TORONTO (AP) -- Pipeline company TransCanada said Thursday it will go ahead with a $12 billion plan to ship 1.1 million barrels of oil per day from Alberta to the country's Atlantic coast that would allow Canadian crude to be exported to Asia.
TransCanada CEO Russ Girling called it an historic opportunity to connect the oil resources of western Canada to the consumers of eastern Canada. He said the pipeline will end in Saint John, New Brunswick, where TransCanada and Irving Oil will build a new deep-water marine terminal. Irving Oil said it will allow Canadian producers direct access to world markets for exporting Canadian oil via the world's largest crude-carrying vessels.
The announcement of the Energy East pipeline comes as TransCanada faces stiff environmental opposition to its proposed Keystone XL pipeline from Alberta to Texas. President Barack Obama's initial rejection of Keystone XL went over badly in Canada, which relies on the U.S. for 97 percent of its energy exports.
The Canadian government has since stepped efforts to diversity oil exports to Asia, but a proposal by Enbridge to build a pipeline from Alberta to Canada's Pacific Coast also faces stiff environmental opposition. All three pipelines require regulatory approval.
"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 U.S. crude oil," Girling said in a statement.
TransCanada's Energy East pipeline has garnered support from both federal and provincial leaders and faces far less opposition than Enbridge's proposed Northern Gateway Project to Canada's Pacific Coast where the fear of oil spills is especially acute in British Columbia, with its snowcapped mountains and deep ocean inlets.
New pipelines are critical to Canada, which needs infrastructure in place to export its growing oil sands production from northern Alberta. The region has the world's third largest oil reserves, with 170 billion barrels of proven reserves. Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million in 2025. Only Saudi Arabia and Venezuela have more reserves.
A lack of pipelines and a bottleneck of oil in the U.S. Midwest reduced the price of Canadian crude in recent years and led to a boom in transporting oil by train. A fiery train derailment that killed 47 in Quebec last month highlighted the danger of moving oil by rail.