Making Ontario and Quebec Stronger Together: Why national energy projects that supply eastern Canadian refineries with western Canadian oil are critical for Ontario and Quebec’s economic future

TORONTO, May 22, 2013 /CNW/ - Ladies and gentlemen . . . hello.

Allow me to begin by presenting the Fédération des chambres de commerce du Québec (FCCQ), an organization that many of you are probably not familiar with.

The FCCQ is both a federation of chambers of commerce AND a province-wide board of trade. With a network of 150 chambers of commerce and 1,200 companies, we represent more than 60,000 businesses and 150,000 businesspeople involved in every economic sector across Québec.

In a word, the FCCQ is Québec's largest network of business leaders and companies—an influential and diverse network that truly reflects Québec's business community.

Our threefold mission is to:

  • Support business development in every economic sector and region;
  • Advocate for the creation of wealth, which depends primarily on a culture of entrepreneurship and innovation; and
  • Build on a network of chambers of commerce while acting as a facilitator for that network.


The FCCQ therefore ardently defends the interests of its members with respect to public policy. When it comes to protecting the interests of Québec's entrepreneurs and businesses, the FCCQ takes a leading role and is a valuable partner. We use every means available to promote an innovative and competitive business environment.

How better, then, to illustrate our approach than by presenting the FCCQ's case for a project that would:

  • Help to maintain an industry facing serious challenges;
  • Contribute to the long-term operations and success of major companies, some on the leading edge of technology;
  • Provide access to a less expensive source of energy;
  • Improve the outlook for public finances;
  • Increase the energy independence of a nation; and, moreover,
  • Play a part in sustainable development.


As you have no doubt guessed, I am referring to Enbridge's project to reverse the direction of flow in its 9B pipeline in order to carry Canadian crude oil to markets in Ontario and Quebec. This project actually represents a restoration of the pipeline's original purpose, which was to transport oil from Western Canada. At the request of clients, the flow was reversed in 1998 at a time when overseas oil was relatively inexpensive.

The project currently proposed by Enbridge is therefore to re-establish the original direction of flow. The FCCQ has supported this project from the outset, and we will continue to promote its benefits.

Let me explain in greater detail the reasons for our support.

1.     Hydrocarbon Development

FIRSTLY, the Fédération is generally in favour of hydrocarbon development.

The FCCQ has always been very active in its efforts to promote the exploration and development of natural resources. We believe that with all resources—mining, forestry, gas and oil—development is one of the most effective means of promoting economic prosperity and ensuring economic health for coming generations.

Like every other region in North America, Québec is a major consumer of oil. And, although we are very much in favour of developing new green technologies, the fact is that businesses AND individuals will continue to use energy from hydrocarbons for many years to come.

An extensive exploration of sedimentary basins in Québec has confirmed the presence of oil and gas reserves. According to the Québec's Ministère des Ressources naturelles, the Gaspé Peninsula may contain 429 billion barrels, while the Québec portion of the Old Harry deposit (in the Gulf of St. Lawrence) holds 7 billion barrels and Anticosti Island has close to another 46 billion barrels. These resources could generate considerable wealth in the medium term.

We are in favour of developing Québec's oil potential. These projects are important for the economic development of our regions and could allow us, in the near future, to reduce imports of foreign oil (from Africa and the Middle East, for example) through the use of more Canadian oil.

You should know that we are not the only ones supporting this development.

A study conducted a year ago by Léger Marketing showed that a majority of Quebeckers (78%) think that the government should make the development of natural resources a cornerstone of economic planning in order to ensure the prosperity of future generations.

The Premier of Québec has also supported this position through public statements as well as in her inaugural speech and discussions with the Premier of Alberta.

The FCCQ hopes that government officials take a pragmatic position on the issue. To be sure, efforts have to be made to reduce our greenhouse gas emissions, but it would not be realistic to hope that we might change our consumption habits overnight, and it would be especially impractical to suppose that electric transportation could replace traditional methods in the short term. The transition is well underway but it will take a very long time.

According to the National Energy Board, it is estimated that the market share of oil-based fuels will decrease by 2% but that real consumption will grow by 1% annually for the next 20 years. The Board further predicts that in 2035 oil-based liquid fuels will still account for 92% of the energy demand for transportation in Canada.

The FCCQ will therefore continue to lobby for the development and efficient use of various sources of energy, which are often complementary, including oil, natural gas, wind power, solar energy and biomass fuels. It is important that each form of energy be used appropriately.

Québec cannot be viewed as an island capable of energy self-sufficiency. The province needs to develop strategies designed to achieve synergy with the rest of Canada while remaining an integral part of the North American market.

