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OTTAWA — TransCanada Corp. faces a rough ride in Central Canada over its proposed $11-billion Energy East pipeline as industrial users and natural-gas distribution companies warn they’ll be short-changed by the company’s plan to switch the pipeline to gas from oil.
Both Quebec and Ontario governments plan to intervene in the National Energy Board review, which will kick off when TransCanada files for regulatory approval later this month. Both provincial governments are being urged to defend their natural gas customers who say their interests are being sacrificed to western oil producers.
Quebec’s regulatory body, Régie de l’énergie, held hearings last week on the Energy East plan, and will provide advice to the Liberal government on whether the project benefits the province.
In the hearing, India-based IFFCO Canada Enterprises Ltd. warned it will cancel plans to build a $1.6-billion fertilizer plant in the province if it can’t secure a reasonably priced source of gas in light of TransCanada’s plan to transform its west-to-east mainline to carry crude.
The province’s biggest gas distributor, Gaz Métro, plans to condemn the project as it is currently structured when it comes before the federal regulator for hearings. A representative of industrial gas users said the loss of pipeline capacity could undermine the competitiveness of central Canada’s energy-intensive industries.
Calgary-based TransCanada proposes to convert a portion of its underutilized west-to-east mainline from gas to oil service to the Ontario-Quebec border and build new pipeline to Saint John, N.B. The Energy East project would deliver 1.1-million barrels per day of western crude to refineries and export terminals in Quebec and New Brunswick.
Alberta crude producers have enthusiastically supported the project, as they seek access to new markets but face major hurdles in British Columbia and the United States.
TransCanada told the Quebec regulator that it is guaranteeing gas service to all customers who sign up for long-term contracts, that it will build new links between southwestern Ontario and Quebec, and that the cost of service will be lower because the company’s mainline will be more fully utilized.
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