TORONTO (miningweekly.com) – The Ontario Petroleum Institute (OPI), which represents Ontario oil and natural gas producers, on Friday welcomed the decision by the National Energy Board (NEB) to approve energy giant Enbridge's Line 9B reversal project.

The NEB, in its decision stated that: "The board's decision enables Enbridge to react to market forces and provide benefits to Canadians, while at the same time implementing the project in a safe and environmentally sensitive manner."

"The benefits of the reversal of Line 9B are clear. For Quebec, bringing a new, reliable supply of competitively priced crude oil to respond to the needs of Quebec-based refineries will protect more than 4 000 jobs, sustain a vibrant petrochemicals industry and strengthen the economy.

“For our customers, Line 9B reversal is an important component of our broader market access initiatives to open up and expand connections to key refining markets. Core to our strategy is to reduce our industry's environmental footprint, which is why our first choice is always to use existing infrastructure," Enbridge president and CEO Al Monaco said.

The NEB's approval came after nearly two years of extensive engagement and consultation with stakeholders, and was subject to Enbridge fulfilling 30 conditions.

In recent years, the significant increase in North American oil production had resulted in dramatic changes in the market, and specifically to the prices received by Ontario producers. Oil prices have been discounted up to 20% lower than the benchmark set for oil by the price of West Texas Intermediate and Brent crude oils.

By having new market alternatives, Ontario producers would receive prices that more closely reflect oil prices in other parts of North America. The eastward flow of Line 9B now made tapping into new markets possible for Ontario producers.

"The discounted oil prices have prompted producers in the province to look for alternative markets for Ontario oil. The NEB's decision to approve the Line 9B reversal has opened the doors for producers to sell Ontario oil to refineries in Eastern Canada at a cost that is far more economical than shipping by road, rail and water,” OPI executive director Hugh Moran said.

The institute said it believed that the decision to reverse the flow of Line 9B significantly benefits Ontario's economy.

"The province's oil and natural gas industry will benefit from the skilled jobs required for the reversal of Line 9B, most of which are transferable to Ontario producers. Having more stable oil prices and new options for market will encourage additional exploration and development in the province, which would also lead to job creation,” Moran added.

The OPI members have been safely using pipelines in gathering and transporting oil for more than a century. The industry fully expects Enbridge to meet its responsibilities and commitment to operating Line 9B to the highest standards to ensure the health and safety of the communities along the route.

The reversal of Line 9B, a 639 km section of Line 9 from North Westover, Ontario, to Montreal, Quebec, represents the second and final phase of Enbridge’s ‘Eastern Canadian Refinery Access Initiative’.

Enbridge has been operating the Line 9 pipeline – an existing 762-mm-diameter pipeline with a current capacity of about 240 000 bbl/d - since 1976. The company’s Eastern Canadian Refinery Access Initiative was expected to help level the playing field for Canadian refineries, safeguard jobs, and bolster the security of Canada’s energy supply.

Originally flowing eastward, Line 9 was reversed in 1998 as foreign oil from areas such as West Africa and the Middle East became more affordable. Quebec’s two remaining refineries currently process 90% foreign-sourced crude.

However, Western Canadian crude was now priced significantly lower than foreign oil, and as a result, Enbridge successfully applied to the NEB in November 2012, to reverse the flow of Line 9 once more.

The Line 9B reversal was considered a critical step in ensuring the future of Quebec’s refining and petrochemicals industries, according to an economic paper written by public policy analyst Jean-François Minardi and published by the Montreal Economic Institute in August 2013.

Quebec’s two refineries represent 20% of Canadian capacity, employing about 1 000 workers, while the petrochemicals sector in Montreal’s east end employs about 3 600 workers, according to Minardi.