SOUTH PORTLAND — City officials are weighing the impact of Thursday’s announcement by TransCanada Corp. that it has abandoned plans to build the controversial Energy East Pipeline, which would have carried 1.1 million barrels of crude oil per day from western Canada to the Atlantic coast.

It wasn’t immediately clear whether TransCanada’s decision might increase or decrease the need to export Canadian oil through an existing pipeline that runs from waterfront terminals in South Portland to refineries in Montreal.

The Portland Pipe Line Corp. is fighting in federal court to overturn a South Portland ordinance that banned crude oil exports from the city and effectively blocked the company from reversing the flow of its pipeline, which currently transports a dwindling amount of foreign crude to Canada.

Thursday afternoon, the city’s attorneys filed a motion in U.S. District Court in Portland seeking a temporary stay of summary judgment proceedings so they can review TransCanada’s action and submit a new request to dismiss Portland Pipe Line’s lawsuit.

Supporters of the so-called Clear Skies ordinance, passed by the City Council in 2014, were both encouraged by and cautious in interpreting what impact TransCanada’s decision might have on the city’s effort to defend the ordinance, which has cost more than $1 million so far.

“Everyone feels it could impact the case – exactly how is unclear,” said Councilor Brad Fox. “On the other hand, it shows that it’s not economically feasible to build all these pipelines because petroleum is becoming a thing of the past.”

The council is scheduled to discuss the lawsuit Wednesday in executive session. City Manager Scott Morelli declined further comment.

In Thursday’s motion, the city’s attorneys question recent testimony by Portland Pipe Line President Thomas Hardison, who said “TransCanada is scheduled to complete its Energy East Pipeline project by 2021, (which) would free up volumes of oil for transport down (the Portland Pipe Line) to South Portland.”

While city officials are expected to reassert, based on TransCanada’s latest action, that the Portland Pipe Line is no longer needed, its owners will likely say the exact opposite, said John Auers, executive vice president at Turner, Mason & Co., a petroleum consulting firm in Dallas.

PIPELINE TO EASTERN MARKETS

The proposed 2,796-mile Energy East Pipeline would have transported crude oil from bituminous sand fields in Alberta and Saskatchewan to the refineries in eastern Canada and a marine terminal in Saint John, New Brunswick, which is on the Bay of Fundy, between Maine and Nova Scotia.

Without Energy East, Portland Pipe Line, a Canadian-owned subsidiary of ExxonMobil and Suncor Energy, rises as a possible alternative conduit that could be pressed into service to move Canadian crude to refineries along the East Coast of the United States and in Europe.

“It supports a reversal (of the Portland Pipe Line), not having a competitive option,” Auers said. “Optionality is almost the most overused word in the business today. Producers of crude oil would prefer to have as many options as possible for getting their product to market.”

Hardison also testified in August that more than 100,000 barrels of crude oil, shipped from western Canada to Montreal via a smaller existing pipeline, is available to be transported daily to South Portland if the Portland Pipe Line were allowed to reverse its flow.

If the Portland Pipe Line did transport as much as 100,000 barrels per day, or 36.5 million barrels per year, south from Montreal to South Portland, that’s less than a quarter of the 160 million barrels of foreign crude that flowed north through the pipeline in 2004.

Whether a reversal of the Portland Pipe Line would ever be warranted is debatable, Auers said. TransCanada developed the $12.6 billion Energy East project when the future of TransCanada’s Keystone XL pipeline was in doubt. The costly project was doomed in January, he said, when the Trump administration cleared completion of the Keystone pipeline to bring Canadian crude to U.S. refineries on the Gulf of Mexico.

CANADIANS THRILLED, DISAPPOINTED

In a written statement released Thursday morning, TransCanada CEO Russ Girling said the company would notify Canadian energy officials and environmental officials in Quebec that the Energy East project was dead. The company said the move, seen as a major victory for environmental groups, is expected to result in a $795 million loss in its fourth quarter.

The statement didn’t specify why TransCanada abandoned the project, but development of so-called tar sands has slowed in western Canada with the worldwide decline in oil prices and the project faced environmental opposition in Quebec, according to the Associated Press.

When TransCanada first announced the Energy East project in 2013, oil was selling for about $100 a barrel but it has dropped to half that. Montreal Mayor Denis Coderre, who has opposed the pipeline, said he was thrilled to see it abandoned. Supporters said they were “extremely disappointed” by the decision.

“The loss of this major project means the loss of thousands of jobs and billions of dollars for Canada, and will significantly impact our country’s ability to access markets for our oil and gas,” the Canadian Energy Pipeline Association said in a written statement.

Supporters said Energy East was necessary to get the oil to world markets and decrease reliance on the United States, which takes 97 percent of Canada’s energy exports. Alberta has the third largest oil reserves in the world, with 170 billion barrels of proven reserves.

Girling previously called the pipeline – the most expensive proposal in TransCanada’s history – a historic opportunity to connect oil resources in western Canada to eastern consumers, shipping to the U.S. Eastern Seaboard, Asia and Europe.

Conservative opposition deputy leader Lisa Raitt called it a terrible day for Canada and blamed Prime Minister Justin Trudeau for not championing the nation-building project and the nation’s energy sector. “Everything Justin Trudeau touches becomes a nightmare,” Raitt said.

Last year, Trudeau approved one controversial pipeline from the Alberta oil sands to the Pacific Coast, but rejected another. Trudeau approved Kinder Morgan’s Trans Mountain pipeline to the Vancouver suburb of Burnaby, British Columbia, but rejected Enbridge’s Northern Gateway pipeline to Kitimat, British Columbia. His government has been trying to balance the oil industry’s desire to tap new markets with environmental concerns.

Natural Resources Minister Jim Carr called TransCanada’s move to abandon Energy East a business decision.

“Conditions have changed,” Carr said. “Commodity prices are not what they were then.”

Carr noted that the Keystone XL pipeline awaits final approvals in the United States.

Kelley Bouchard can be contacted at:

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