Ontario Board Sees More Risk Than Gain in Energy East Pipe

(Bloomberg) -- TransCanada Corp.’s proposed Energy East pipeline will create more risk than gain for Ontario, according to a regulator asked by the provincial government to study the impact of the C$12 billion ($9.2 billion) oil conduit.

While more than 40 percent of the pipeline will cross Canada’s most-populous province, it will produce “only modest economic benefits,” the Ontario Energy Board said in a report Thursday. The conversion of a natural gas line to carry oil as part of the project means the price of gas in eastern Ontario is forecast to rise an average of 12 percent in winter months from 2016 to 2035, according to the regulator.

Winning political support is important for TransCanada to avoid further delays for a line proposed to cross six provinces and transport as much as 1.1 million barrels of oil a day from Alberta to Canada’s Atlantic Coast. The energy industry has been stymied by opposition to pipelines in its effort to boost exports of oil-sands crude, including TransCanada’s proposed Keystone XL conduit to the U.S. Gulf Coast.

TransCanada said Energy East is poised to displace crude imports from other countries into eastern Canada, add C$15 billion to the Ontario economy and create 4,200 jobs, in an e- mailed statement. The company said it would examine the Ontario regulator’s report and ensure its project is safe and provides economic gains.

The Ontario regulator also raised concerns about the line’s impact to environmentally sensitive lands, climate change and the risk of spills. The report was commissioned to inform the provincial government as it prepares to weigh in on a national review of the project.

The National Energy Board is assessing Energy East to make a recommendation to the federal government, which has the authority to approve or reject the line.

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Susan Warren, Carlos Caminada.


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