TransCanada to go ahead with $12-bn Energy East pipeline

Canada's largest pipeline operator TransCanada Corp said yesterday that the company will proceed with the construction of its $12-billion crude oil pipeline project from Western Canada to refineries and export terminals in the east.

The proposed 4,400-km Energy East pipeline will have the capacity to carry 1.1 million barrels of crude oil per day (b/d) from oil-rich provinces of Alberta and Saskatchewan to refineries in Quebec and New Brunswick and to marine facilities for export to energy-hungry Asian markets.

The decision on the project is based on binding, long-term contracts received from producers and refineries for approximately 900,000 b/d of oil, TransCanada said in release.

TransCanada's president and chief executive officer Russ Girling said, ''We are very pleased with the outcome of the open season for the Energy East pipeline held earlier this year and are excited to move forward with a major project that will bring many benefits across Canada.''

''This is an historic opportunity to connect the oil resources of western Canada to the consumers of eastern Canada, creating jobs, tax revenue and energy security for all Canadians for decades to come.'' Girling further stated.

The proposed pipeline is expected to provide a stable and reliable alternative to refineries in the east by securing access to cheaper Western Canadian crude oil compared to more expensive imported oil. Eastern Canada currently imports around 700,000 b/d of crude.

The mammoth project involves conversion of an existing 3,000-km natural gas pipeline to an oil pipeline as well as construction of 1,400 km of new pipelines in Alberta, Saskatchewan, Manitoba, Eastern Ontario, Quebec and New Brunswick to link up with the converted pipeline.

It will commence from a new tank terminal in Hardisty, Alberta with three more terminals along its route: one in Saskatchewan, one in Quebec City and another in the Saint John, New Brunswick.

The pipeline will terminate at Canaport in Saint John where TransCanada and energy producer Irving Oil have formed a joint venture to build, own and operate a new deep water marine terminal. The ice-fee port can handle the world's largest oil tankers, which substantially reduces shipping costs on long-haul routes to Asia.

The new pipeline is expected to become operational by 2018.

Calgary-based TransCanada is a major North American energy company operating oil and gas pipelines, power plants and other related facilities. The company's assets include a gas pipeline network extending more than 68,500 km, 400 billion cubic feet gas storage facilities and interests in over 11,800 megawatts of power generation in Canada and the US.

Its much-hyped Keystone XL LNG pipeline project connecting western Canadian producers to the US Gulf Coast has met stiff opposition from environmentalists and politicians.

''Energy East is one solution for transporting crude oil but the industry also requires additional pipelines such as Keystone XL to transport growing supplies of Canadian and US crude oil to existing North American markets,'' Girling said.

TransCanada said that it will proceed with the necessary regulatory applications in early 2014. The company said that it has already commenced collecting field data and engaging with aboriginal and stakeholder groups on the project.