TransCanada CEO Russ Girling (second from left) announces the new Energy East pipeline during a news conference in Calgary.TODD KOROL/Reuters
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It likely seemed a no-brainer for Prime Minister Stephen Harper to voice his enthusiasm for a proposed oil pipeline that would bring Alberta crude to eastern Canadian refiners and ports.
Even New Democratic Party Leader Thomas Mulcair has voiced support for a project that would bring Canadian oil to Canadian consumers.
But the devilish details of TransCanada Corp.'s Energy East proposal may cause more headaches for the Prime Minister who is already mired in messy pipeline politics in the United States and in British Columbia.
In welcoming the announcement of the Energy East project earlier this month, Natural Resources Minister Joe Oliver echoed TransCanada's description of a project that would convert portions of "under-utilized" gas pipeline to carry crude oil.
But the Conservatives' touting of the west-to-east oil pipeline puts them potentially at odds with industries and municipal utilities in Ontario and Quebec that still depend on the natural gas line for service. The Energy East project is a key piece in the growing battle between TransCanada and its customers and competitors in Ontario and Quebec – one that has powerful regional and interprovincial overtones.
The gas-to-oil conversion is strongly backed by western oil producers who are looking for new markets for their crude, and hence by Alberta Premier Alison Redford. It is welcomed by Irving Oil as a new source of crude for its refinery in Saint John and for a new export terminal at the city's port, and hence New Brunswick Premier David Alward has lauded the project as a "nation builder."
Neither Mr. Harper, nor the two premiers, appear too concerned about looming opposition from environmental groups, or wariness from First Nations along the route, though they've promised a rigorous regulatory review.
Environmentalists have succeeded in politicizing and delaying TransCanada's proposed Keystone XL pipeline in the U.S., and have worked with First Nations to mount formidable opposition to Enbridge Inc.'s Northern Gateway crude pipeline in British Columbia. But Ottawa has streamlined the regulatory approval process and given cabinet the final say over pipeline projects – so should the Harper government deem Energy East to be in the national interest, it will get the green light.
But to the list of usual suspects in the pipeline debate, the Energy East plan has raised concerns among TransCanada's customers in Ontario and Quebec, who reject the claim that the gas pipeline – known as the mainline – is under-utilized, at least in their service area.
The problem for TransCanada is that the gas sales from western Canada to eastern markets have dropped precipitously, so much of the line from Alberta to northern Ontario has excess capacity. But the system is also used to move growing volumes of gas imported from the U.S. through southwestern Ontario through the province and into Quebec, and is a critical piece of energy infrastructure for industrial users and municipal utilities.
Quebec's GazMetro has already raised its concerns with Premier Pauline Marois, according to a report from The Globe and Mail's Sophie Cousineau. And the Parti Québécois government will be hard-pressed to support an oil pipeline through its province that is constructed at the expense of its own industry.
In Ontario, Premier Kathleen Wynne has noted that provinces must co-operate to move Canadian energy resources through their jurisdictions, but provincially-based utilities – as well as some industry analysts – warn the province could be left as a high-cost gas market if critical pipeline capacity is taken out of service. And Ontario is increasingly relying on gas-fired power to serve its electricity needs.
Mr. Harper and Mr. Oliver will doubtless want to leave it to the regulators like the National Energy Board to sort out the competing interests. But they may have to tone down their enthusiasm for Energy East, lest they be seen to favour the western oil industry over central Canadian industrial interests.
Shawn McCarthy covers energy in the Ottawa bureau.