Quebec, N.B., agree to take closer look at oilsands pipelines

MONTREAL -- The premiers of Quebec and New Brunswick agreed Monday to create a working group to weigh the risks of allowing oilsands crude to be piped across their provinces.

The get-together between Quebec's Pauline Marois and New Brunswick's David Alward came at a critical time for Alberta's oil industry, which is trying to find ways to get its bitumen to international markets.

With the industry held back by bottlenecks, the meeting at Marois' Montreal office came amid increasing talk of sending Alberta oil to Eastern Canada.

The oil industry is eyeing New Brunswick as a potential destination for Western Canada crude, a project that would have to cross through Quebec.

Alward and Marois announced that a working group would be created to take closer look at the TransCanada Corp. (TSX:TRP) proposal.

The premiers, who declined to speak to media gathered outside Marois' office, issued a joint statement following their meeting Monday.

"We agreed that more information and analysis is required to ensure that all technical, environmental, and economic issues related to this project respond to the interests of Quebecers," said Marois, who told Alward she was not opposed to the initiative.

In the same statement, Alward said he brought Marois up to speed on his recent meeting with oil-industry leaders and Alberta Premier Alison Redford.

"We agreed to continue working together to learn more," he said.

"I am looking forward to the information that will be gathered by the working group to help us better understand the scope of this important opportunity to drive job creation and innovation in our natural resources."

Time is of the essence for the controversial Canadian oilsands industry.

Federal Natural Resources Minister Joe Oliver estimates that $50 million is lost each day due to a lack of pipeline capacity out of Western Canada and the U.S. Midwest. The congestion has translated into lower-than-usual rates for Canadian oil.

The Canadian industry is awaiting a U.S. decision on the controversial Keystone XL pipeline to send oilsands crude to the Gulf Coast -- a project that has been met with strong opposition amid environmental concerns on both sides of the border.

Thousands of people staged a weekend demonstration in Washington, D.C., to denounce the carbon-intensive Alberta crude and urge U.S. President Barack Obama to live up to his climate pledges.

In the meantime, the oil industry is considering other options.

TransCanada Corp. says it's technically and economically feasible for it to convert an existing, underused natural gas line to bring oil from Western Canada to Quebec and New Brunswick.

The Calgary-based company says it aims to file a regulatory application for its eastbound pipeline proposal by year-end following "encouraging" feedback from potential customers.

Alward said earlier this month that he would happily welcome a pipeline carrying oilsands bitumen to a 300,000-barrel-per-day refinery in Saint John, with the possibility of also exporting some of that crude by tanker.

"We're open for business," he said after a meeting in Calgary with Redford. The two leaders have been talking for months about the feasibility of shipping oil to New Brunswick.

Enbridge Inc. (TSX:ENB) is also hoping to send Alberta crude eastward. The company wants to expand capacity on some pipes in the Great Lakes region and reverse the flow of another line between Montreal and southern Ontario.

The project is currently working its way through the regulatory process.

Marois has already shown an openness to the idea of permitting oilsands bitumen to travel across her province.

After meeting with Canadian premiers in November, Marois agreed to create working groups to weigh the economic benefits and environmental risks of pumping Alberta crude through Quebec.

During Monday's meeting, a Marois spokeswoman indicated the Quebec government is still in the early stages of assessing the TransCanada project.

Marie Barrette explained that the premier's decision not to speak to reporters was because the TransCanada proposal is still a relatively new plan.

"The file is not super-advanced," Barrette said while Alward and Marois met behind closed doors.

"It's not as advanced as, say, the Enbridge pipeline, so there are questions to ask, there are things to consider.

"What else would you like us to say in a news conference?"

Alward and Marois also discussed the impact of Ottawa's changes to the Employment Insurance program, the status of free-trade negotiations between Canada and the European Union and daycare centres.

Marois' office initially billed Monday's talks with Alward as the first tete-a-tete for the provincial leaders, but a spokeswoman later said the two premiers had met one-on-one before.

Alward's office said he and Marois had a private meeting shortly after she won Quebec's September election. They also saw each other at a Francophonie summit in Africa, and at a premiers' conference.