TransCanada nixes export terminal in Quebec for Energy East Pipeline

Quebec will no longer host an oil export terminal for TransCanada’s controversial Energy East Pipeline, the Calgary-based company announced Thursday.

Six months after abandoning a proposal to build a terminal northeast of Quebec City, TransCanada said it would amend its proposal to the National Energy Board to include a new route for the pipeline.

The company made the decision after “conducting thorough studies and consulting with many local communities,” Energy East president John Soini said in an interview.

TransCanada (TSX:TRP) plans to build a 4,600-kilometre pipeline to transport 1.1 million barrels of Alberta crude as far east as Saint John, N.B, home to Irving Oil’s massive refinery and the site of the only planned export terminal for the project.

The pipeline is unpopular in Quebec and served as political fodder during the recent federal election campaign for the anti-Energy East Bloc Quebecois, who said the project brings only risks to the province with none of the benefits.

While ditching plans to export crude from Quebec, TransCanada said it will ensure refineries in Montreal and Quebec City are still able to access domestic crude from Energy East.

The $12-billion project is scheduled to be completed by 2020.

Soini said the pipeline will have 500 long-term jobs and add $1.19 billion to the Quebec government’s coffers during the exploitation phase.

But Premier Philippe Couillard said the company has yet to demonstrate the economic benefits for his province.

Couillard reiterated Quebec cannot just serve as a passageway for TransCanada, which is expected to file detailed plans for Energy East by the end of the year.

“We asked them to fulfil seven conditions, one of them is economic impact in Quebec, a positive economic impact,” Couillard said in Quebec City. “It’s up to the promoter to show us what it will be and then we’ll have a very strict evaluation of what this part of the project will mean for Quebec.”

TransCanada had wanted to connect Alberta crude to two eastern ports, enabling sales to overseas customers — one in Saint John, N.B., and one in Cacouna, Que.

In April, TransCanada ditched the Cacouna port proposal because of concerns over beluga whale habitat, but it had spent months scouting other potential locations along the St. Lawrence River.

The president of a major oilsands producer said he’s not too fussed about the Quebec terminal being scrapped.

“We would have preferred to have it, but obviously for environmental reasons it doesn’t make sense, so we’re fine with going to Saint John,” said Steve Laut of Canadian Natural Resources Ltd (TSX:CNQ).

“It’s a big port. It can handle all the tankers that come in there.”

While environmental groups may have won this battle, the war is not over, said Greenpeace campaigner Patrick Bonin, adding concerns remain in Quebec about the pipeline itself.

“This is above all a great victory for the citizens and the environmental groups who made it clear to TransCanada that their plans to build an oil export terminal are not welcome in Quebec. But the fight is far from over.”

– with files from Alexandre Robillard in Quebec City.