An oil pipeline to Canada’s Atlantic Coast
TransCanada Corp. will have to spend $1 billion USD more than planned on an oil pipeline to Canada’s Atlantic Coast if natural gas customers get their way, a move it says would threaten the viability of the project.
TransCanada has delayed seeking regulatory approval of the $12 billion Energy East line as it negotiates with Quebec’s Gaz Metro Inc. and Ontario units of Spectra Energy Corp. and Enbridge Inc., said two people familiar with the talks who asked not to be identified discussing a private matter.
The spat centers on TransCanada’s plan to convert a 3,000 km stretch of its mainline gas conduit to carry oil. The nation’s largest pipeline operator after Enbridge is pursuing Energy East as environmental opposition imperils other planned lines from Canada’s oil sands to tidewater, including its Keystone XL.
Gas distributors claim that converting the mainline in eastern Ontario would lead to fuel shortages and higher prices. While TransCanada intends to build a new 250 km gas line to meet demand, the distributors say it won’t be big enough. They want the company to build a standalone oil conduit or a gas line the same size as the existing one at no cost to customers.
Building an oil line from North Bay, Ontario, to Ottawa instead of altering the existing one would cost at least $1 billion USD more and put Energy East in jeopardy, the company says.
“It would be prohibitively expensive,” Karl Johannson, president of natural gas pipelines at TransCanada, said in an Oct. 16 phone interview, adding Energy East’s economics are tied to re-purposing the 1950s-era mainline. “What makes this project work is we have underutilized infrastructure.”