MONTREAL -- A pipeline operator has begun formally arguing its case to send oilsands crude flowing from the Alberta oilpatch to Eastern Canada, in a controversial proposal to reverse the flow on one of its lines.
The National Energy Board hearings into the proposal by Enbridge Inc. (TSX:ENB) have kicked off at a time when Canada is struggling to find ways to ship Alberta bitumen to foreign markets amid stiff opposition fuelled by safety and environmental concerns.
Representatives for Enbridge made their case in Montreal as hearings began Tuesday, insisting the plan would benefit Canadians across the country.
Enbridge counsel Douglas Crowther opened by saying the project "would redeploy an existing pipeline in a safe, efficient and economical way to the benefit of refineries in Quebec, oil producers in Western Canada and the broader Canadian public interest."
The Calgary-based company hopes to reverse the flow and increase the capacity of its existing Line 9, an initiative that would pump oilsands crude across southern Ontario and Quebec.
The project would uncork an important outlet for Alberta oil producers as they search for ways to get their product to market.
Prime Minister Stephen Harper has been engaged in an increasingly bitter dispute with U.S. President Barack Obama over the proposed Keystone XL pipeline by TransCanada Corp. (TSX:TRP) to send oilpatch crude south to the Gulf of Mexico.
Ottawa is also facing significant resistance within Canada to Enbridge's Northern Gateway proposal to ship bitumen through the B.C. backcountry to tankers on the Pacific coast.
In the face of such bottlenecks, use of rail has skyrocketed in transporting oil.
The National Energy Board hearings on Line 9, which runs from Sarnia, Ont., to Montreal, are occurring in a climate where alternative means of transporting oil face significant scrutiny, particularly following last summer's rail disaster in Quebec.
On July 6, a train transporting crude derailed and exploded in the Quebec community of Lac-Megantic, killing 47 people and obliterating the community's downtown core.
The Line 9 hearings, which will feature presentations from around 40 interested parties on different sides of the debate, will continue over the next few days in Montreal before moving to Toronto next week. The panel has up to three months to deliberate and is expected to reach a decision by early 2014, at the latest.
This would be the second change in direction for Enbridge's line.
Oil initially flowed east from Sarnia to Montreal through the four-decade-old Line 9 but, since market conditions changed in the 1990s, imported crude has been piped in the other direction.
The new plan calls for oil to be pumped eastward once again along the 831-kilometre-long stretch of pipeline and for its daily capacity to be increased to 300,000 barrels, up from the current 240,000 barrels.
The company argues the Line 9 project would provide refineries in Ontario and Quebec with a more secure oil supply from Western Canada at a lower price than foreign product they currently buy. The reversal, Enbridge says, would create jobs and boost provincial revenues.
Enbridge's Line 9 proposal has met resistance from environmentalists, First Nations and residents who fear the project would speed up the release of greenhouse gases from the oilsands and pose significant risks to communities along the corridor, which is Canada's most populated region.
The company is still cleaning up after a 2010 pipeline spill in Michigan, a rupture that saw 20,000 barrels of crude pour into the Kalamazoo River. Enbridge, however, maintains that safety is its top priority.
That hasn't calmed the concerns of many people in Quebec and Ontario that a similar breach could strike in their own backyards.
Groups opposed to the project have planned a protest Wednesday in Montreal.
Patrick Bonin of Greenpeace Canada said Line 9 is about the same age and of similar construction to the pipeline that leaked in Michigan.
He said that reversing the flow of Line 9, filling it with a different type of crude and increasing its capacity would significantly increase the chances of a breach.
The company, Bonin added, has failed to consider a possible "worst-case scenario" of a major leak in a heavily populated area along the pipeline, such as Montreal. He said a catastrophe like that could affect the drinking-water supply for one million people and contaminate the St. Lawrence River.
"Those are tremendous risks and Enbridge definitely underestimates those risks," said Bonin, who also believes the company has overestimated the project's economic spinoffs.
"All the risks are on the shoulders of communities."
During Enbridge's presentation Tuesday, company counsel Ann Biguee argued that it learned a lot from the Kalamazoo spill in Marshall, Mich.
She defended the company's record from critics who refer to that disaster as an example of Enbridge's lack of preparedness for emergencies and its inability to prevent damage to the environment as well as third parties.
"What all of those arguments fail to acknowledge is that we are no longer in 2010," Biguee told the hearing.
"In the intervening years, and under the close and careful supervision of the National Energy Board, Enbridge has implemented a large number of operational and procedural changes based on its detailed investigations of, and lessons learned from, the Marshall incident."
Enbridge has said the Line 9 pipeline is continuously monitored from an Edmonton control centre and it can be turned off in up to 10 minutes. The line is also patrolled on foot and by air by response crews and a sudden loss of pressure would lead to an automatic shutdown.
Enbridge, meanwhile, isn't the only company hoping to pipe Alberta bitumen to Eastern Canada.
TransCanada has presented a proposal of its own to ship crude eastward by converting an existing natural gas line.
The company is proposing to build the Energy East Pipeline project, which still has to clear regulatory reviews, to pump up to 1.1 million barrels per day from Western Canada to Quebec and eventually New Brunswick.
The premiers of Quebec and New Brunswick have shown an openness to allowing Alberta crude shipped across their territories, projects that are expected to create jobs in Eastern Canada.
Quebec Premier Pauline Marois has already agreed to create working groups to examine the economic benefits and environmental risks of pumping oilpatch bitumen through her province.
In August, Marois said the project could be a boon for Quebec, particularly since it would supply oil refineries in Montreal. She said Alberta crude would be cheaper than oil purchased from abroad.
Ontario Premier Kathleen Wynne has pledged that environmental concerns will be addressed before Western oil will be transported across her province by pipeline.
Anti-pipeline protests have been staged in Ontario over Enbridge's plan, including the blockade of an pumping station near Hamilton a few months ago that led to 18 arrests.
But despite opposition in Canada and the U.S., Ottawa appears poised to continue the fight to get oilsands crude out of Alberta.
Former Conservative cabinet minister Jim Prentice said in a recent speech that Canada must find a way to get its landlocked resources to market by building pipelines in virtually all directions.
The ex-industry and environment minister, now a CIBC senior executive, said earlier this month that Canadian oil production is projected to double over the next two decades to about six billion barrels.
But Prentice added that finding markets and getting the oil to market is not assured.
