Calgary (Platts)--23Nov2012/536 pm EST/2236 GMT

The Alberta government has taken the first step toward finding a footing for its growing bitumen production in eastern Canada, with the establishment of a working group with the Quebec provincial government, an Alberta government official said Friday.

The group will focus on issues related to technology and environment in the development and transport of natural resources. Details on the group's composition and specific tasks would be unveiled in early 2013, Jay O'Neill, a spokesman for the Alberta government, said from Edmonton.

The establishment of a working group came after Alberta's Premier Alison Redford late Thursday met her Quebec counterpart, Pauline Marois, in Halifax on the sidelines of the annual Council of Confederation meeting of the premiers of all Canadian provinces and territories.

"This was the first time for me to sit down with Premier Marois and we have an agreement to build bridges between the two provinces on the issue of energy, economic growth and jobs," Redford told reporters during a webcast conference call late Thursday.

"We have not concluded what the synergies could be over the long term. But [in the shorter-term], but there is a very good opportunity to cooperate and the working group will immediately begin sharing knowledge and expertise on resources development, as well as key issues around oil pipelines."

Brushing aside a specific query if talks were held to ship Alberta crude to refineries in Montreal, Redford said the working group is likely to be the first move toward that path.

The setting up of a working group has raised some eyebrows in the industry, particularly after a November 14 statement by Quebec's Environment Minister, Daniel Breton, who said the province would block a pipeline to transport Alberta crude to Quebec if it is found to pose a serious environmental hazard.

"They cannot go over our heads because it is on our territory and we have environmental reasons to make sure everything goes well," he said in Quebec City. "If it does not go well, we cannot go ahead. But if it goes well, we will go ahead. However, we will need to have all the information."

Sourcing crude from Alberta could result in a lower import bill for Quebec's refineries, which are at present securing feedstock supplies from more expensive international markets, Redford said.

"One thing provincial governments in Canada are thinking about now is to work together on opportunity opportunities," Redford said. "A working group will demonstrate that natural resources development can create jobs and sour economic growth," she said.

Oil sands will still continue to be the major business in 2013 in western Canada despite emerging tight oil plays in Saskatchewan and LNG in British Columbia, but there is a risk of slow down unless the path to a new market is opened up, said Chris Mackie, vice-president for business development with Baker Hughes Canada.

"An oil pipeline to Eastern Canada could change the face of the industry as it will allow producers to cut direct deals with refinery operators," he said.

At present, refineries in Ontario and Quebec import some 850,000 b/d of crude oil primarily from the Middle East and Africa. But later this year Enbridge is due to file an application to federal Canadian regulator National Energy Board to reverse its 240,000 b/d Line 9B from Westover, Ontario, to Montreal to serve refineries in Quebec, while TransCanada will soon start gauging shipper interest to convert its underutilized natural gas main line that runs east to transport crude.

--Ashok Dutta, newsdesk@platts.com

--Edited by John Kingston, john_kingston@platts.com