Enbridge’s Line 9B pipeline reversal could open up new markets for Ontario oil producers

Today, the Ontario Petroleum Institute, which represents Ontario light crude oil producers, appeared before the National Energy Board in Toronto, to explain why the reversal of flow of Enbridge’s Line 9B is crucial for the future growth of the province’s oil production in the industry.

“The reversal of Enbridge’s Line 9B would offer Ontario an enhanced competitive market in Canada for current and future production,” said Jim McIntosh, a petroleum Engineering Consultant and a member of the Ontario Petroleum Institute’s Board of Directors. “The approval of Line 9B provides an option that enables oil produced in Ontario to be transported to Canadian refineries outside of the Sarnia region at a cost differential superior to road, rail and water.”

Dramatic changes in the market
In his presentation to the National Energy Board, Mr. McIntosh explained that significant increases in North American oil production have resulted in dramatic changes in the market and specifically to the prices received by Ontario producers. Oil prices have been discounted up to 20% lower than the benchmark set for oil by the price of West Texas Intermediate (WTI) and Brent crude oils.

To remain viable contributors to the Ontario economy, the producers' ability to market its current and future production is an important priority. This has prompted Ontario producers to look for an alternative market for oil.

"The logical and practical choice for an alternative market for Ontario oil production would be to refineries in Montreal and Saint John," said McIntosh. "This option is practical only if pipeline delivery is available. The reversal of Line 9B provides that availability to Montreal."

McIntosh added: "Having this new transportation choice helps remove any bottlenecks created by oversupplies at Sarnia. Additional refinery options for oil volumes at Sarnia will firm up the price."

Jobs and expertise in Ontario
The Ontario Petroleum Institute strongly believes the Line 9B reversal project will create jobs in the province and advance Ontario's oil production industry.

"The collateral benefit for the Ontario oil and natural gas industry will be the skilled jobs required for the reversal of Line 9B, most of which are transferable to the Ontario producers," said McIntosh. "The reversed system will increase marketing alternatives for local producers, ensuring they will receive prices that more closely reflect oil prices in other parts of North America. Oil prices that are more stable will encourage additional exploration and development in Ontario, and the jobs created by that activity."

Safety and environmental standards
Regarding pipeline safety, McIntosh told the National Energy Board that its members have been safely using pipelines in gathering and transporting oil for more than 100 years.

"The Ontario Petroleum Institute fully expects Enbridge to meet its responsibilities and commitment to operating Line 9B to the highest standards to ensure the health and safety of the communities along the route and in the surrounding areas of the route."

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/18102013/enbridge_line_9b_pipeline_reversal_could_open_up_new_markets_for_ontario_oil_producers/