Safety paramount: CEO
He said the province could be shipping bitumen directly to export markets now if it chose to ship by rail cars, insisting that rail is price competitive with pipelines in certain circumstances.
Girling, who said he’s “extremely optimistic” that Energy East has enough customer support to go ahead, insisted that safety is paramount.
“With all of our projects including Energy East, our focus is on ensuring that we’re using the best technology and the best response capabilities available to assure the public we can do these things safely,” he said.
Energy East could deliver crude to refineries in Quebec and Saint John, N.B., as well as enable exports to reach markets on the U.S. Eastern Seaboard via tanker.
Quebec Premier Pauline Marois told reporters in Quebec City on Tuesday that it’s “fair to ask the question” of whether construction of projects such as Energy East, and a separate Enbridge Inc. proposal, should be sped up in light of Lac-Mégantic.
However, she cautioned she didn’t want to “get the two files mixed up.”
Rail and pipeline are seen as having two distinct purposes when it comes to transporting crude. Pipeline is generally seen as the more long-term solution while rail is viewed as a flexible stopgap measure to tide producers over until the pipelines are built or tap into markets that pipelines can’t access. With major pipeline projects such as Keystone XL beset by delays, many companies have been ratcheting up rail use.
Baytex Energy CEO James Bowzer said he expects about 43 per cent of the company’s heavy oil volumes to move by rail for the remainder of 2013. Between Alberta and the Bakken region of Saskatchewan and North Dakota, the industry is moving some 750,000 barrels per day of crude by rail, he noted.
John Rogers, vicepresident of investor relations at oilsands producer MEG Energy, said his company is pursuing pipeline, rail and river barge options to get crude to market. Of the three, he said pipeline is by far the cheapest at a toll of $10 per barrel between the oilsands region and the Gulf of Mexico. Rail is the priciest at between $15 and $18.
“I think pipelines have always looked better from an economic point of view — they’ve always looked better than rail. I think they both can be used to safely transport crude in North America. They both obviously have challenges that the industry is working real hard to ensure it deals with,” said Rogers.