Menu

Americas

Major west-to-east oil pipeline proposed in Canada

Technicians work next to an oil pipeline on June 9, 2013 in Badila, southern Chad. TransCanada announced plans for the construction of a $12 billion pipeline to carry oil from the Alberta oil sands to the Atlantic seaboard.AFP/File

TransCanada announced plans Thursday for the construction of a $12 billion pipeline to carry oil from the Alberta oil sands to the Atlantic seaboard.

The company said it was going ahead with the Energy East Pipeline project, which could move 1.1 million barrels of oil a day from western Canada to eastern markets, after hearing from potential customers.

It said it had already concluded long-term contracts with producers and refiners to move about 900,000 barrels a day, though the project still requires regulatory approval.

"This is an historic opportunity to connect the oil resources of western Canada to the consumers of eastern Canada, creating jobs, tax revenue and energy security for all Canadians for decades to come," TransCanada CEO Russ Girling said in a statement.

The project has aroused stiff opposition from Quebec, and environmental groups have vowed to fight it.

It is supposed to be completed by 2018, and the company indicated it would approach Canadian authorities for approval by the end of the year.

With around 170 billion barrels of oil in the ground, Canada has the world's third largest oil reserves after Saudi Arabia and Venezuela.

However, exports have been limited by a shortage of pipeline capacity.

And although Canada is a net exporter of oil, it imported 600,000 barrels a day in 2012 to supply its refineries on the east coast.

Plans for the Keystone XL pipeline linking Alberta to the Gulf of Mexico, meanwhile, have been stalled by US President Barack Obama as he weighs US energy requirements against environmentalists who say oil sands production is polluting and perpetuates reliance on fossil fuels.

With that as the backdrop, TransCanada in April launched a process to gauge the interest of suppliers in western Canada on a pipeline that would carry oil to the east.

The project calls for converting a 3,000-kilometer (1,800-mile) gas pipeline to oil and adding a 1,400-kilometer section from Quebec to New Brunswick on the Atlantic coast.