In recent months, I鈥檝e seen a heartwarming display of support for the oilpatch boil over and start to make some noise. One of the common phrases is 鈥淏uild the pipeline.鈥� Another is 鈥淲e support the pipeline.鈥�
But which pipeline? Most people really don鈥檛 know. So here鈥檚 a primer for you.
First of all, it鈥檚 not one pipeline. There are actually five export oil pipelines at issue. One鈥檚 mostly built, one is in purgatory, two have been cancelled (but should be reborn and built) and the last, we own, but haven鈥檛 yet built.
The first is the Enbridge Line 3 Replacement. This project is pretty much all done in Canada, with some of the last work in Saskatchewan happening south of Moosomin this past winter. You would think it鈥檚 ready to put into service, but that鈥檚 not the case. Opposition in Minnesota has meant that permits to build that portion won鈥檛 be issued until this November, pushing back the project a full year. It was supposed to be in service in later 2019, and now that鈥檚 going to be later 2020, at best.
Line 3 Replacement replaces the one problematic pipeline in the Enbridge mainline system that has required the most maintenance.
The next one is the Keystone XL pipeline. It was kyboshed by former U.S. president Barrack Obama, but revived by President Donald Trump the same week he took office. It looked like it was finally going to start construction last year when a Montana court ordered it be reviewed, again, on an environmental basis. As of mid-March, TransCanada was expecting construction to be delayed yet another year, as it would likely lose this year鈥檚 construction season.
Some people have said no Saskatchewan oil would flow on Keystone XL. I strongly disagree. Most of the production from northwest Saskatchewan that is not refined in Lloydminster ends up being pipelined by the Husky mainline to Hardisty, Alta., Canada鈥檚 oil hub.
That鈥檚 where the Enbridge mainline and Keystone pipeline originate. There is no reason that I know of that oil from a thermal plant at Edam, piped to Lloydminster, then Hardisty, could not find its way into Keystone XL.
Both of these pipelines would allow Canada to ship more oil to the U.S. That鈥檚 good, but it does not allow us to ship to new markets. Anything going in those new lines would still be at the mercy of American, and only American, oil markets.
The next two, the dead ones, are dead precisely because of the policies of the Justin Trudeau-led federal Liberal government.
One of those pipelines is Energy East. For Saskatchewan, this pipeline is/was the most important. Right now, every drop of oil produced in southeast Saskatchewan that does not go by rail is shipped by TEML to the Enbridge Mainline terminal at Cromer, Man., via the 16-inch Westspur line. Very little, if any, goes by rail these days.
Energy East included a planned 71-kilometre, 16-inch pipeline called the Cromer Lateral that would have allowed as much as 100 per cent of southeast Saskatchewan鈥檚 oil to be shipped on Energy East instead of the Enbridge Mainline. That meant, instead of being locked into shipping that oil into the American Midwest or southern Ontario, Saskatchewan and Manitoba producers could have used the Cromer Lateral and Energy East to sell their oil to refineries in Montreal, Quebec City or Saint John, N.B.
The Irving Refinery at Saint John is the largest refinery in Canada, and it currently accepts its oil principally by tanker, but can also receive it by rail. Those tankers come from places like Saudi Arabia, Nigeria, Azerbaijan and the United States.
Energy East would have started at Hardisty. Its capacity would have been 1.1 million barrels per day. Thus, most of its oil would have come from Alberta. But some of it could have come from northwest Saskatchewan, for the same reasons I explained for Keystone XL.
In addition to supplying Montreal, Quebec and Saint John refineries, displacing foreign oil, Energy East would have allowed us to export oil, on our own tankers, to foreign markets like Europe. Energy East was supposed to have been in service by 2018. It鈥檚 2019.
All the arguments about Northern Gateway being in service by now, and the impact on differentials, also apply to Energy East. If Energy East had been working by now, Western Canada would not have lost billions of dollars this last winter. Those are billions we will never get back.
One more thing on Energy East 鈥� it would have made Canada energy independent. If the rest of the world decided to not sell us oil, we would be just fine. That is not the case now. Without foreign oil, Eastern Canada would be walking.
Energy East was killed when the Trudeau government 鈥渕oved the goalposts鈥� on the environmental assessment for the project 鈥� adding greenhouse gas emissions for the oil it would have carried into consideration. At that point, TransCanada threw its hands up and gave up, after spending a billion dollars to get to this point. Bill C-68 will change the way pipelines have been assessed for generations, a system that, up until the last decade, worked just fine, thank you.
Next week: Northern Gateway, Trans Mountain Expansion, and why this is so important.
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Brian Zinchuk is editor of Pipeline News. He can be reached at [email protected].
