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West-to-east pipeline plan solidifying

The federal government is firming up its support of two projects that would see oil from Alberta piped to Atlantic Canada.

Natural Resources Minister Joe Oliver says he gave a tentative nod to one proposal in a meeting with industry giant Irving Oil.

"I met with Arthur Irving (Irving Oil's chairman) and expressed the support of the government of Canada, in principle, for this initiative," Oliver said in an interview with The Canadian Press.

TransCanada Corp. (TSX:TRP) wants to convert an existing, underused natural gas line to bring oil from Western Canada to Quebec and New Brunswick.

It would be up to the National Energy Board to approve such projects, and TransCanada has not yet formally submitted the proposal for scrutiny.

Irving Oil owns a refinery in Saint John with a current capacity of about 300,000 barrels per day. If the conversion goes ahead, the pipeline could move upwards of one million barrels per day and benefit the Irving refinery.

Oliver said industry participants have built a solid business case for the proposal, and he supports it, so long as it passes the necessary regulatory hurdles.

"We in principle are very supportive and are encouraging the market participants to pursue it," said Oliver.

"To the extent that there are regulatory reviews, of course we respect that, and our support would be contingent on those reviews coming out positive."

Another proposal would see Enbridge Inc. (TSX:ENB) expand capacity on some pipes in the Great Lakes region and reverse the flow of another line between Montreal and southern Ontario, the so-called Line 9 pipeline that currently brings imported oil to a refinery in Sarnia, Ont.

Environmental groups have mounted a campaign against the Line 9 reversal, calling it just one more step towards creating an eastern route for "dirty'' oilsands exports.

Oliver, though, said the proposal would have to jump through fewer environmental hoops and take less time than two controversial pipeline projects in the West, the Northern Gateway pipeline through British Columbia and TransCanada's Keystone XL line into the United States.

"You don't have the issue of the construction and the potential environmental impact which has to be assessed," Oliver said.

"In both cases ... the bulk of the line will have already been built, and that makes quite a difference. In terms of the surrounding area through which it goes there's no (environmental) impact."

The Canadian Press


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