Ever since the TransCanada Corporation decided not to proceed with the Energy East pipeline, various advocates of the project have renewed the call for its revival. The arguments advanced almost always claim that bringing Alberta bitumen to Saint John means “Canadian oil for Canadians.”
On July 26, 2018 the Telegraph Journal published a significant commentary by Peter McKay calling for the resurrection of the Energy East pipeline. Considering his past role in the federal government and his continuing prominence as a national figure, his views on this issue are important.
While McKay is clear that the main purpose of the pipeline is to export Alberta bitumen, he also repeats the Canadian oil for Canadians argument. He writes about moving “… crude oil from Alberta … to Saint John … where raw product can be refined.” And again, he writes that, “It would boost our energy independence … instead of shipping it in from Saudi Arabia, Algeria and Venezuela.”
The Sustainable Energy Group in Woodstock has been following the information put out about the purpose of the Energy East pipeline since the idea was first advanced. In reviewing this information, it is clear that Mr. McKay, and all those before him who have been repeating the Canadian oil for Canadians argument, are likely in error on this point.
And now, as reported in the February 13th Telegraph Journal, Andrew Scheer, national Conservative leader, is repeating this claim. He is quoted by reporter, John Chilibeck, as saying, “It makes no sense that we have energy reserves in Western Canada and yet Eastern Canada’s being served by oil coming from other markets. … we should be self-sufficient when it comes to energy.” He then goes on to say, “There are thousands of jobs in the energy sector that count on oil coming through for refining, for processing.”
When the Energy East pipeline was proposed, it was accompanied by media talk of a major refinery upgrade at Saint John to process Alberta bitumen, which the present refinery cannot handle. At a certain stage in making their case for the pipeline, the TransCanada Corporation launched a “Canadian Oil for Canadians” media campaign. It was then withdrawn. Media talk about upgrading the Saint John refinery to process bitumen also disappeared.
There is plenty of information online about exporting Alberta bitumen from the Energy East pipeline to refineries elsewhere in the world that can process it into marketable products, but I can now find nothing online supporting the idea that it will be refined in Saint John and become Canadian oil for Canadians.
What can be found online are statements from spokespersons for the refinery in Saint John that explain why the Energy East pipeline would not provide Canadian oil for Canadians. As far back as 2013, refinery manager, Mark Sherman, explained why no definite commitments were being made. Mr. Sherman is quoted as saying; “It’s very difficult to make a commercial case for a coker.” (A “coker” is the refinery upgrade needed to process bitumen.) He goes on to say, “They’re very expensive and we’re a smaller company.” *
Irving Oil President, Ian Whitcomb, speaking about what to do with Alberta bitumen at a Scotiabank Investment Symposium in April 2016, is quoted as saying; “Most of the industry today is taking a wait-and-see attitude.”**
In an interview with the Financial Post editorial board in April of 2016, Mr. Whitcomb makes it quite clear; he is reported as saying that “his refinery would continue to purchase foreign oil even if Energy East goes ahead.” And in a direct quote, he states; “We will add Western crude to our portfolio as the economics dictate, but probably not at the expense of our Saudi barrels.”**
It appears from this statement that even “Western crude” that the Saint John refinery can process is not likely to be used as long as Saudi crude is cheaper. And as long as the Saudis are pumping oil, their barrels will likely have a cost advantage over other sources of supply. Processing Alberta’s bitumen is not even in the picture.
There is apparently no economic case for a refinery upgrade to process bitumen in Saint John, and no commitment to make such an upgrade seems in prospect. It’s possible intentions have changed at the Saint John refinery since the 2013 and 2016 statements, but if so no public announcement has been made. Until we hear otherwise, it’s misleading to include “Canadian oil for Canadians” in any discussion of an Energy East pipeline.
References
*Mike Sherman quote:
https://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/when-oil-meets-water-the-final-stop-for-the-energy-east-piperline/article14057475/
**Ian Whitcomb quote:
https://business.financialpost.com/commodities/energy/irving-oils-president-says-it-would-keep-saudi-imports-even-if-energy-east-goes-ahead
Keith Helmuth is member of the Woodstock Sustainable Energy Group
February 15, 2019