September 15, 2013

Portland-Montreal Pipe Line faces dual threat from Canada

Two pipeline proposals could reduce the need for overseas oil that moves through Maine.

By Tux Turkel tturkel@pressherald.com
Staff Writer

Two Canadian pipeline proposals have put the future operation of the 72-year-old crude oil pipeline connecting Portland and Montreal in jeopardy, according to industry, financial and environmental sources in Canada.

Many Mainers are familiar with the ongoing battles between the Portland-Montreal Pipe Line and environmental activists, who suspect the corridor soon will be used to pump crude from the Alberta oil-sands across the state. A less visible but more realistic threat is coming from two Canadian pipeline proposals that are responding to changes in global petroleum markets. These changes could greatly reduce the need for the overseas oil that now moves through Maine to Montreal and supports 100 percent of the Portland pipeline's business.

Canadian experts reached by the Maine Sunday Telegram agree that development of either of these pipelines, coupled with a new plan to move oil by rail to a refinery in Montreal, eventually could force the Portland pipeline to shut down.

At stake for Maine are 35 well-paying jobs and $3.5 million a year in spending tied to tanker docking and other services. The company also pays $1 million a year in local property taxes and $2 million in state income taxes.

Seeking a reaction from the company, the newspaper requested an interview with Larry Wilson, president and chief executive officer of the Portland-Montreal Pipe Line. Wilson referred the matter to a public relations spokesman, and later responded to a handful of email questions.

Wilson didn't directly answer specific questions about the impact of the Canadian pipelines and reversing the flow of the Portland pipeline to pump crude from Alberta. He did note that energy transportation markets are dynamic and constantly evolving. He said the company closely monitors demand and carries out strategies to position it for success.

"PMPL has every reason to be optimistic about our long term future and our ability to continue providing excellent careers and making significant contributions to our communities, while providing vitally important energy transportation needs," he said.

The most far-reaching threat to Portland came last month from TransCanada Corp.'s proposal to build a 2,734-mile pipeline to connect oil fields in Alberta with the Irving Oil refinery in Saint John, New Brunswick. The Energy East pipeline would bypass Maine to the north and give Canada a path to export its enormous oil reserves without crossing an international border. Energy East could move more than 1 million barrels of oil a day in 2018.

The more immediate threat is a plan by Enbridge Inc. to repurpose an existing pipeline and pump less-expensive oil from western Canada to refineries in Ontario and Quebec. The first phase of this project, called the Line 9 reversal, already has been approved by federal regulators and is in operation. A final hearing on the second phase is set for early October.

Both these proposals face opposition in Canada. Environmental groups charge that these pipelines will be prone to leaks, pointing to the 2010 Enbridge spill in Michigan. They also say that further oil-sands development will accelerate the pace of climate change. Energy East also faces special challenges in Quebec, where political separatist leanings and the Lac-Megantic railroad disaster may make any oil transport project a hard sell.

But both projects also are being propelled by factors that may not be immediately evident to Americans. They boil down to a sense of self-determination in a vast nation with a small population but abundant energy resources.

CANADIAN OIL 'LANDLOCKED'

The Line 9 reversal is seen as a chance to save the Suncor Energy oil refinery in Montreal, the last of six refineries that once operated in the city. Crude from western Canada is now 20 percent less expensive than overseas supplies, business groups say, and cheaper oil is essential to the survival of Suncor-Montreal and another refinery near Quebec City.

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