IN THE NEWS ~ Politicians hail new markets, revenues for province, Canada

Support strong for project but divisions remain

James Wood And Reid Southwick, Calgary Herald, News, Page A3.

It's being hailed as a "historic" project that will link the country together, but a planned $12-billion oilsands pipeline set off immediate divisions as opponents vowed to stop the energy development.

Calgary-based TransCanada Corp. announced Thursday it would go ahead with its Energy East project, building upon the company's existing pipeline system to take western Canadian crude as far east as Saint John, N.B., while passing through Montreal and Quebec City.

The project starts with a high level of political support and the Alberta government expressed optimism the line will win public backing as it moves through regulatory hurdles.

"This pipeline is 70 per cent in the ground today," Finance Minister Doug Horner told reporters in Edmonton. "This benefits all Canadians. It doesn't just benefit Albertans."

But other oilsands pipeline plans, such as Enbridge's proposed Northern Gateway development to the British Columbia coast and Trans-Canada's Keystone XL project to the U.S. Gulf Coast, have faced staunch opposition from environmental groups and local interests.

TransCanada CEO Russ Girling said the announcement was a "historic" day for both his company and Canada, comparing Energy East to legacy projects such as the Canadian Pacific Railway and the Trans-Canada Highway.

But he acknowledged "there will always be those that are opposed to a project like this for one reason or another."

"What we need to do is sit down with folks that are opposed for those kinds of reasons and explain to them, at least from our perspective, why we think it's beneficial to economic development and job creation and long-term prosperity for this country," he said in Calgary.

Girling said Energy East would fill a growing appetite among eastern Canadian refineries for less expensive and more reliable western crude, rather than importing more than 700,000 barrels a day from overseas sources.

At the same time, he said oil producers would secure access to overseas markets through marine terminals in Quebec and New Brunswick.

Energy East would involve converting a portion of TransCanada's underused natural gas main line to ship oil 3,000 kilometres from Alberta to its terminus near the Quebec-Vermont border.

Some 1,400 kilometres of new pipe will be built to Saint John, where crude can both feed Irving Oil's massive refinery as well as be shipped off shore. In New Brunswick, Irving announced Thursday it planned to build a $300-million marine terminal to handle the increase.

However, organizations such as Greenpeace, the Sierra Club and the Council of Canadians immediately lined up to oppose Energy East. They maintain there are safety concerns around converting natural gas pipelines and major environmental problems associated with pipeline construction, as well as increased carbon emissions from expanding oilsands production.

Keith Stewart of Greenpeace said there has "been a much more organized political push" for the eastern pipeline, but noted there was little initial concern raised about Northern Gateway, only to see that project ultimately shunned by B.C.'s two main political parties.

"Most people in Quebec haven't even thought of this yet," he said from Toronto.

Premier Alison Redford - who in a statement called Energy East a "nation-building" exercise - and Quebec Premier Pauline Marois agreed last year to create a working group on resource issues, including pipelines. Marois said last week her province would have to thoroughly examine any pipeline proposal before signing off on the project.

However, the pipeline plan has the enthusiastic support of New Brunswick Premier David Alward, who on Thursday called it "a gamechanger."

"It will change the direction of our province, our economy, the fate of many of our citizens, and it will help create a stronger more prosperous future for all of us," he said.

The federal Conservative government, which has made increasing energy development a key component of its agenda, also supports the East Coast line.

"Initiatives like this could allow Canadian refineries to process more potentially lower-priced Canadian oil, enhancing Canada's energy security and making our country less reliant on foreign oil," Natural Resources Minister Joe Oliver said in a statement.

The federal NDP, which opposes Gateway and Keystone, also backs the concept of a west-to-east pipeline.

NDP natural resources critic Peter Julian believes there is greater public support for the idea because it's seen as a "wise use of resources that ensures the maximum benefit to Canada and Canada's regions."

But he cautioned that the Conservative government's approach, which he characterized as attempting to ram projects such as Northern Gateway through by undermining the environmental review process, won't fly. For Alberta, Energy East is seen as a chance to gain access to new markets, such as India.

Horner said its impact would be "huge" because the pipeline will reduce the price differential between Alberta crude and world oil prices and help guarantee ramped-up production from the oilsands. "The investment in infrastructure in our province is going to provide the revenue that we need to build the province," said Horner.

"This is a significant piece to our royalties, this is a significant piece to the job creation in the province and it's a significant piece to the investment across the province." Alberta has already agreed to purchase firm capacity of up to 100,000 barrels per day for 20 years on the Energy East line.

But the Alberta Federation of Labour, while supporting an eastern pipeline in principle, said the project must be built around refining crude in Canada, not exporting raw bitumen.

"Without strong leadership from the province and the federal government, this will be another missed opportunity," said AFL president Gil McGowan.

WITH FILES FROM THE CANADIAN PRESS JWOOD@CALGARYHERALD.COM

Energy East pipeline stats

Route: The pipeline will cross about 4,400 kilometres from Hardistry, Alta., with receipt points in Saskatchewan to delivery points in Montreal, Levis, Que., and Saint John, N.B.

Transformation: One of six existing lines on TransCanada's historic Canadian Mainline will be converted from natural gas to crude oil service over 3,000 kilometres. There will be construction of about 1,400 kilometres of new pipeline in all provinces along the route. The terminals at Levis and Saint John will include facilities for marine tanker loading.

Cost: About $12 billion.

Regulatory: TransCanada said it would seek regulatory approvals from the National Energy Board starting in 2014.

In-service: Late-2017 to Quebec; 2018 to New Brunswick.

Product: Capacity is 1.1 million barrels a day, up from

TransCanada's previous estimate of 850,000 bpd, primarily light oil or synthetic crude upgraded from bitumen. Producers have already signed up to move 900,000 bpd of oil. The Alberta government will move 100,000 bpd for 20 years from upgraded bitumen that it is paid in lieu of receiving royalties on production.

Refineries: Suncor (140,000 bpd) at Montreal, Ultramar/Valero (265,000 bpd) at Levis, Que., and Irving (300,000 bpd) in Saint John. Eastern Canadian refineries currently import about 700,000 bpd, primarily from Saudi Arabia, Nigeria and Libya.

Economics: Scotiabank puts the cost to send oil from Alberta to Quebec at $6 per barrel and an additional $7 to Saint John. That compares with $5 from Alberta to Vancouver via the Trans Mountain pipeline or $6 to $8 from Alberta to the U.S. Gulf Coast through a variety of pipelines. ILLUS: Transcanada Corp. / The TransCanada pipeline will build on the company's existing system to take western Canadian crude east to Saint John, N.B., while passing through Montreal and Quebec City. TransCanada Corp.; Source: Transcanada Corp. / ; Andrew Vaughan, The Canadian Press, Files / Premier Alison Redford and New Brunswick Premier David Alward tour the Irving Canaport Marine Terminal in Saint John, N.B., in June.;