and Quebec to a terminus in Saint John, N,B. This would allow Canada to secure its own energy supply and drastically shorten the route between east and west.
To do it, Transcanada would repurpose about 3,000 kilometres of existing natural gas line that ends near Ottawa, then add a 1,400-kilometre extension.
Like the proposed Keystone XL pipeline from Hardisty, Alta., to Steele City, Neb., the very idea has sparked an outpouring of environmental and NIMBYish objections. Many of these are legitimate. Enbridge alone has suffered hundreds of spills and leaks over the past decade.
Nonetheless, we are a car culture. We crave crude. We want affordable fuel. We can’t have it both ways. All we can do is hope for continuous improvement in regulation and the technologies used to build and monitor this infrastructure.
The alternative is not risk-free. Not only did the train disaster in Lac-Mégantic, Que., highlight the risks of shipping by rail, it also promises to hit us all in the wallet. In July, credit rating agency Moody’s said it expects the disaster will make shipping oil by rail more costly and increase regulatory scrutiny, putting pressure both on major railroads and oil producers.
Enter TransCanada with its Energy East project, which it bills as a “critical infrastructure project for all Canadians because it will enhance our country’s energy security, allow us to receive greater value for our important natural resources and will create tangible economic benefits for communities across the country.”
Earlier this month, Transcanada released the findings of an independent report by Deloitte that suggested Energy East could create 10,000 jobs and generate $10 billion in additional GDP during its construction phase.
Given my area of focus, I am most interested in what happens afterward. This pipe would move up to 1.1 million barrels of oil per day from Western Canada to refineries and export terminals in Eastern Canada and sustain about 1,000 full-time jobs.
And then there are the indirect economic benefits.
If you view the map included in CBC’s coverage of the announcement, you can see the current plan is for terminals in Montreal, Quebec City and Saint John. It doesn’t make sense to ship a raw product a great distance to refine it, then have to ship it back again. It’s better to have regional terminals and refining facilities to balance supply and demand in regional markets along the route. That’s one reason why I would like to see more terminals than just those three.
Here’s the other: Wherever a terminal and refinery is located, it will provide a boon for nearby industrial investment. Energy costs are lower when you are close to the source of supply. Ensuring that energy is plentiful and cheap in regions across Canada will help drive the reshoring trend I have previously touched on that is expected to bring manufacturing jobs back to North America. This is particularly important for a province like Ontario, which suffered a drastic contraction in its manufacturing sector during the recession.
From an economic standpoint, an east-west pipeline is a great idea. It could help redistribute oil patch wealth across Canada, boost the East Coast refining industry and spur new industrial development along the route. And we would no longer be reliant on a U.S.-based distribution system for moving our own product for domestic consumption.
Of course, taking full advantage of its economic potential will depend on how forward-looking and enterprising our entrepreneurs and corporations are willing to be.
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