The volume of crude oil transported from Maine to Canada on the Portland-Montreal Pipe Line fell by nearly 60 percent between 2010 and 2013, and the trend is accelerating this year.

The pipeline had pumped 18.6 million barrels of oil from South Portland to Montreal as of July, state figures show, making it unlikely that this year’s volume will approach the roughly 57 million barrels moved in 2013. By comparison, the pipeline transported about 98 million barrels in 2010.

The rapid decline is tied to shifting market conditions in Canada that have put the operation of the pipeline and its South Portland marine terminal in jeopardy. The pipeline’s sole remaining refinery customer in Montreal is in the process of weaning itself from imported crude oil in favor of less-costly supplies in North America. The transition will be aided by work underway to reverse the flow of an oil pipeline that connects western Canada and Montreal through Ontario, called Line 9. These changes are on track to be done next year.

These events call into question the economic viability of the 73-year-old South Portland facility, which at its peak served several refineries in Quebec and Ontario.

“Once the Line 9 reversal is complete, I don’t see any purpose for that (Portland) pipeline bringing international crude to Montreal,” said John Auers, executive vice president at Turner, Mason & Co., a Dallas petroleum industry consulting firm.

Auers, who is the firm’s lead forecaster and is familiar with Portland, said the line isn’t considered a critical facility in the industry. It could be shut down by its majority owner, ExxonMobil Corp.’s Canadian counterpart Imperial Oil, unless or until a new purpose can be developed. The most likely option, he said, is to reverse the flow and move crude from western Canada for export through Portland Harbor.


“Times change,” Auers said. “And pipelines do get shut down. Some are idle, and some get repurposed. In the big scheme, this isn’t a big deal for Imperial. It’s not a profit center for them; it’s not moving much material now. But I’m sure they’ll make an effort (to repurpose it).”

Portland Pipe Line Corp. declined to answer the Press Herald’s questions about the company’s strategy to slow the decline and whether it’s possible to develop new customers or uses for the terminal and line. Through a spokesman, it did provide an emailed statement noting its safe and reliable service over the years.

It also said: “In addition to its current services, PMPL is exploring other options to fully utilize its valuable assets to best serve the needs of energy consumers and communities.” The statement concluded that the company “will continue to provide its energy (terminal services) and transportation services well into the future.”


Questions about the future of the pipeline follow approval last summer by the South Portland City Council of hotly contested waterfront zoning changes. The ordinance was aimed at blocking any potential export of the heavy crude oil from western Canada known as tar sands. Environmental activists who championed the ban say tar-sands crude is more likely to corrode and breach the underground pipelines. The petroleum industry says the oil is no different to transport than other forms of crude and has pledged to fight the action in court.

The decline of the Portland-Montreal Pipe Line underscores how energy markets are in flux.


The facility was built during World War II to get oil to Montreal refineries, which were iced in during the winter. It was upgraded over time to feature two separate pipes running underground for 236 miles through Maine, New Hampshire, Vermont and Quebec. Together, they could handle 600,000 barrels of oil a day. Tank farms in South Portland also were built to hold 3.5 million barrels.

But in recent years, competition and consolidation have closed five of the six Montreal refineries. The most recent change was the conversion in 2010 of the city’s Shell refinery to a products terminal.

That conversion marked the start of a steady decline for the Portland pipeline. As demand fell, the company took an older, 18-inch-diameter pipeline out of service. It now uses only a newer, 24-inch line, which has been operating well below capacity for the past few years.


This year, business has fallen off significantly. Monthly data from the Maine Department of Environmental Protection show year-over-year declines in each of the seven months ending in July, the most-recent figures.

The reason lies with the changing business practices of the last Montreal refinery, owned by Suncor Energy, a minor partner in the pipeline. Suncor can process 137,000 barrels per day. It’s making a transition from overseas crude oil to supplies from western Canada and North Dakota, and, to a lesser degree, off the coast of Newfoundland. It began making the switch last year via rail cars, but the big change will come next year when Enbridge Corp. reverses Line 9.


From 1976 to 1999, Line 9 moved crude from western Canada to Montreal. But when imports became cheaper, the line’s flow was reversed. Now domestic oil is cheaper again, so Enbridge is changing the flow back to eastbound service.

At a hearing last year before the National Energy Board of Canada on the Line 9 re-reversal, Suncor cited a consultant’s report that estimates an average $2-per-barrel price advantage for North American oil projected out to 2025. Suncor is a major producer of tar sands oil, so it’s not surprising that the company wants to use cheaper oil that it’s producing to feed its oil refinery. Suncor has indicated that the switch is critical to the refinery’s economic survival.

Various media reports in Canada have noted that both Suncor and the only other operating Quebec refinery, Valero Energy Corp. near Quebec City, plan to use only North American crude by next year.

That switch appears well underway. Sneh Seetal, a spokeswoman for Suncor, said “the majority of feedstock today is sourced from offshore East Coast Canada and the United States.”

Seetal declined, however, to say whether the Montreal refinery would get any supply next year from the Portland pipeline.



The drop in barrels directly affects shipping traffic in Portland Harbor and the related economic activity.

Mark Usinger, owner of the A.L. Griffin ship chandlery in Portland, said the pipeline terminal had roughly 18 ships a month calling before the Shell refinery closed. Helping to supply those tankers made up “a substantial portion” of the company’s business. Now dockings have fallen to four or five a month, he said.

“Everyone in the maritime industry is concerned about oil flow in the harbor and the impact it’s having on business,” he said. “The bottom line for us is, fewer ships, less business.”

The Portland-Montreal Pipe Line has faced challenges before. When Line 9 was first built and imported oil prices surged in the late 1970s, tanker traffic fell off. But the company was able to use its assets to find new revenue in the 1980s, when the smaller of the two pipes was converted to move natural gas from Canada. When market conditions for imported oil improved, the line was switched back to oil and Portland entered a growth mode.

But today’s fundamentals are different. Two dedicated natural gas lines from Canada were built across Maine in the 1990s. Low-priced natural gas also is on New England’s doorstep, in Pennsylvania.

The best bet for the future of the Portland-Montreal Pipe Line, said Auers, the Dallas petroleum consultant, is for its owners to reverse the flow to export Canadian crude through South Portland. A reversal has been proposed in the past, but it’s strongly opposed by environmental activists. The company has insisted there are no current plans to reverse the flow, but has said it’s keeping all options open.

Auers said a line reversal would be most likely to move the same light grades of crude oil it has been pumping for 70 years, rather than heavy tar-sands crude, because East Coast oil refineries are set up to handle those lighter grades.

“It doesn’t have to be tar sands,” he said. “It’s more likely to be light crude, and that could be a compromise. Does it matter whether it moves east to west or west to east?”

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