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Extend eastern pipeline to Saint John, mayor tells oil companies

The mayor of Saint John, N.B., Mel Norton, right, arrives at Calgary city hall Tuesday, with assistant Christopher Dever.

TODD KOROL

Saint John Mayor Mel Norton travelled to Calgary this week with a single message for the oil companies: He wants a new pipeline to come to his city.

After meeting with Cenovus Energy Inc., Shell Canada Ltd. and the Canadian Energy Pipeline Association, Mr. Norton said some executives are relieved to hear from a community that actually supports pipeline development in its backyard – in this case, TransCanada Corp.'s proposed Energy East pipeline. The project would see capacity in TransCanada's mainline converted from natural gas to crude oil to supply Eastern Canadian markets with Western oil.

"Especially for some in the oil and gas sector here in Alberta, they've been beaten up fairly badly by some of the issues in the United States," Mr. Norton said, referring to the criticism of TransCanada's push to win approval for its Keystone XL pipeline project that would bring oil from Alberta to the U.S. Gulf Coast.

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With Saint John's unemployment rate sitting at 9.2 per cent and many people leaving the province for work, Mr. Norton said he's not taking any project for granted. The exact routing for the Energy East project has not yet been finalized and the mayor wants to make sure some of that Western oil makes its way to the 300,000-barrel-per-day Irving Oil Ltd. refinery in Saint John, with access to massive tankers going to and from the city's deep-water port.

"There has to be a decision made whether to bring it all the way to the East Coast, or to stop, potentially, in Quebec City," he said. In that vein, the mayor said he is trying to get the process to run more smoothly by arranging a meeting with Quebec municipal leaders, including the mayor of Quebec City.

U.S.-based Valero Energy Corp. has a 230,000-barrel-per-day refinery across the St. Lawrence River from Quebec City, and is currently importing most of its crude by ship. The refinery has a terminal at the Port of Quebec, with capacity to offload a million barrels of crude.

There would be an advantage for the Port of Quebec to see the pipeline end there, rather than extend all the way to Saint John, says Robert Johnston, an analyst with New York-based consultancy Eurasia Group. The port facilities could be transformed from import-oriented to handle exports of Canadian oil to refineries in the Atlantic basin.

Valero, based in San Antonio, Tex., is looking at enhancing its rail-handling capacity for the refinery. And it is eagerly supporting Enbridge Inc.'s plan to reverse an existing pipeline to carry Western oil into Montreal and then barge it down river, as well as TransCanada's Energy East proposal.

Valero spokesman Bill Day said the company is not planning to reverse its crude-handling capability for exports because it wants to maximize the flexibility of the refinery's crude supply. The company recently won U.S. Department of Energy approval to export up to 90,000 barrels per day of crude to Quebec from Texas, where there is a glut of light, sweet crude. "We're looking at an all-of-the-above strategy," Mr. Day said.

Mr. Norton said his city has advantages over Quebec, such as a deep port able to accommodate the largest crude tankers in the world, the fact that Saint John waters are ice-free year round, and closer proximity to world markets, including those in Europe, South America and India. (Quebec can accommodate all-weather crude carriers, with a capacity of up to one million barrels of oil.)

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He said residents of the New Brunswick city, population 70,000, have stopped him on the street to tell him how much they support the new pipeline, and there's "social licence" for expansion of Saint John's petroleum processing and shipping industry.

"The people of Saint John understand that marine vessels are just part of the economy. That's part of what drives our economy and has always driven our economy. It's nothing to look out and see two or three large ships coming to and from the harbour, and many of them carrying product to market," said Mr. Norton, who travelled to Calgary for the two-day visit along with a contingent including his province's energy minister, the city's MP and port authority officials.

"Folks see this for what it is, which is very good jobs – very good development."

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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

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