Alberta’s oil minister, Ken Hughes, whispered into the ear of his counterpart from New Brunswick, Craig Leonard. Never before, Leonard remembers Hughes saying, had he seen so many of the major oil sands players together in a single room. And they were listening keenly.
“It was like a light bulb turned on,” said Leonard. “It was very clear from the reaction that this was an idea that had tremendous potential.”
According to Leonard and others at the meeting, Mike Ashar, at the time the CEO of Irving Oil, outlined how a pipeline east across Canada to Saint John could help get Alberta’s oil efficiently to the world market, paving the way for higher prices and the potential for expanded production.
Ashar said the pipeline could provide a reason to build Canada’s first oil sands upgrader – a facility that processes tar sands into a product that can be more easily refined into gasoline, diesel and other fuels – on the Atlantic coast. There, lower labor costs and easy access to imports could reduce the facility’s multi-billion dollar price tag by 40%, according to an attendee who asked not to be named.
The need for a new route for Canada’s oil was acute, say industry experts. While the United States delayed Keystone, Canadian supply mounted and prices dropped. The Canadian Imperial Bank of Commerce estimated the glut and lack of pipeline capacity had cost Canada $25 billion in oil revenues in 2012.
“The value destruction as a result of not getting our crude to market is a staggering cost to Canada. It needed a solution,” said former New Brunswick premier McKenna, who is now on the board of oil sands producer Canadian Natural Resources.
As Irving Oil prepared to make its sales pitch to TransCanada and the oil sands producers, it stepped up its lobbying efforts in Ottawa. Irving Oil executives held more meetings with Canadian regulators and office-holders in 2012 than in the two previous years combined, according to federal lobbying disclosure documents reviewed by Reuters. These included repeated meetings with Joe Oliver, then Canada’s natural resources minister, the ministry’s director of oil sands, advisors to Prime Minister Stephen Harper, and environment ministry officials.
Now Energy East has the public support of Canada’s conservative government and the government of New Brunswick, where much of the new pipeline construction would take place. The project has also moved much more quickly, from conception to requesting regulatory approval, than its all-Canadian rival, Northern Gateway, which would transport oil over the Rocky Mountains to the Pacific Coast.
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