Lacking supply of Alberta crude in the east has depressed prices and eroded producer profits.
November 30, 2012
by The Canadian Press
CALGARY—Enbridge Inc. is seeking regulatory approval to reverse the flow of a Quebec-to-Ontario oil pipeline and ship greater volumes of crude through it.
The Calgary-based pipeline giant has applied to the National Energy Board to reverse a stretch of its Line 9 pipeline that currently runs from Montreal to Westover, Ont.
It also wants to increase the line’s capacity from 240,000 barrels per day to 300,000 barrels per day.
Line 9 flowed from west to east when it was built in the 1970s, but it was reversed two decades later to respond to market conditions at the time. Now, Enbridge wants to restore its original flow so that eastern refineries can have access to western crude.
During the summer, the NEB gave Enbridge the green light to reverse a segment of Line 9 between Sarnia, Ont., and Westover, which is close to Imperial Oil’s Nanticoke refinery.
The application covers the remaining stretch to Montreal, where Suncor has a refinery.
Eastern refineries currently rely on crude imported from overseas, which is more expensive than oil that comes from Western Canada. It’s one of the reasons why gasoline prices are much higher in the East than they are the West, though there are many other factors at play.
A lack of adequate pipeline capacity has meant Alberta crude hasn’t been able to find its way to the most lucrative markets, leading to a supply glut that has depressed prices and eroded producers’ profits.
Environmentalists are concerned that the Line 9 reversal will cause more oilsands crude—deemed in some quarters to be dirtier than oil from elsewhere—to flow east.
“Enbridge’s Line 9 oil pipeline proposal is all risk and no reward for Ontario,” said Environmental Defence’s Gillian McEachern in a release.
She added oilsands crude is “more dangerous and more difficult to clean up” than other types and drinking water and farmland should not be put at risk “just to help big oil get even bigger.”
Enbridge says those claims are “false.”
“The market demand driving the Line 9 reversal projects, from Ontario and Quebec refiners, is for light crude oil, which is generally sourced from regions other than the Canadian oilsands,” it said. “However, crude oil derived from the oilsands region of Canada, sometimes called diluted bitumen or dilbit, could also be shipped on Line 9.”
Enbridge added that dilbit is safely shipped every day through pipelines across North America.
“Decades of transporting heavy crude proves there is no evidence that pipelines transporting this product are more susceptible to internal corrosion than pipelines transporting other crude oil types.”
©The Canadian Press