Ontario, Alberta Pitch Cross-Canada Oil Pipeline to Ease US Reliance
(Bloomberg) -- Alberta and Ontario proposed a crude oil pipeline and energy corridor across Canada as a way of reducing the country’s dependence on the US.
The 3,300-kilometer (2,051-mile) route, called the Northern Shield Energy Corridor, would connect the Alberta oil-storage hub of Hardisty with the central Canadian refining center of Sarnia, Ontario, Alberta Premier Danielle Smith and Ontario Premier Doug Ford told reporters Monday.
The proposed pipeline would carry about 500,000 barrels of oil a day for domestic use and export markets, and could expand to 800,000 barrels a day. Ontario will also explore creating its own strategic petroleum reserve.
“By reducing Canadian reliance on oil imports, the Northern Shield pipeline could help stabilize oil prices across the country and strengthen national security,” Ontario and Alberta said in a release.
The project proposed Monday is similar to the mothballed Energy East oil pipeline floated more than a decade ago but later scrapped. A new cross-Canada oil pipeline would allow Canadian producers to avoid moving crude through the US, as is done on Enbridge Inc.’s Line 5, which crosses the border in Ontario and connects with another line that moves oil to Quebec.
A feasibility study on the Northern Shield proposal is set to be completed by the end of this year, and will explore costs and commercialization options. Ford told reporters that while a private proponent would be welcome, a government-led project can’t be ruled out.
“I think it’s a great investment, no matter if it’s the government,” he said. “I always prefer looking at the private sector investing.”
Since US President Donald Trump launched a trade war with Canada last year, sending relations to their lowest point in decades, Canadian political leaders including Prime Minister Mark Carney have been looking to diversify exports to other countries and lessen reliance on US infrastructure. Last week, Carney and Smith announced plans to build a new 1 million barrel a day pipeline to Canada’s Pacific coast to boost exports of crude oil to Asian markets.
The new west coast line will be built by government-owned Trans Mountain Corp., operator of the only existing oil pipeline running from Alberta to a Canadian port on the Pacific.
Ford said the Northern Shield proposal is being discussed with the Major Projects Office, a federal entity that works to provide faster regulatory approvals.
The proposal is just the latest in a series of new projects announced in the past year that could add more than 2 million barrels a day of capacity to ship crude out of out Western Canada.
They include Enbridge Inc.’s Mainline expansion, the new Bridger conduit that will run from Alberta to Wyoming, an expansion of the existing Trans Mountain system to add 300,000 barrels of daily capacity.
The sudden surge of new export conduits has raised questions about whether oil sands producers and their investors have the stomach to boost capital spending to fill the pipes. Oil companies in the region have room to expand, according to Smith, who wants Alberta’s crude output to double.
“I have absolute confidence that we will be able to do it,” she said during the press conference. “We’ve got to think big and we’ve got to be looking at being one of the top three energy producers and exporters in the world.”
(Adds other pipeline projects in final three paragraphs.)
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