An early-stage proposal to ship as many as one million barrels a day of western crude to eastern refineries seems to be gaining traction, executives with pipeline giant TransCanada said Tuesday.
In recent months, the Calgary-based company has been floating the idea of converting part of its natural gas mainline - the eastbound main artery for natural gas out of Alberta - partly to oil service to serve refineries in eastern Canada and the U.S. eastern seaboard that currently rely on pricey crude from overseas.
"We've now determined this project is both technically and economically feasible," CEO Russ Girling told analysts on a conference call to discuss third-quarter results. "Discussions with potential shippers and other stakeholders are underway to determine if this is a project that the market wants to see - and based on early indications, we believe that it is."
The project, 80 per cent of which would comprise existing pipe, could ship between 500,000 and one million barrels of oil per day, depending on demand.
A preliminary estimate puts the project's price tag at roughly $5 billion, but a lot still needs to be worked out. TransCanada would need to add new pump stations along the length of the pipeline and undertake a lot of work to make sure pipe is in good enough shape to ship oil.
It's not clear whether the line would stop at refineries in Montreal or extend all the way to the east coast. Nor is it known yet how much appetite there is to ship the crude offshore to Europe or Asia via a marine terminal in Quebec or the Maritimes.
Eastern Canadian refineries process between 600,000 and 700,000 barrels a day and the U.S. eastern seaboard refines another million barrels.
Those refineries are geared to process light sweet crude, so TransCanada would likely be shipping them synthetic crude oil from Alberta's oilsands.
