TORONTO (miningweekly.com) – Regional energy infrastructure developer and operator TransCanada on Thursday announced that it would proceed with its proposed 1.1-million-barrel-a-day Energy East pipeline that would transport crude oil from Western Canada to Eastern Canadian refineries and export terminals.

The Conservative federal government, under the leadership of Prime Minister Stephen Harper, welcomed the development decision for the $12-billion project, saying the decision is a “milestone in transporting Canadian crude from west to east and reaching new markets abroad” and that this was “exceptional news for Canada’s energy security and our economy”.

TransCanada said it had closed binding, long-term contracts for moving 900 000 bbl/d from producers and refiners during a successful ‘open season’, which had confirmed strong market support for a pipeline.

"This is an historic opportunity to connect the oil resources of Western Canada to the consumers of Eastern Canada, creating jobs, tax revenue and energy security for all Canadians for decades to come,” TransCanada president and CEO Russ Girling said.

He added that interest in Energy East demonstrates refineries' desire to have access to a stable and reliable supply of Western Canadian crude oil – pushing out more expensive crude oil from foreign sources. Eastern Canada currently imports about 700 000 bbl/d from the Middle East, Nigeria and Angola.

In 2012, 83% of crude oil deliveries to Atlantic Canadian refineries and 92% of oil deliveries to refineries in Québec were imported.

Canada is desperately seeking alternative oil transport networks to its rail infrastructure to boost an industry that last year accounted for C$100-billion in exports of oil and natural gas, Al Monaco, the country’s largest pipeline operator Enbridge’s president and CEO, said at a recent Bloomberg Canada Economic Summit in Toronto.

The Canadian Association of Petroleum Producers’ '2013 Crude Oil Forecast, Markets and Transportation' report expected Canadian crude oil production to more than double to 6.7-million barrels a day by 2030, up from 3.2-million barrels a day in 2012.

"Energy East is one solution for transporting crude oil but the industry also requires additional pipelines such as Keystone XL to transport growing supplies of Canadian and US crude oil to existing North American markets. Both pipelines are required to meet the need for safe and reliable pipeline infrastructure and are underpinned with binding, long-term agreements,” Girling added.

The pipeline, which would incorporate current Canadian Mainline natural gas assets, is expected to be in service for deliveries to Québec by late-2017 and for deliveries to New Brunswick by 2018.

The Energy East Pipeline project would involve converting a portion of natural gas pipeline capacity in about 3 000 km of TransCanada's existing Canadian Mainline to crude oil service and constructing about 1 400 km of new pipeline.

The pipeline would transport crude oil from receipt points in Alberta and Saskatchewan to delivery points in Montréal, the Québec City region and in Saint John, New Brunswick, greatly enhancing producer access to Eastern Canadian and international markets. The pipeline will terminate at Canaport, in Saint John, New Brunswick where TransCanada and Irving Oil had formed a joint venture to build, own and operate a new deep-water marine terminal.

TransCanada said it now intended to proceed with the necessary regulatory applications for approvals to construct and operate the pipeline project and terminal facilities in early 2014.