5 Things To Know About Energy East
Energy East is a $12 billion project proposed by TransCanada (TSX: TRP) – the same company behind the Keystone XL oil pipeline and the Eastern Mainline natural gas pipeline project, among others.
The Energy East pipeline would run between Hardisty, Alberta, and Saint John, New Brunswick. Covering 4,600 km, the pipeline would transport 1.1 million barrels of oil per day coming from Alberta. The pipeline would transport both so-called “light oil”, which includes oil from synthetic crude and oil from shale deposits, and “heavy oil”, which is diluted bitumen.
It’s a megaproject that has generated a lot of debate across Canada, and a lot of hope in New Brunswick, where supporters, including the provincial government, believe it will create jobs and opportunities for local businesses.
An undertaking of this scale is a complicated piece of business. Here are five things you need to know about Energy East from a New Brunswick perspective:
1) It Could Mean A Lot for New Brunswick’s Economy
The proposed route of the pipeline includes over 500 kilometers in New Brunswick, a third of which will be on crown land. Saint John-based Irving Oil, operator of Canada’s largest oil refinery, and TransCanada have also formed a joint venture to develop and construct a $300 million marine terminal at Irving Canaport in Saint John. The Energy East pipeline will also offer Irving Oil a broader supply of crude oil for its 300,000-barrel / day refinery.
Proponents of the project say it will create up to 2,300 direct and indirect jobs in the province.
2) It’s a Complex Regulatory Process
In October of 2014 TransCanada filed its formal project application with the National Energy Board of Canada (all 30,000 pages of it), initiating the regulatory review process. Because Energy East is an interprovincial project it falls under federal jurisdiction and must be reviewed by the National Energy Board. For the project as a whole to be approved, TransCanada must obtain approval from the NEB to proceed with a number of the project components, including the purchase of pipeline assets from Canadian Mainline, and the right to convert those assets from a natural gas pipeline to an oil pipeline.
In March the National Energy Board closed the process of Applications to Participate in the upcoming hearing, having received a total of 1,805, including one from the Government of New Brunswick. Participants will have a status of being either an “Intervenor” or a “Commenter.”
According to the NEB, the full list of approved participants will be released in the coming weeks.
Because they expect to be receiving further amendments to the Energy East application from TransCanada in the final quarter of 2015, the NEB can’t yet say when the hearing process will begin. The hearing order will be issued after these amendments have been received and reviewed, along with further information on the public hearing process.
3) It’s An Election Issue
The Energy East pipeline has become an issue in the federal election. NDP leader Thomas Mulcair and Liberal leader Justin Trudeau are hedging, with neither willing to publicly endorse the pipeline. What they have been clear on is their lack of faith in the National Energy Board’s current federal review process.
Green Party Leader Elizabeth May is firmly against Energy East.
Meanwhile Prime Minister Stephen Harper, who supports the project, is spinning his opponents’ ongoing assessment of the project as a calculated move that allows them to change their tone to suit the audience.
4) The Ontario Energy Board Isn’t Convinced
On August 13 the Ontario Energy Board released their report in which they concluded that the safety and environmental risks could outweigh what it termed as “the modest benefits” that Ontario would get from the project. The Ontario provincial government hasn’t yet come out on either side of the project.
In response to the OEB findings, TransCanada pointed to a Conference Board of Canada report that argued that Energy East will add $15 billion to Ontario’s economy, create 4,200 jobs in Ontario during construction and contribute $50 million in property taxes each year to Ontario municipalities.
5) TransCanada Reached An Important Agreement With Distributors
On August 24 TransCanada reached an important agreement with natural gas distributors Gaz Metro, Enbridge Gas and Union Gas that resolved their issues with Energy East and the Eastern Mainline Project. The agreement ensures that Energy East and the Eastern Mainline Project will provide gas consumers in Eastern Canada with sufficient natural gas transmission capacity and reduced natural gas transmission costs.
Terms of the agreement include:
- The distributors’ issues related to both Energy East and the Eastern Mainline Project have been addressed
- TransCanada will size the Eastern Mainline Project to meet all firm requirements including gas transmission contracts resulting from both 2016 and 2017 new capacity open seasons plus approximately 50 MMcf/d of additional capacity
- TransCanada will also ensure a long-term benefit to gas consumers in eastern Ontario and Québec (Eastern Triangle) of at least $100 million through to 2050
With the sharp drop in oil prices and the political manoeuvring flowing from the federal election, there are still obstacles for the Energy East project to overcome.