Skip to main content

The Globe and Mail

Canadian oil could get an unexpected route to Asian markets

Saint John’s ice-free, deep-water port would allow crude to be loaded onto the largest tankers.

BRIAN ATKINSON/The Globe and Mail

TransCanada Corp.'s proposed Energy East pipeline could give western oil producers back-door access to Asian markets at a reasonable transportation cost if it reaches Saint John.

While politicians have focused on the provision of Canadian crude to eastern refineries, Saint John's ice-free, deep-water port would allow crude to be loaded onto the largest tankers, providing an economical route to India at least, and perhaps China, Bank of Nova Scotia senior economist Patricia Mohr said Tuesday.

"The [west-to-east] pipeline certainly compares favourably to other options for moving crude, especially by rail to the east coast," Ms. Mohr said in an interview. "The line would provide vitally needed new export outlets for Western Canadian oil producers, especially to the U.S. east coast, Europe and, interestingly, to India, which is a growth market."

Story continues below advertisement

TransCanada is expected to announce soon whether it intends to proceed with the pipeline, which would ship up to 850,000 barrels a day to Eastern Canada. Word could come as early as this week – and company executives have sounded bullish on its prospects for bringing western crude not only to Quebec but all the way to Saint John.

In a report Tuesday, Ms. Mohr estimated transportation costs for various routes. She said Alberta-to-Saint-John costs would be $7 (U.S.) a barrel by pipeline, versus $15 a barrel to reach the city's Irving refinery by rail from Western Canada. Pipeline costs to the U.S. Gulf Coast would be comparable to those of Energy East, at $6 to $8 a barrel, while the proposed North Gateway pipeline through B.C. would carry a transportation cost of $3.30 a barrel.

Ports in Quebec are eager to provide export capacity for western producers. Both Montreal and Quebec City currently offload imported crude for refineries in those cities, but that traffic would largely be lost if TransCanada proceeds and Enbridge Inc. wins approval to reverse its Line 9, which currently carries imported crude from Quebec to refineries in Southwestern Ontario.

Quebec City can handle large tankers, but not the ultra-large ones that could dock at Port Saint John. Pipeline access to Saint John would make it commercially viable to ship diluted bitumen to India's west coast, home to a large and complex refining sector led by multinational Reliance Industries.

At this early stage, the TransCanada proposal has so far not run into the stiff political resistance that has plagued the company's proposed Keystone XL pipeline from Alberta to the Gulf Coast or Enbridge's Northern Gateway project, though resistance could grow in Quebec and elsewhere.

Report an error Licensing Options
About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.