Cover: Energy East Conceptual Route Map. Source; TransCanada Corporation.
ENERGY EAST AND MONTREAL PIPELINE HUB
Mike Priaro
First uploaded March 20, 2015
Last updated April 2, 2015
TransCanada’s Energy East pipeline was scheduled to deliver western crude to Montreal by mid-2018 and to Saint John NB by late-2018.
However, on April 2, 2015 TransCanada announced it would not be building the Cacouna QC terminal and that as a result the project would be delayed two years to 2020 —without further specific explanation for the delay.
Energy East Original Timeline. Source; TransCanada Corporation. Note project approval has been delayed at least one year frpom the above as a result of actions by Quebec and federal governments.
However, Alberta could produce, and TransCanada could deliver, another 1.1 million bbl/day of bitumen-based crudes by 2025 to a major new oil pipeline hub near Montreal. This would require conversion and construction of an Energy East Line 2, and shipping only partially upgraded, fully-upgraded (syncrude), or conventional crudes for environmental, economic, business, and efficiency reasons. There are currently at least three lines running across the Canadian Shield (one is used for natural gas) and five or more across the Prairies in TransCanada's system.
Among the many benefits of Energy East, and a new Montreal area major oil pipeline hub, first proposed by this author and detailed below for the first time, perhaps the most important may be its potential to establish an independent eastern North American (ENA) benchmark price for western crudes.
Montreal Area Major New Oil Pipeline Hub. Source; Mike Priaro.
An ENA benchmark price for western crudes will be higher than the current Western Canada Select (WCS) benchmark price which is heavily-discounted because of the US ban on exports of domestic crude and by increasing competition from abundant US domestic crudes in the U.S. mid-continent, and lighter, more desirable and refinery-friendly, imported crudes on the Gulf Coast —the largest and most competitive crude market on Earth.
U.S. Crude Production Forecast. Source; Hart Energy.
Pipelines radiating from a major oil pipeline hub near Montreal will provide:
1) Centralized control, maximum flexibility, and efficiency for storage and distribution of crude and refined products throughout eastern Canada and the north-east US;
2) Feedstock for an expanded petrochemical industry in Montreal;
3) Elimination of oil tanker traffic from the St. Lawrence River and Gulf of St. Lawrence;
4) Feedstock to ensure continued viability of refineries in Montreal and Levis QC, and Saint John NB;
5) Feedstock to expand Irving’s Saint John NB refinery to 600,000 bbl/d;
6) Feedstock to create a new petrochemical centre in Saint John;
7) Expansion of refined product and petro-chemical exports from the Saint John NB Canaport;
8) Opportunity to export crude worldwide with an extension to the Canso NS Superport —the safest port on Canada’s east coast and the closest to markets in Europe and India;
9) Opportunity to export crude and refined products to the eastern US from Portland ME using a reversed Portland-Montreal pipeline system;
10) Provide a secure, second source of feedstock to the Sarnia ON refining/petrochemical complex by replacing Enbridge’s inadequate, unsafe Line 9;
11) Provide opportunity to expand processing and exports of refined products and petrochemicals from the Sarnia complex ensuring its viability;
2) Feedstock for an expanded petrochemical industry in Montreal;
3) Elimination of oil tanker traffic from the St. Lawrence River and Gulf of St. Lawrence;
4) Feedstock to ensure continued viability of refineries in Montreal and Levis QC, and Saint John NB;
5) Feedstock to expand Irving’s Saint John NB refinery to 600,000 bbl/d;
6) Feedstock to create a new petrochemical centre in Saint John;
7) Expansion of refined product and petro-chemical exports from the Saint John NB Canaport;
8) Opportunity to export crude worldwide with an extension to the Canso NS Superport —the safest port on Canada’s east coast and the closest to markets in Europe and India;
9) Opportunity to export crude and refined products to the eastern US from Portland ME using a reversed Portland-Montreal pipeline system;
10) Provide a secure, second source of feedstock to the Sarnia ON refining/petrochemical complex by replacing Enbridge’s inadequate, unsafe Line 9;
11) Provide opportunity to expand processing and exports of refined products and petrochemicals from the Sarnia complex ensuring its viability;
and, perhaps most importantly,
12) Create an ENA reference price for Canadian crude; and,
13) Create a market for trading of futures and options contracts for Canadian crude.
