A pragmatic compromise on Energy East that Prime Minister Trudeau could get behind

As anyone who has followed this blog knows, I have kept my ear tuned to the fiasco that is the National Energy Board (NEB) hearings on the Energy East Pipeline Project in Quebec. One fallout of this mess is the fact that today I read one well-placed journalist suggesting that Energy East may “die a long slow death“. In reviewing the submission documents for Energy East I have come to wonder whether this issue has not been a sort of own-goal by both TransCanada and the NEB and whether there is a politically-expedient way out of the mess for our Prime Minister. My answer to those questions is “Yes”. The rest of this blog post will explain why I think there is a compromise out there that might allow the Prime Minister to approve a version of this project while not destroying his political base in Quebec.

To explain how this compromise would work it helps to understand a few things about the Energy East Pipeline proposal. It is my understanding that one of the original backers of the pipeline was Suncor. Suncor is a major producer of western oil and is also the owner of the last remaining refinery in Montreal. One advantage of the pipeline was that it would allow Suncor to vertically integrate its supply chain by allowing the Suncor refinery to use Suncor bitumen sourced from Suncor facilities in western Canada. To facilitate this, Suncor has even indicated that they would spend a billion dollars to add a coker to their Montreal refinery to make it capable of handling bitumen.

The thing about Energy East, however, is that the mainline of the pipeline was always intended to bypass Montreal. As presented in the map of the project the routing of the pipeline skirts the outer suburbs of Montreal (running north of the suburb of Terrebonne). After bypassing Montreal the route returns to run within several kilometers of the St. Lawrence before going north again around Trois-Rivieres. This is important because much of the political muscle against Energy East has been provided by Dennis Coderre and his supporters who are looking to protect Montreal from potential effects of the pipeline. The only part of the pipeline that actually crosses into Montreal proper is the Montreal Lateral  which forks off from the Energy East mainline in Mascouche and goes through the City to the Suncor Refinery.

As Mr. Coderre has pointed out, the City of Montreal went along with the reversal of the Enbridge Line 9B which is now pumping up to 300,000 barrels/day from western Canada and the western US to Montreal. Ironically, for a Mayor who claims to be fighting the pipeline on water quality considerations, enough oil from Line 9B makes it to Montreal that they can actually fill tankers in Montreal which they then ship down the river to the nearby Levis refinery two to three times a week. It is ironic since the act of filling and moving those tankers places the St. Lawrence at much greater risk from spills than a single underground crossing of a pipeline like Energy East would do; but that is another battle for another day.

From a nationalistic perspective, the Enbridge Line is less than ideal since much of the oil travelling down the line is American in origin and runs via the US. From Suncor’s perspective the line doesn’t give them control of their supply chain, so once again we have a sub-optimal outcome. That being said, I am a pragmatist and pragmatically-speaking Montreal is clearly now getting enough supply from North America to avoid the need for them to use Saudi or Algerian oil to make up their volumes.  This essentially eliminates the major argument for the Montreal Lateral.

This brings me to the obvious pragmatic solution to this problem: Prime Minister Trudeau should approve the Energy East proposal with the condition that the approval does not apply to the Montreal Lateral.

Practically-speaking, the Montreal Lateral doesn’t substantially increase crude oil security to Montreal, but it does jack up the risk to the regional water supply and forms the primary basis for political opposition to the project. By essentially bypassing Montreal this decision would defang Mr. Coderre. Should Mr. Coderre continue to oppose the pipeline then he will be shown to be the hypocrite that so many claim him to be. You see for the last decade he has remained silent on the historic Portland Montreal pipeline, the 74 year old pipeline that used to feed the Montreal refinery with oil from overseas and which also crosses the St. Lawrence River. In addition, we have not heard a peep from him about the loading of oil tankers in Montreal to feed the Levis Refinery which also puts the river (and his water supplies) at risk. Should he then complain about an Energy East pipeline (sans the Montreal Lateral) that poses substantially less risk to his community, and its water supply, he would be shown to be the political opportunist that many claim him to be. Myself, I believe he is a political pragmatist. He is likely to take the win and cease being a thorn in the government’s side on this file.

An Energy East Pipeline with the Cromer and Levis laterals intact, meanwhile, still has the ability to provide the Canadian crude necessary to supply the Levis and St. John refineries which is still a big win for Canadian nationalists and reduces the risk to the St. Lawrence posed by the current crude being transported to Levis and St. John via tanker and rail. The removal of the Montreal Lateral, meanwhile, gives the opponents of the project a victory in the battle and provides a means by which the Prime Minister can be seen to both support this national project while being sensitive to the politics of Quebec. Admittedly, for the hard-core environmentalists this compromise would not be enough, but let’s be honest, no compromise will satisfy them. Moreover, as I have written before since they don’t care about facts their minds aren’t going to be changed anyways.

Approving Energy East without the Montreal Lateral represents a less-than-perfect solution for both sides; but one which both sides can live with. This is the kind of solution that a pragmatist like myself lives for: it represents a pragmatic solution that makes the most sense for the most people while acknowledging and respecting the views and concerns of all sides.

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