East-West pipeline project viable, premiers say

The premiers of Alberta and New Brunswick emerge from a meeting in Calgary sounding enthusiastic about the chances of building an East-West energy pipeline.

Alberta's Redford, New Brunswick's Alward tout piping bitumen eastward

Alberta Premier Alison Redford met in Calgary with New Brunswick David Alward to discuss the prospect of building an East-West pipeline. (CBC)

The premiers of Alberta and New Brunswick emerged from a meeting in Calgary Tuesday sounding enthusiastic about the chances that an East-West energy pipeline could get built.

Alberta Premier Alison Redford said such a pipeline would be a viable commercial project that would not require any public money.

"At this point in time, it doesn’t seem to be a necessity."

New Brunswick Premier David Alward said building a pipeline from Western Canada to his province may be the answer for Alberta's recent financial woes while benefitting the entire Canadian economy.

"We think it’s in Canada’s interest that we find a way to partner … a way to work together," he said.

Alberta is expecting a financial shortfall of $6 billion this year because of lower-than-expected oil prices.

Alward met with Alberta government officials in Edmonton over the past few days before touring the oilsands.

"For me it was incredibly moving, just the enormity of the development that is there," he said, adding that the environmental protections in place impressed him.

Alward noted that New Brunswick boasts the country’s largest refinery and the deepest ice-free port on the eastern seaboard.

"Up until now, it has come from other parts of the world. We believe it is a great answer to seeing Alberta get better value for the resource they have."

Alberta faces budget woes

TransCanada is the company behind the East-West pipeline project, which is looking to convert an existing natural gas pipeline to carry bitumen from Alberta to a refinery in New Brunswick.

It would be several years before western crude would make its way to the east, as the proposal has not yet been submitted to the National Energy Board, but federal Natural Resources Minister Joe Oliver has expressed support for the idea. 

Alberta Finance Minister Doug Horner said on CBC's Lang and O'Leary Exchange on Monday that the wide gap between oil’s global benchmark price and what Canadian producers can get for their oil is causing considerable problems for the royalty calculation in the provincial budget, as well as for the oil industry and Canada's gross domestic product. 

"It's a little bit like if you only have one customer, and you only had one product and you only have one way to get that product to the customer, but he had a whole other raft of potential suitors he's going to discount you," he said.

"And that's what is happening to us in Alberta, actually in Canada as a whole. We are being discounted off the Brent price probably $50 a barrel."

Horner said long-term solutions like building new pipelines and shipping oil by rail to refineries are in play, but Alberta will have to weather the storm until then.

"The market does adjust …. Our problem right now, of course, is the medium term of lower royalty revenues, which is 30 per cent of what we use in our budget."