New Brunswick an ally in getting landlocked Alberta crude to tidewater

CALGARY – Alberta Premier Alison Redford has found an ally in her New Brunswick counterpart when it comes to getting landlocked oilsands crude to new markets.

New Brunswick Premier David Alward said Tuesday he’d gladly welcome a pipeline carrying oilsands bitumen to the 300,000-barrel-per-day Irving Oil refinery in Saint John — the largest in Canada — with the possibility of also exporting some of that crude by tanker.

“We’re open for business,” Alward said at a joint news conference with Redford.

“We believe the Saint John refinery can act as an anchor, but certainly allowing Alberta to be able to access the world and diversify Alberta’s markets, that’s great for Alberta. It’s great for the producers, most importantly, it’s great for every Canadian,” he said.

“We have a tremendous resource that right now it’s clear we’re not getting the value that we should be getting and by diversifying the markets, that will allow that to take place.”

While pipelines have been politically contentious in many parts of the country, Alward said all three main political parties in New Brunswick are behind the eastern pipeline idea.

Alward, whose son works as a pipefitter in the oilsands, spent Monday touring both mining and steam-driven developments around Fort McMurray, Alta., and meeting with top industry executives.

He said he was impressed by both the scale of the projects and the steps taken to reduce their environmental footprint.

“For me it was incredibly moving,” he said.

The Alberta government has warned of a $6-billion revenue shortfall this year because oilsands crude has been fetching a significantly lower price than U.S. and global benchmarks.

At the heart of the problem is a lack of pipeline capacity to get that crude to tidewater, enabling it to access more lucrative markets by tanker and command a better price.

As it stands, virtually all of Alberta’s energy exports go to the United States, which is becoming a less reliable customer, Redford said in a speech earlier Tuesday. At the same time, 40 per cent of Canada currently imports crude from overseas instead of getting it from domestic producers.

There are currently two pipeline proposals in the works to connect oilsands crude to eastern markets, though neither has said definitively they would stretch all the way to Saint John.

Redford said both are commercially viable and not in need of government funding.

Enbridge Inc. (TSX:ENB) plans to reverse the flow of an existing pipeline, Line 9, between southern Ontario and Montreal, to flow from west to east. That project is currently working its way through the regulatory process.

TransCanada Corp. (TSX:TRP) has said it’s technically and economically feasible for it to convert its part-empty natural gas mainline to oil service. That, too, goes as far as Quebec. TransCanada is in the process of gauging shipper interest in that line.

Environmental groups in Ontario and Quebec are concerned about oilsands bitumen, which they deem to be dirtier than other types of crude, being shipped through that part of the country.

Both Enbridge and TransCanada have said they envision light oil, like that produced in Saskatchewan and North Dakota, being shipped east, since refineries there are configured to handle that type of oil.

However, they have said it’s possible for heavier oilsands crude to flow east eventually.

On Tuesday, Redford said: “It’s bitumen. We’re talking about bitumen.”

The tone Tuesday was markedly different from an October meeting between Redford and B.C. Premier Christy Clark. Clark described that interaction as “frosty.”

Clark has been less-than-enthusiastic when it comes to shipping oilsands crude across her province to the West Coast for export, imposing five conditions relating to environmental protection, First Nations consultation and sharing of economic benefits.

Redford said her professed excitement over west-to-east pipeline proposals is not an indication that optimism is waning for West Coast projects such as Enbridge’s Northern Gateway or Kinder Morgan’s Trans Mountain expansion, which face vehement opposition within B.C.

“For us, it’s not an either-or proposition,” said Redford.

“We will continue to try to have constructive dialogue with respect to everything.”