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Support builds among premiers to ship Alberta oil to Eastern Canada

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HALIFAX - A proposal to ship oil from Alberta to Eastern Canadian markets is drawing support from a growing number of premiers who say it could help stimulate the economy while serving as the foundation for a national energy strategy.

Alberta Premier Alison Redford said she was delighted Friday to see her provincial counterparts back the idea following a discussion she had with Quebec Premier Pauline Marois the night before.

"We are pleased by the fact that there are so many provinces that are interested in talking about what the challenges and opportunities are," Redford said after a meeting of the premiers in Halifax.

"This is an important policy discussion for us to have and there's absolutely no reason to think that this is in any way what I would call an exclusive discussion."

Redford and Marois have agreed to set up working groups to examine the economic benefits and environmental risks of pumping Albertan crude through Quebec.

Redford said she has also been in discussions for several months with New Brunswick Premier David Alward about the feasibility of shipping oil to his province.

"This is driven by the private sector and this ultimately will work if the private sector believes there is a business case and opportunity for that to happen," said Alward, whose province is home to a large refinery in Saint John owned by Irving Oil.

"This is a project that has to go from Alberta, potentially to Saint John, and so it's not about one province or another."

The latest plan would reverse the flow of an existing pipeline to bring Alberta oil to customers in the eastern half of Canada, and could result in slightly lower gasoline prices in that region. The project is being reviewed by the National Energy Board.

There are actually two proposals to ship western crude to the East, including one by Enbridge Inc. (TSX:ENB) and another by TransCanada Corp. (TSX:TRP).

The Enbridge proposal involves expanding capacity on some pipes in the Great Lakes region and reversing the flow of another between Montreal and Sarnia, Ont.

Rival TransCanada plans to convert some of its empty natural gas mainline to oil. The company behind the contentious Keystone XL pipeline is looking to sound out customer interest in the East in the new year.

Federal Natural Resources Minister Joe Oliver said Friday he was encouraged that Marois is keeping an open mind about the possibility of oil flowing through Quebec's borders.

"I think that's obviously very positive because, in our view, the whole issue of resource development, which is so critical to the future prosperity of Canada, can only be done in co-operation with all levels of government," Oliver said after giving a speech to the Board of Trade of Metropolitan Montreal.

Oliver touted the benefits of a West-East oil flow, which he argued would create jobs in Eastern Canada and reduce prices at the pumps for consumers.

"In addition to being a key job creator, it would allow us to use our own Canadian oil and reduce the costly foreign oil imports — a considerable savings," said Oliver, who added that 92 per cent of the oil consumed by Quebecers comes from outside markets.

Prior to the premiers' meeting, Manitoba's Greg Selinger said the idea presents an opportunity to build national energy security, stimulate private investment in the East and expand market opportunities for petroleum producers in the West.

"I think it's a good story for all of us if we do it properly," Selinger said.

Robert Ghiz of Prince Edward Island and Nova Scotia's Darrell Dexter have also voiced their support.

The talk of reversing the flow of oil came the same day as Statistics Canada released a study saying gas consumers in Central and Eastern Canada are being hit harder than those in the West because of a growing price gap between the types of crude refineries in both parts of the country use.

Refineries in the East import a lot of their crude from overseas, which has been driven higher by conflicts in the Middle East and growing demand from China.

British Columbia Premier Christy Clark said the proposed development does little to change her government's fierce opposition to the Northern Gateway pipeline running through her province if it doesn't secure greater economic benefits.

She said her province has set five conditions in order to allow a pipeline to the Pacific and it isn't budging from that position.

"The world's best spill response on land and on the marine side,'' she said. "Nothing less than that will meet the expectations of British Columbians.''

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