Quebec and Alberta premiers agree to consider shipping oil to Eastern Canada

HALIFAX – The premiers of Alberta and Quebec have agreed to consider shipping oil to Eastern Canada after a similar proposal stoked tensions in the West.

Alison Redford and Pauline Marois left a meeting in a downtown Halifax hotel side-by-side late Thursday, announcing they will strike working groups to explore the possible economic benefits and environmental effects of the project.

“We have agreed that there is some very good opportunity for us to exchange technical information around economic development, the environment and the technical development of resources so that we can have an informed conversation,” Redford said.

“I think what is really important today is that we have acknowledged that there might be opportunity. We are not concluding what those will be, but we are sharing some very important information.”

Marois said she will travel to Alberta to discuss the development further, likely after Christmas.

“Before we go and decide on these issues, I think we have the necessity to split some information, some expertise, about economic, technical issues and environmental issues,” she said.

Their overtures come after Redford’s struggles with pursuing the development of a pipeline in British Columbia, where Premier Christy Clark has fiercely opposed the project unless her provinces reaps greater economic benefits.

For the Parti Quebecois government, whose raison d’etre is to remove Quebec from Canada, the West-East pipeline could be yet another example of how Marois appears to have shed the party’s more activist positions towards a more market-friendly stance.

The latest plan would reverse the flow of an existing pipeline to bring Alberta oil to customers in the eastern half of Canada, and could result in slightly lower gasoline prices in that region. The project is being reviewed by the National Energy Board.

The idea has sparked the interest of Premier Robert Ghiz.

“If we’re producing this oil to begin with, we should be using it in our own country if at all possible,” Ghiz said shortly after arriving in Halifax to meet with other premiers to discuss the economy.

“We just want to talk. We’re not saying we’re going to see this happen overnight.”

There are actually two current proposals to ship western crude eastward.

One by Enbridge Inc. (TSX:ENB) — the same company behind the controversial Northern Gateway pipeline connecting oilsands crude to Asia via the northern B.C. coast — involves expanding capacity on some pipes in the Great Lakes region and reversing the flow of another between Montreal and Sarnia, Ont.

Rival pipeline firm TransCanada Corp. (TSX:TRP) has a plan to convert some of its part-empty natural gas mainline to oil service, which it had deemed to be both technically and economically feasible.

TransCanada, which also aims to increase oilsands shipments to the U.S. through its contentious Keystone XL pipeline, intends to formally gauge customer interest in its eastbound pipeline proposal in the new year.

North American crude has been fetching a lower price than international varieties because it lacks adequate access to coastal waters. Burgeoning supplies from the oilsands and U.S. fields haven’t been able to find their way to the most lucrative markets.

Most refineries in the eastern part of the continent are configured to handle light, sweet crude imported from Saudi Arabia and other parts of the world, rather than the tarry, heavy stuff produced in the oilsands.

Some fear the prospect of oilsands crude — derided as “dirty oil” in some quarters — eventually filling those eastbound pipes.

“There are activists who are worried about dirty oil and not too many people wonder, ‘What oil are you using?’ Is the oil from Venezuela and Nigeria and Iraq cleaner than Alberta oil? Are they doing better in emissions?” said Bob Schulz, a professor at the University of Calgary’s Haskayne School of Business. “Probably not.”

Another observer said the environmental questions are legitimate — especially with respect to an older pipeline.

“We are seeing more accidents, more little leaks here and there, some big spills that are much more damaging and very, very expensive,” said Warren Mabee, of the Institute for Energy and Environmental Policy at Queen’s University. “So there’s an issue with using old pipes.”

He said he would expect that when companies seek to use old pipes, they would do a fair bit to reinvest and revitalize the infrastructure.




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