PIPE DREAM Uniting western assets with eastern port could create opportunity for all

By Alec Bruce

been less than a year The notion of a new eastern pipeline, to unite all Canadians in a common goal. since former Bank connecting Irving Oil’s refining It’s an opportunity to show that if we all It’s operations and LNG terminal work together we can have economic Of governor David in Saint John to the existing trunk in benefits and strong social programs for all Dodge suggested that shipping , has already achieved almost Canadians.” Alberta oil to mythic stature in New Brunswick. If Meanwhile, New Brunswick NDP “might make more sense” nothing else, it has inspired the sort of Leader Dominic Cardy burned up the than fighting the “loony tunes” political unity normally displayed only social media with tweets like this: “Why in Vancouver over the stalled during times of national strife (war) or don’t we focus on the W-E pipeline? jubilation (Olympic hockey gold). Known tech, high revenue, lots of jobs, Northern Gateway project. In December 2012, every sitting less divisive. Let’s unite behind that . . . The problem with B.C. is the member of the New Brunswick let’s share the wealth.” politics: Premier Clark wants a Legislative Assembly voted to support the In a November interview with Atlantic piece of Alberta’s royalty action. scheme. At the same time, during a tour Business Magazine, Premier David New Brunswick’s Premier of the province, federal Natural Resources Alward said, “We are investing significant Minister Joe Oliver told reporters: “Our energy in working with the Irving family, Alward, on the other hand, just government wants refineries like the one certainly meeting with leaders across wants the pipeline because here in Saint John, processing Canadian the country on that, to see if there is a it will stimulate economic crude, expanding their operations and business case. We believe this could be growth—construction jobs creating more jobs for New Brunswickers as important to this century as what the to begin with and later, a and all Canadians.” railroad was in the past.” more diversified, homegrown Addressing a Saint John audience Former Premier Frank McKenna went of rotarians a month later in January, even further. In a widely distributed Op-Ed petrochemical industry. provincial Liberal Leader Brian Gallant in December, he wrote, “These initiatives said a pipeline would be “an opportunity are not pipe dreams. They have widespread,

NR52 | NATURAL RESOURCES MAGAZINE | March/April 2013 multi-party support at the federal and provincial government levels.” He added: “They strengthen inter- provincial commerce, provide new employ- ment 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 Offshore Excellence and industry behind this pipeline . . . to AROUND THE WORLD 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 flow 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 East Isle Shipyard . politically.” Shelburne Ship Repair Woodside Industries Less certain is the source of funding. IRVINGSHIPBUILDING.COM Joe Oliver has said the federal government [email protected] won’t subsidize the estimated $5-billion initiative, though at an energy ministers’

Online extras: naturalresourcesmagazine.com | NR53 “Irving Oil has had people in Alberta every day for the past three or four months. They are ardent supporters of the pipeline.”

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 ice- free, 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 Local projects than the possibility of durable, long- term enterprise. Says McKenna: “The University of Alberta has over 1,000 skilled need local power professionals right now just working on research with companies in the resource From our east coast home, Valard can deploy local resources to sector. This could be exactly what we are any power project within . We provide simple, cost- talking about for New Brunswick. We could effective solutions for engineering, procurement, construction and be creating a powerhouse of knowledge maintenance – all backed by Canada’s largest power line workforce and new knowledge industries all around and 35 years of experience. the utilization of these resources.” In economic development circles, that’s when East Coast Workforce | Turnkey Project Delivery | Competitive Project Financing myth becomes sturdy reality. Should the pipeline be approved, estimates are that it could be in the ground and transporting petroleum within a www.valard.com decade. | NRM

NR54 | NATURAL RESOURCES MAGAZINE | March/April 2013