It’s been less than a year since former Bank Of Canada governor David Dodge suggested that shipping Alberta oil to the Maritimes “might make more sense” than fighting the “loony tunes” in Vancouver over the stalled Northern Gateway project.
The problem with B.C. is the politics: Premier Clark wants a piece of Alberta’s royalty action. New Brunswick’s Premier Alward, on the other hand, just wants the pipeline because it will stimulate economic growth—construction jobs to begin with and later, a more diversified, homegrown petrochemical industry.
The notion of a new eastern pipeline, connecting Irving Oil’s refining operations and Canaport LNG terminal in Saint John to the existing trunk in Quebec, has already achieved almost mythic stature in New Brunswick. If nothing else, it has inspired the sort of political unity normally displayed only during times of national strife (war) or jubilation (Olympic hockey gold).
In December 2012, every sitting member of the New Brunswick Legislative Assembly voted to support the scheme. At the same time, during a tour of the province, federal Natural Resources Minister Joe Oliver told reporters: “Our government wants refineries like the one here in Saint John, processing Canadian crude, expanding their operations and creating more jobs for New Brunswickers and all Canadians.”
Addressing a Saint John audience of rotarians a month later in January, provincial Liberal Leader Brian Gallant said a pipeline would be “an opportunity to unite all Canadians in a common goal. It’s an opportunity to show that if we all work together we can have economic benefits and strong social programs for all Canadians.”
Meanwhile, New Brunswick NDP Leader Dominic Cardy burned up the social media with tweets like this: “Why don’t we focus on the W-E pipeline? Known tech, high revenue, lots of jobs, less divisive. Let’s unite behind that . . . let’s share the wealth.”
In a November interview with Atlantic Business Magazine, Premier David Alward said, “We are investing significant energy in working with the Irving family, certainly meeting with leaders across the country on that, to see if there is a business case. We believe this could be as important to this century as what the railroad was in the past.”
Former Premier Frank McKenna went even further. In a widely distributed Op-Ed in December, he wrote, “These initiatives are not pipe dreams. They have widespread, multi-party support at the federal and provincial government levels.”
He added: “They strengthen interprovincial commerce, provide new employment in growth sectors in the midst of a sluggish economy, support Eastern Canada’s refining and petrochemical industries, and diversify our energy markets. Finally, eastern access to western oil opens the door to exciting new development opportunities, including new or expanded port facilities and a bitumen upgrader for Eastern Canada that would add significant value to our oil exports.”
In a January interview with this magazine, he elaborated: “If we can get the oil pipeline from western Canada, what it will mean is a lot of jobs during the construction, but it will also connect us to a national grid. It will mean that we will be getting oil to tidal water that is within New Brunswick. And that means that we can create all kinds of value-added industries . . . We’ve got to get both the private sector and industry behind this pipeline . . . to the energy security of Canada to lower the prices for East Coast refineries and to create the potential for value-added jobs in the East . . . So, I’m passionate about that.”
Still, before any shovels break the ground, several questions remain: Is Irving interested in the new business? If it is, is it equipped to handle the load? And, who will finance the construction of the pipeline, itself?
As to the first two, there seems little doubt. In January, Irving Oil president Mike Ashar told the CBC the company was set to go. “What producers want is a large customer,” he said. “And why this refinery is so critical (is because) we run more than 300,000 barrels a day. So we can be an anchor customer.”
One highly placed source, who requested anonymity, was unequivocal: “Irving Oil has had people in Alberta every day for the past three or four months. They already bring in 100,000 barrels a day by train. They are ardent supporters of the pipeline.
“They are working very hard on this. And I think the ducks are nicely lined up. (There are) a number of major producers in Alberta who support it. And the carriers are very interested. There is absolutely no doubt that oil will f low as far as Quebec City. That’s a no-brainer. So the challenge we have is getting it from Quebec City to Saint John, both economically and politically.”
Less certain is the source of funding. Joe Oliver has said the federal government won’t subsidize the estimated $5-billion initiative, though at an energy ministers’ conference in September he confirmed that Ottawa has moved to streamline the process, “so that there will be only one regulatory body assessing potential projects. We don’t think there’s a need for two independent scientific reviews. One is enough provided the provinces meet the federal standard.”
It’s possible the federal government will come through with a generous loan guarantee, similar to the one it approved for the Muskrat Falls hydroelectric project in Newfoundland and Labrador. But industry observers say the most likely scenario is a mix of financing from producers, carriers and the New Brunswick government, itself.
This is, as accountants say, the fine print. The larger script tells a story of momentum, which is quickly gathering. The emerging sentiment among business and community leaders in New Brunswick is that the province’s evolution towards a more entrepreneurial, innovative and productive society will depend on major projects, such as a pipeline, that leverage existing assets, including an icefree, deepwater port and a state-of-the-art refinery, to create long-term centres of industrial excellence.
In this respect, the first wave of construction jobs—though desperately needed in a province with 11 per cent unemployment—is less important than the possibility of durable, longterm enterprise. Says McKenna: “The University of Alberta has over 1,000 skilled professionals right now just working on research with companies in the resource sector. This could be exactly what we are talking about for New Brunswick. We could be creating a powerhouse of knowledge and new knowledge industries all around the utilization of these resources.” In economic development circles, that’s when myth becomes sturdy reality.
Should the pipeline be approved, estimates are that it could be in the ground and transporting petroleum within a decade.