TransCanada eyes moving western crudes east via converted gas pipeline
Vancouver (Platts)--14Nov2012/123 pm EST/1823 GMT
Moving Western Canadian and Bakken crudes to eastern North American
would "significantly benefit" refineries in that region and pose less of an
environmental challenge than plans to export crude from British Columbia to
Asia, a TransCanada executive said Wednesday.
That advantage would be reinforced if converting a portion of
TransCanada's Mainline natural gas system reduced the movement of tankers on
the St. Lawrence Seaway, Alex Pourbaix, the company's president of energy and
oil pipelines, told a webcast investor conference in Toronto.
Pourbaix said that in testing its conversion plan, TransCanada has heard
from stakeholders that "right now the East Coast (of Canada and the United
States) has the highest refined product prices on the continent."
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"If we're importing higher-priced crude from Saudi Arabia, Nigeria or
Libya, it doesn't take a great leap of logic to appreciate" the economic
benefits of shipping 500,000-1 million b/d of heavy crude from the Alberta
oil sands and light sweet crude from the Bakken to eastern refineries, he
Although TransCanada has yet to decide which of its 10 gas pipelines
would be affected by a conversion, it expects regulatory approval and
construction would take two years each, for a completion date of 2017,
assuming corporate sanctioning in 2013.
The Calgary-based company has put a preliminary pricetag of C$5.2
billion ($5.19 billion) on serving refineries in Montreal and Quebec City.
Asked why that project would encounter less environmental and First
Nations resistance than the proposals by Enbridge and Kinder Morgan to build
pipelines from the Alberta oil sands across British Columbia to tanker ports
on Canada's Pacific Coast, Pourbaix said the main advantage is that 80% of
the gas pipeline is already in the ground, while rights-of-way and
relationships with landowners have been established for the other 20%.
"Unlike British Columbia, there is a pretty significant and long-term
tradition of moving oil (in eastern North America)," he said. "For 50 years,
tanker traffic has been moving in and out of the Irving Oil refinery in Saint
John, New Brunswick, and every day tankers move up and down the St. Lawrence
"If we're able to extend the Mainline towards the East Coast that would
actually reduce tanker traffic, which everybody sees as more risky than
pipelines," he added.
Pourbaix also said East Coast refiners are geared to run light sweet
crudes which suits the Mainline conversion, while Gulf Coast refiners have
made "very significant investments" to run heavy crudes and are unlikely to
switch to "given that they are notoriously cautious" about making any
CEO Russ Girling said TransCanada derives comfort from market support
for the Keystone system, including the XL pipeline which has contracts
averaging 18 years for 500,000 b/d of its design capacity of 830,000 b/d.
"We haven't seen any wavering on those contracts as new crude supplies
have developed. We've actually seen increasing demand for the (XL) pipeline
and a line up of shippers who wants to get on if anybody wants to give up
capacity," he said.
"When the market speaks with large balance-sheet commitments to
long-term contracts that is evidence the market is saying the best bet is to
connect supply to refinery," Girling said.
--Gary Park, firstname.lastname@example.org
--Edited by Kevin Saville, email@example.com