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Canadian Energy Centre

‘Big vulnerability’: How Ontario and Quebec became reliant on U.S. oil and gas

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9 minute read

From the Canadian Energy Centre

By Deborah Jaremko

ARC Energy Institute leaders highlight the need for a new approach in a new reality

Despite Canada’s status as one of the world’s largest oil and gas producers, more than half of the country’s own population does not have true energy security – uninterrupted, reliable access to the energy they need at an affordable price.

Even though Western Canada produces much of the oil consumed in Ontario and Quebec, in order to get there, it moves on pipelines that run through the United States.

“It’s only energy secure if the Americans are our partners and friends,” leading energy researcher Jackie Forrest said on a recent episode of the ARC Energy Ideas podcast.

Amid rising trade tensions with the United States, energy security is taking on greater importance. But Forrest said the issue is not well understood across Canada.

“The concern is that in the worst-case scenario where the Americans want to really hurt our country, they have the ability to stop all crude oil flows to Ontario,” she said.

That action would also cut off the majority of oil supply to Quebec.

The issue isn’t much better for natural gas, with about half of consumption in Ontario and Quebec supplied by producers in the U.S.

“Tariffs or no tariffs, there is a real vulnerability there,” said Forrest’s co-host Peter Tertzakian, founder of the ARC Energy Research Institute.

The issue won’t go away with increased use of new technology like electric cars, he said.

“This isn’t just about combustion in engines. It’s about securing a vital commodity that is an input into other parts of our manufacturing and sophisticated economy.”

Oil: The Enbridge Mainline

The Enbridge Mainline is the main path for oil from Western Canada to reach refineries in Ontario and Quebec, according to the Canadian Association of Petroleum Producers (CAPP).

Originating in Edmonton, Alberta, the Enbridge Mainline moves crude oil, refined products, and natural gas liquids through a connected pipeline system. At Superior, Wisconsin, the system splits into Line 5, going north of Lake Michigan, and Lines 6, 14, and 61, going around the southern tip of the lake. The two routes then coalesce and terminate in Sarnia, Ontario, where it is interconnected with Line 9, which is terminated in Montreal, Quebec. Source: Canadian Association of Petroleum Producers

Originally built in 1950 from Edmonton to Superior, Wisconsin, in 1953, it was extended to Sarnia, Ontario through a segment known as Line 5.

CAPP said that at the time, politicians had pushed for an all-Canadian path north of the Great Lakes to increase energy security, but routes through the U.S. were chosen because of lower project costs and faster timelines.

In 1979, an extension of the pipeline called Line 9 opened, allowing oil to flow east from Sarnia to Montreal.

“Line 9 was built after the oil crisis and the OPEC embargo as a way to bring western Canadian crude oil into Quebec,” Forrest said.

But by the 1990s – before the massive growth in Alberta’s oil sands – there was a lack of crude coming from Western Canada. It became more economically attractive for refineries in Quebec and Ontario to import oil from overseas via the St. Lawrence River, CAPP said.

A reversal in 1999 allowed crude in Line 9 to flow west from Montreal to Sarnia.    

By the 2010s, the situation had changed again, with production from the Alberta oil sands and U.S. shale plays surging. With more of that oil available, the offshore crude was deemed to be more expensive, Forrest said.

In 2015, Line 9 was reversed to send oil east again from Sarnia to Montreal, displacing oil from overseas but not resolving the energy security risk of Canadian pipelines running through the U.S.

CAPP said the case of Line 5 illustrates this risk. In 2020, the Governor of Michigan attempted to shut down the pipeline over concerns about pipeline leak or potential oil spill in a seven-kilometre stretch under the Straits of Mackinac.

Line 5 has been operating in the Straits for 72 years without a single release.

Enbridge is advancing a project to encase the pipeline in a protective tunnel in the rock beneath the lakebed, but the legal battle with the State of Michigan remains ongoing.

Natural gas: The TC Canadian Mainline

The natural gas pipeline now known as TC Energy’s Canadian Mainline from Alberta was first built in 1958.

