* Quebec, Alberta to study benefits of getting Western crude
* New Brunswick, Manitoba enthusiastic
* Landlocked Western crude selling at discount
* Eastern Canada linked to pricier North Sea Brent
By Richard Woodbury
HALIFAX, Nova Scotia, Nov 23 (Reuters) – Alberta, Canada’s
oil-producing heartland, and Quebec’s separatist government will
study the benefits of shipping the western province’s crude to
refineries in Quebec, a shift that could help cut the industry’s
dependence on the U.S. market.
The development is a shift from previous comments by Quebec
officials that had cast doubt on the energy industry’s quickly
evolving plans to get oil sands-derived crude to Eastern
Canadian refineries, which now handle mostly imported oil that
arrives at a much higher price.
Alberta Premier Alison Redford and her Quebec counterpart,
Pauline Marois, agreed on Thursday to set up a working party to
look at the issue ahead of a Marois visit to Alberta next year.
“It’s exactly the evaluation we will do, to see if it’s
advantageous for both sides to have Albertan oil refined in
Quebec,” Marois said on Thursday evening on the sidelines of a
meeting of Canada’s provincial premiers.
Redford, along with New Brunswick Premier David Alward, want
to send Albertan crude to the Irving Oil Ltd refinery at Saint
John, New Brunswick, which would mean using pipelines through
Quebec. The refinery, Canada’s largest, has capacity of 300,000
barrels a day (bpd).
With Albertan crude production expanding rapidly, Redford
has actively pushed for a national energy strategy to get
Alberta oil to market through pipelines or other means.
Neighboring British Columbia has resisted a plan by Enbridge
Inc for the C$6 billion ($6 billion) Northern Gateway
pipe to the Pacific Coast, for export to Asia, and U.S.
President Barack Obama has, temporarily at least, blocked
TransCanada Corp’s $5.3 billion Keystone XL pipeline to
Texas refineries.
Greg Selinger, premier of the Prairie province of Manitoba,
through which some crude already flows, praised the idea as a
way to build energy security in Canada.
“Providing energy into the Atlantic and Eastern provinces I
think would be very positive for the country, both from a
private investment point of view in the East, but also to
provide further market opportunities for Canadian producers in
the West,” he told reporters on Friday in Halifax.
“So I think it’s a good story for all of us if we do it
properly.”
CHEAP IN WEST, PRICEY IN EAST
Current pipelines routes oil from landlocked Alberta south
rather than east. Eastern Canadian refineries pay prices tied to
more expensive North Sea Brent, while Albertan producers,
reliant on the U.S. market, sell their crude at a deep discount.
Redford said changing the routing for the oil might allow
Quebec to get cheaper oil than its current imports.
Marois’ newly elected separatist and left-leaning government
had initially signaled resistance to the idea of taking oil from
the Alberta tar sands. But Marois pointed out the potential
employment benefits and noted Quebec’s petrochemical industry.
“If we continue down this path, it’s important that each
side comes out a winner,” she said.
Quebec is home to two big refineries, Suncor Energy Inc’s
plant in Montreal and Valero Energy Corp’s
facility in Quebec City, with capacities of 130,000 bpd and
265,000 bpd respectively.
Enbridge Inc plans to file an application with
Canada’s National Energy Board later this year for a project
that would reverse the flow direction of its Line 9 so crude
could flow to Montreal from Sarnia, Ontario, north of Detroit.
Enbridge would also increase the capacity of the pipeline to
300,000 bpd from 240,000, using what is known as a drag reducing
agent, where a polymer is injected into the crude to cut
friction.
That would mean the company would require little new
construction on the pipeline, which was built during the energy
crises of the 1970s. Originally, it shipped Western Canadian
crude to Quebec.
The direction of flow was changed in the 1990s, allowing
imported crude to flow to several refineries in southern Ontario
and the U.S. Midwest. The premium price of such oil has rendered
that uneconomic and the line has been idle.
TransCanada Corp has also proposed shipping Western Canadian
crude to Quebec and beyond by converting one of the pipelines on
its cross-Canada natural gas mainline to oil transport.
Last month, Chief Executive Russ Girling said the company
would decide next year whether to go ahead with a project to
carry up to one million barrels a day.
