Energy East port must be away from belugas, Quebec and Alberta premiers say

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Alberta Premier Jim Prentice came to Quebec City on Tuesday to promote TransCanada Corp.'s Energy East project as a nation-strengthening pipeline whose benefits would stretch far beyond the interests of one single province.

What he got was more proof that the $12-billion project will be a tough sell, even as pieces of the plan begin to unravel.

Quebeckers are skeptical that the province would obtain anything of material value from the proposed pipeline. And for many here, arguments about revenue gains to the federal treasury from having an export outlet for Alberta crude are largely abstract.

It did not help that Mr. Prentice's host, Quebec Premier Philippe Couillard, put the kibosh on a key element of the pipeline's export potential – a marine oil shipping terminal at Cacouna near Rivière du Loup on the southern bank of the St. Lawrence River.

The area is a migration and calving spot for beluga whales.

"It seems very difficult to me to continue to see a petroleum terminal on that site," Mr. Couillard told reporters at a news conference with Mr. Prentice. "Now it's up to the promoter to find alternative sites."

The previous day, the Committee on the Status of Endangered Wildlife in Canada said the beluga population in the St. Lawrence is at greater risk of extinction than it was 10 years ago. The expert committee recommended the belugas be declared endangered with full protection of their habitat.

Calgary-based TransCanada has put on hold all work related to the Cacouna site in response to the recommendation, which is expected to be formalized next week. But it is unclear whether it has a backup plan if Cacouna proves unsuitable.

The company says it invested a lot of time winning support from the town's leaders and residents for the terminal. To start from scratch on another site could be problematic. It could also throw off the economics of the project.

"We are not giving up on Cacouna," TransCanada spokesman Tim Duboyce said. "We need to speak to federal and provincial officials as well about what might be coming next in the event of a formal change in the classification of the beluga and whether or not the project would even be feasible as a result of any changes. Which we don't know."

The Energy East pipeline would carry a maximum of 1.1-million barrels of Alberta oil sands crude across Canada to refineries in Quebec and New Brunswick. About half the volume would be for export, giving Alberta's land-locked oil crucial access to world markets and the higher prices that would command.

Mr. Prentice argues the project would generate wealth and revenue for all Canadians. Mr. Couillard has shown he is sensitive to that line of thinking, telling the Quebec legislature in September that the province's income from equalization payments is largely funded by the West's oil and gas development.

But the Quebec Premier has his own interests to defend and political calculations to make. The province wants to cut its reliance on oil imported on tankers, but it knows some Quebeckers frown on oil sands crude. It wants jobs, but knows the project's main promoters, Alberta and the federal government, suffer from the perception they have no coherent climate policy.

Quebec has set out seven principles to guide its final position on Energy East, including an environmental assessment of the project's footprint in the province.

Mr. Couillard on Tuesday backed away from an earlier suggestion by one of his cabinet ministers that the evaluation would include "upstream" greenhouse gas emissions produced by oil extraction. Quebec will study only the impact on its territory, the Premier said.

TransCanada evaluated eight potential sites for a marine terminal in Quebec, screening for marine navigation conditions, proximity to the mainline pipeline route, and environmental and socio-economic considerations. Three were judged appropriate: Cacouna, East Lévis across the river from Quebec City, and Baies-des-Sables, just north of Mont-Joli.

At East Lévis, the narrow channel in front of the terminal site would limit the size of tankers that could call at the port, the company said. To use the Baies-des-Sables site would require building another 160 kilometres of pipeline to link with the mainline.

"I hope there will be discussions between the proponents and Premier Couillard about the other alternative locations" to Cacouna, Mr. Prentice said. "It would seem to me that the project will be stronger as a piece of nation-building infrastructure if there is a port facility in the province of Quebec."

With a report from Shawn McCarthy