The TC Canadian Mainline (red dashed line) transports natural gas produced in Western Canada to markets in Eastern Canada. Red lines show pipelines regulated by the Canada Energy Regulator, while black lines show pipelines regulated by the United States. Source: Canadian Association of Petroleum Producers

“This pipeline brought gas into Ontario, and then it was extended to go into Quebec, and that was good for a long time,” Forrest said.

“But over time we built more pipelines into the United States, and it was a better economic path to go through the United States.”

The Mainline started running not at its full capacity, which caused tolls to go up and made it less and less attractive compared to U.S. options.

According to CAPP, between 2006 and 2023 the Mainline’s deliveries of gas from Western Canada to Ontario and Quebec were slashed in half.

“We should have said, ‘We need to find a way for this pipeline, over our own soil, to be competitive with the alternative’. But we didn’t,” Forrest said.

“Instead, we lost market share in Eastern Canada. And today we’re in a big bind, because if the Americans were to cut off our natural gas, we wouldn’t have enough natural gas into Quebec and Ontario.”

A different approach for a new reality

Forrest said the TC Mainline, which continues to operate at about half of its capacity, presents an opportunity to reduce Canada’s reliance on U.S. natural gas while at the same time building energy security for oil.    

“Those are the same pipes that were going to be repurposed for oil, for Energy East,” Tertzakian said.

“The beauty of the thing is that actually, I don’t think it would take that long if we had the will… It’s doable that we can be energy secure.”

This could come at a higher cost but provide greater value over the long term.

“That’s always been the issue in Canada, when it comes to energy, we always go with the cheapest option and not the most energy secure,” Forrest said.

“And why? Because we always trusted our American neighbor to never do anything that will impact the flow of that energy. And I think we’re waking up to a new reality.”

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2025 Federal Election

Canada’s pipeline builders ready to get to work

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From the Canadian Energy Centre

By Deborah Jaremko

“We’re focusing on the opportunity that Canada has, perhaps even the obligation”

It was not a call he wanted to make.

In October 2017, Kevin O’Donnell, then chief financial officer of Nisku, Alta.-based Banister Pipelines, got final word that the $16-billion Energy East pipeline was cancelled.

It was his job to pass the news down the line to reach workers who were already in the field.

“We had a crew that was working along the current TC Energy line that was ready for conversion up in Thunder Bay,” said O’Donnell, who is now executive director of the Mississauga, Ont.-based Pipe Line Contractors Association of Canada (PLCAC).

“I took the call, and they said abandon right now. Button up and abandon right now.

“It was truly surreal. It’s tough to tell your foreman, who then tells their lead hands and then you inform the unions that those three or four or five million man-hours that you expected are not going to come to fruition,” he said.

Workers guide a piece of pipe along the Trans Mountain expansion route. Photograph courtesy Trans Mountain Corporation

“They’ve got to find lesser-paying jobs where they’re not honing their craft in the pipeline sector. You’re not making the money; you’re not getting the health and dental coverage that you were getting before.”

O’Donnell estimates that PLCAC represents about 500,000 workers across Canada through the unions it works with.

With the recent completion of the Trans Mountain expansion and Coastal GasLink pipelines – and no big projects like them coming on the books – many are once again out of a job, he said.

It’s frustrating given that this could be what he called a “golden age” for building major energy infrastructure in Canada.

Together, more than 62,000 people were hired to build the Trans Mountain expansion and Coastal GasLink projects, according to company reports.

O’Donnell is particularly interested in a project like Energy East, which would link oil produced in Alberta to consumers in Eastern and Atlantic Canada, then international markets in the offshore beyond.

“I think Energy East or something similar has to happen for millions of reasons,” he said.

“The world’s demanding it. We’ve got the craft [workers], we’ve got the iron ore and we’ve got the steel. We’re talking about a nation where the workers in every province could benefit. They’re ready to build it.”

The “Golden Weld” marked mechanical completion of construction of the Trans Mountain Expansion Project on April 11, 2024. Photo courtesy Trans Mountain Corporation

That eagerness is shared by the Progressive Contractors Association of Canada (PCA), which represents about 170 construction and maintenance employers across the country.

The PCA’s newly launched “Let’s Get Building” advocacy campaign urges all parties in the Canadian federal election run to focus on getting major projects built.

“We’re focusing on the opportunity that Canada has, perhaps even the obligation,” said PCA chief executive Paul de Jong.