13) Create a market for trading of futures and options contracts for Canadian crude.
The economic power of a major oil hub is shown by millions of oil futures and options contracts traded annually on the New York and Chicago Mercantile Exchanges based on the price of oil at Cushing OK —the largest oil pipeline hub in the U.S.
Source: PennEnergy.
Quebec's chemical industry employed 21,000 people and exported $5.8 billion worth of chemicals and plastics in 2011 according to StatsCan. Indirect benefits included 800 businesses supplying goods and services to that industry.
And according to Québec's Ministère des Resources Naturelles, billions of barrels of potential oil resources in the St. Lawrence Basin await exploration and development. A major oil pipeline hub near Montreal and pipelines through Atlantic Canada will accelerate their development and ensure maximizing added-value.
By obtaining a near-world oil price for upgraded bitumen which is much higher than the discounted price of non-upgraded bitumen to WCS, which is heavily-discounted to WTI, which in turn is discounted to world oil prices, the Alberta government will obtain much higher royalties and bitumen producers will receive much higher revenues. The Alberta government calculates royalty revenues based on the price of WTI.
All Canadians will profit from domestic upgrading, refining, petrochemical, and export operations spread across this great land, and from associated direct, indirect, and induced jobs, secondary industries, domestic profits, and government revenues from municipal, corporate, personal, sales, and excise taxes.
Canadian freedom from the tyranny of crude prices set in the US mid-continent and Gulf Coast will be won along with Canada’s energy independence and security forever.
Mike Priaro
Calgary, Alberta, CANADA
403-281-2156
And according to Québec's Ministère des Resources Naturelles, billions of barrels of potential oil resources in the St. Lawrence Basin await exploration and development. A major oil pipeline hub near Montreal and pipelines through Atlantic Canada will accelerate their development and ensure maximizing added-value.
By obtaining a near-world oil price for upgraded bitumen which is much higher than the discounted price of non-upgraded bitumen to WCS, which is heavily-discounted to WTI, which in turn is discounted to world oil prices, the Alberta government will obtain much higher royalties and bitumen producers will receive much higher revenues. The Alberta government calculates royalty revenues based on the price of WTI.
All Canadians will profit from domestic upgrading, refining, petrochemical, and export operations spread across this great land, and from associated direct, indirect, and induced jobs, secondary industries, domestic profits, and government revenues from municipal, corporate, personal, sales, and excise taxes.
Canadian freedom from the tyranny of crude prices set in the US mid-continent and Gulf Coast will be won along with Canada’s energy independence and security forever.
Mike Priaro
Calgary, Alberta, CANADA
403-281-2156
Author Bio
"Mike Priaro, B.Eng.Sc. (Chem. Eng.), U.W.O. '76, P.Eng., Lifetime Member Association of Professional Engineers and Geoscientists of Alberta (APEGA), worked in facilities, production, operations and reservoir engineering, as engineering consultant, area superintendent, and engineering management in Alberta's oil patch for 25 years for companies such as Amoco and PetroCanada.”
“He increased oil production from the historic Turner Valley oilfield and brought in under-balanced drilling technology to drill out, complete, and test several of the highest producing gas wells ever on mainland Canada at Ladyfern. He co-authored ‘Advanced Fracturing Fluids Improve Well Economics’ in Schlumberger's Oilfield Review and developed the course material for the ‘Advanced Production Engineering’ course at Southern Alberta Institute of Technology.”
"Mike has presented his work to Canada’s House Committee on Natural Resources in Ottawa and had work published by the Macdonald-Laurier Institute in the March and April, 2014 and February, 2015 editions of Inside Policy magazine, by U.S. energy industry websites such as RBN Energy, in the July 17, 2014 edition of the Oil and Gas Journal, in Petroleum Technology Quarterly, Q3 2014 and in several columns in the Calgary Herald.”
“Mike has no formal connection to any oil company, environmental organization, think tank, labour organization, lobbying or special interest group, academia, or to provincial or federal politics. However, Mike has been recently retained by Alberta Sulphur Research Limited to help promote its new partial upgrading process for bitumen."
“Mike is the author of “A ‘Canada-First’ Canadian Energy Strategy” (see https://www.behance.net/portfolio/editor?project_id=5808629) and is available for consulting work, special projects, and speaking engagements.”