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Energy East ‘risky,’ offers few economic benefits: Montreal's mayor

Montreal Mayor Denis Coderre is shown in his office on Jan. 9, 2014.

Christinne Muschi/The Globe and Mail

Montreal Mayor Denis Coderre is expressing reservations about the two oil pipeline projects that will cut across Quebec, saying TransCanada Corp.'s Energy East project in particular appears to offer little local economic benefit for the risk.

"We're for economic development but this can't just be a passing zone through Quebec so it's shipped off to other countries," Mr. Coderre told reporters at a news conference Thursday morning.

The mayor, who's also president of the regional Communauté Métropolitaine de Montréal government, joined the Union of Quebec Municipalities in asking the National Energy Board (NEB) to suspend its study of Energy East.

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The comments mark only the latest challenge for the controversial pipeline projects as local interests flex their power against a pan-Canadian vision of economic development. Proponents of both projects argue their pipelines will enhance Canada's energy security, even as mayors and premiers wonder what's in it for their regions.

In an open letter published in Le Journal de Montréal, Mr. Coderre notes that the 82 municipalities that make up Montreal's regional government are backing Enbridge Inc.'s Line 9 pipeline project. Local lawmakers recognize the project could benefit eastern Montreal's refineries by providing more secure and lower-cost supply, he said.

Still, the mayor said outstanding environmental and safety questions about the Enbridge project remain. And he said the company has yet to respond to those in sufficient detail.

Enbridge won approval from the NEB to reverse the flow of crude in its Line 9 pipeline earlier this year as long as it meets 30 conditions related to safety and other issues. The $110-million project will transport western Canadian and North Dakota oil eastward.

Mr. Coderre was more blunt about TransCanada's Energy East proposal.

He said the current project as presented lacks proper impact studies, that the techniques the company plans to use to cross bodies of water "appear to us to be risky" and that the locations of shut-off safety valves haven't been identified. And he expressed serious doubts about the potential spinoffs for the Montreal region.

"Tell me what kind of benefits there are," the mayor challenged the company. "Because so far, according to our fiscal specialists and economists in Montreal, the benefits are very minimal."

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As part of its project application to the NEB, Calgary-based TransCanada produced an analysis of the projected economic benefits of Energy East for various regions in Canada. The report, prepared by the Conference Board of Canada, estimates Quebec will see a $5.8-billion boost to its gross domestic product and secure a significant chunk of employment worth 50,000 person years if the project gets built.

Those opposed to the project are challenging those estimates as grossly unrealistic, noting that after the pipeline gets built permanent employment is minimal. As part of its seven conditions for backing the plan, Quebec's Liberal government has said the project needs to generate economic and fiscal benefits for all of Quebec.

Energy East is a $12-billion project to carry western crude along a 4,500-km pipeline to Quebec and New Brunswick. It would be the biggest pipeline in North America, with a capacity of 1.1-million barrels of oil per day. Roughly half of its capacity would be slated for export, TransCanada management has said.

"Four billion dollars of this $12-billion project is going to be spent on the Quebec portions of this" pipeline, said TransCanada spokesman Tim Duboyce. "It would seem to me hard to believe that a significant amount of that isn't going to go into spending on services and contracts to firms that have expertise in different fields that are based in and around Montreal."

Quebec and its municipalities will also collect an estimated $1.2-billion in taxes when the pipeline starts operating, according to Conference Board estimates. TransCanada last month filed a formal application with the NEB for the pipeline project. The regulatory tribunal has up to 15 months to provide a recommendation.

The Communauté Métropolitaine de Montréal and the Union of Quebec Municipalities said Thursday TransCanada has failed to provide the NEB with definitive documentation necessary to properly evaluate the Energy East project, such as the pipeline's final path. It is asking the NEB to suspend its analysis of the project until more complete information is submitted.

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TransCanada rejects that assessment.

Mr. Duboyce said Mr. Coderre is wrong when he says the company has not submitted detailed impact studies to the NEB. "There are exhaustive impact studies on environment, safety, socioeconomics and the rest of it," he said. "We're full prepared and ready to sit down and discuss" them.

As for the final pipeline route, that continues to change as consultations with stakeholders take place, Mr. Duboyce said. "We never intended to have it in its final form at this stage of the game."

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