“Most of the companies are quite busy irrespective of the pipeline issue right now. But looking at the long term, there’s predictability and long-term strategy that they see missing.”

Top of mind is Ottawa’s Impact Assessment Act (IAA), he said, the federal law that assesses major national projects like pipelines and highways.

In 2023, the Supreme Court of Canada found that the IAA broke the rules of the Canadian constitution.

Construction of the Coastal GasLink pipeline. Photograph courtesy Coastal GasLink

The court found unconstitutional components including federal overreach into the decision of whether a project requires an impact assessment and whether a project gets final approval to proceed.

Ottawa amended the act in the spring of 2024, but Alberta’s government found the changes didn’t fix the issues and in November launched a new legal challenge against it.

“We’d like to see the next federal administration substantially revisit the Impact Assessment Act,” de Jong said.

“The sooner these nation-building projects get underway, the sooner Canadians reap the rewards through new trading partnerships, good jobs and a more stable economy.”

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Canadian Energy Centre

First Nations in Manitoba pushing for LNG exports from Hudson’s Bay

Published on

From the Canadian Energy Centre

By Will Gibson

NeeStaNan project would use port location selected by Canadian government more than 100 years ago

Building a port on Hudson’s Bay to ship natural resources harvested across Western Canada to the world has been a long-held dream of Canadian politicians, starting with Sir Wilfred Laurier.

Since 1931, a small deepwater port has operated at Churchill, Manitoba, primarily shipping grain but more recently expanding handling of critical minerals and fertilizers.

A group of 11 First Nations in Manitoba plans to build an additional industrial terminal nearby at Port Nelson to ship liquefied natural gas (LNG) to Europe and potash to Brazil.

Courtesy NeeStaNan

Robyn Lore, a director with project backer NeeStaNan, which is Cree for “all of us,” said it makes more sense to ship Canadian LNG to Europe from an Arctic port than it does to send Canadian natural gas all the way to the U.S. Gulf Coast to be exported as LNG to the same place – which is happening today.

“There is absolutely a business case for sending our LNG directly to European markets rather than sending our natural gas down to the Gulf Coast and having them liquefy it and ship it over,” Lore said. “It’s in Canada’s interest to do this.”

Over 100 years ago, the Port Nelson location at the south end of Hudson’s Bay on the Nelson River was the first to be considered for a Canadian Arctic port.

In 1912, a Port Nelson project was selected to proceed rather than a port at Churchill, about 280 kilometres north.

The Port Nelson site was earmarked by federal government engineers as the most cost-effective location for a terminal to ship Canadian resources overseas.

Construction started but was marred by building challenges due to violent winter storms that beached supply ships and badly damaged the dredge used to deepen the waters around the port.

By 1918, the project was abandoned.

In the 1920s, Prime Minister William Lyon MacKenzie King chose Churchill as the new location for a port on Hudson’s Bay, where it was built and continues to operate today between late July and early November when it is not iced in.

Lore sees using modern technology at Port Nelson including dredging or extending a floating wharf to overcome the challenges that stopped the project from proceeding more than a century ago.

Port Nelson, Manitoba in 1918. Photo courtesy NeeStaNan

He said natural gas could travel to the terminal through a 1,000-kilometre spur line off TC Energy’s Canadian Mainline by using Manitoba Hydro’s existing right of way.

A second option proposes shipping natural gas through Pembina Pipeline’s Alliance system to Regina, where it could be liquefied and shipped by rail to Port Nelson.

The original rail bed to Port Nelson still exists, and about 150 kilometers of track would have to be laid to reach the proposed site, Lore said.

“Our vision is for a rail line that can handle 150-car trains with loads of 120 tonnes per car running at 80 kilometers per hour. That’s doable on the line from Amery to Port Nelson. It makes the economics work for shippers,” said Lore.

Port Nelson could be used around the year because saltwater ice is easier to break through using modern icebreakers than freshwater ice that impacts Churchill between November and May.

Lore, however, is quick to quell the notion NeeStaNan is competing against the existing port.

“We want our project to proceed on its merits and collaborate with other ports for greater efficiency,” he said.

“It makes sense for Manitoba, and it makes sense for Canada, even more than it did for Laurier more than 100 years ago.”

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