Blocked on the Keystone XL — The Tar-Sands Industry Looks East

A proposed Energy East pipeline would send oil-sands crude across Canada to terminals on the Atlantic coast.

By Christina Nunez

The oil-sands industry in Alberta has a problem: It's capable of producing more oil than it can get to market. It has tried building new pipelines south into the United States—the famous Keystone XL project—and west to British Columbia. But both projects are stalled and face stiff opposition. Now a battle is heating up over the latest proposal: a 2,858-mile-long pipeline to Canada's east coast.

TransCanada, the same company that wants to build Keystone XL, says it plans to seek Canadian government approval of the Energy East project in early November. "This is largest regulatory application in our company's history," said TransCanada spokesperson Shawn Howard. "It's tens of thousands of pages." The company announced last year that it had "confirmed strong market support."

Canada's oil sands are currently pumping out approximately two million barrels a day, an amount expected to nearly double within the next ten years. Oil trains are taking up some of the excess: In an annual forecast, the Canadian Association of Petroleum Producers (CAPP) predicted that oil transported by rail would increase from about 200,000 barrels a day in late 2013 to 700,000 a day by 2016.

But that forecast also called pipelines "essential" to moving new production.

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From those terminals the oil could be shipped to refineries along the U.S. East and Gulf Coasts, and it would also find ready markets in Europe and Asia, according to CAPP. Some observers naturally see the Energy East project as a way around the Keystone XL impasse.

TransCanada, for its part, says the main impetus for Energy East is to reduce dependence in eastern Canada on foreign oil imports, and that Keystone XL will not be abandoned even if Energy East is built. "We believe that ultimately both of these projects will be approved. They have different markets," said Howard. "It's too simple for people to think that this is an either-or."

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