Parliamentary commission on Line 9B pipeline reversal

The future of Quebec's refining industry depends on having access to quality crudes at competitive prices, and this means access to Western oil. This is the conclusion of a submission presented today by Valero Energy Inc. (Valero) during consultations conducted by the Agriculture, Fisheries, Energy and Natural Resources Commission on the Pipeline 9B Reversal Project proposed by Enbridge.

The future of refineries

The future of refineries depends on huge investments and these investments are made in the markets that are the most competitive. At present, 90% to 95% of the operating costs of the Jean-Gaulin refinery in Lévis are raw material-related.

"It is urgent for us to be able to diversify our supply sources in order to compete with other North American refiners that already benefit from Western oil at a lower cost. There is no doubt that the reversal of Pipeline 9B is vital for ensuring our competitiveness," explained Ross R. Bayus, President, Canadian Operations, Valero Energy Inc. before the Commission.

Since 2008, six refineries have announced their closure in North America's Northeast, including one in Montreal East in 2009, and more recently, another in Dartmouth, Nova Scotia. The increasingly strict regulations on products, which require massive investments, combined with the recent recession, have led to the closure of these refineries and several others that were considered more vulnerable. Only the refineries that are operating in a competitive environment are able to attract the investments needed for them to continue their activities.

Changes in the market

Our challenge in a market undergoing profound change is for us to adapt and even take the lead. Otherwise, we run the risk of becoming marginalized and uncompetitive, despite the fact that, at Lévis, we own a world class plant in which we have invested almost $2 billion since 2001. We are lucky to have the option presented by Pipeline 9B as an immediate and safe solution," stated Mr. Bayus.

The Pipeline 9b reversal project would generate a total investment of almost US$ 200 million for Valero in Quebec, most of which would go to its Montreal East facilities. This would entail the creation of about 200 jobs during the construction phase and 100 new permanent jobs related to the use of state-of-the-art ships to carry the crudes from Montreal to Lévis.

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/29112013/parliamentary_commission_on_the_line_9b_pipeline_reversal_project/