2.     Structuring the Economy

SECONDLY, the Enbridge project would help structure the economy in Montréal's east end, Québec and Canada by maintaining and creating jobs and supporting the development of major industrial sectors.

It would serve to consolidate activities at the Suncor and Ultramar refineries in Montréal and Lévis, respectively, and perhaps even lead to new investment there. Ultramar has already announced its intention to invest $120 million in its Lévis refinery should the Enbridge project go ahead.

On one hand, this large-scale project would contribute directly to maintaining some 2,000 jobs in Montréal's east end—jobs that are primarily dependent on the refining and petrochemical industries. In case you are not aware, let me remind you that, over the last thirty years, five refineries in Montréal closed because they were not competitive. Thousands of well-paying direct and indirect jobs were lost as a result.

On the other hand, this project would serve to make the two remaining refineries more competitive by supplying them with oil at the Brent crude price, which is about $20 less per barrel—sometimes even cheaper because other refineries already have access to this more competitive product.

Finally, this project would have obvious spinoffs down the line for companies operating in the petrochemical industry. The current integrity dig program will see hundreds of employees hired in Ontario, and Enbridge has already purchased 2.5 million dollars worth of steel from the Niagara region.

While Enbridge's line 9 project is full stop in Montreal, TransCanada Pipeline's project to build a 4,400-kilometre pipeline (that could transport between 500,000 and 850,000 barrels of crude oil a day from Alberta and Saskatchewan to refineries in Eastern Canada) would serve to create a new national market for oil production in Western Canada and open the way for potential exports. The project would provide economic benefits for every province by creating jobs and ensuring a stable and reliable supply of oil.

Every necessary means must be taken to ensure that the refining industry remains competitive and active in Québec. It would indeed be ironic if we no longer had facilities to refine crude at the moment we began tapping our own oil reserves. We all know that, once a refinery closes its doors, they remain shut forever. I prefer not to envisage the consequences of closing two more refineries in Eastern Canada!

We all know the answer…

Moving ahead with this project would therefore help to consolidate refining and petrochemical operations that have been hard hit in recent years. It would provide benefits to the entire Québec economy and, through market interconnectivity, the Canadian economy as a whole.
Canadian oil must be refined in Canadian facilities!

I am sure, however, that you do not need to be convinced of this.

3.     Good News for Public Coffers

THIRDLY, from a macroeconomic perspective, the Enbridge project would be good for public finances.

It would improve Québec's trade balance, which year after year suffers an annual deficit of about $16 billion because of the need to import hydrocarbons. The reality is that Québec currently has to import nearly all the hydrocarbon fuels it consumes. Despite the province's strength in hydroelectricity, half of Québec's demand for energy (51%) is met by hydrocarbons: 38% by oil and 13% by natural gas.

Electricity satisfies just 38% of our energy needs with the remaining 11% coming provided by biomass fuels (10.4%) and coal (1%).

The idea of replacing some of the fossil fuels imported from abroad with underground resources from right here in Québec represents a major turnaround. It is time for Québec to become more energy independent by using Canadian black gold. The Enbridge project would go a long way in achieving this.

It would also serve to boost government income, which Québec sorely needs at the present time. By generating economic activity and creating jobs, the Enbridge project would augment government revenues and finance a part of the growing cost of social programs.

4.     A Reliable, Less Expensive and Greener
Source of Energy

Allow me to recapitulate.
The FCCQ is for the Enbridge project because:

  1. We are generally in favour of developing hydrocarbons;
  2. It would help improve the economic structure in Montréal, Québec and Canada; and
  3. It would be beneficial for public finances in Québec.


FOURTHLY AND FINALLY, the Enbridge project would provide businesses in Québec and Ontario with a reliable, less expensive and greener source of energy.

Enbridge's plan to supply Québec refineries with Canadian oil by reversing the direction of flow in its pipeline between Sarnia and Montréal would effectively provide Québec's refining and petrochemical industries with a reliable supply of oil at a significantly lower cost than for crude imported from the Atlantic Basin.

For example, Québec refineries now process Brent crude from Europe, the Middle East and North Africa at a current cost of US$104 a barrel, whereas oil sands oil is sold at the West Texas price of US$96.

Furthermore, reversing Line 9B would offer Québec refineries a new supply source and, therefore, greater flexibility. This would specifically reduce the dependence of refineries in Québec and Ontario on foreign offshore oil while ensuring supply security for Québec's domestic energy market. Western Canada will always be a more stable geopolitical region than any country in North Africa or the Middle East currently supplying Québec.

In this respect, the Enbridge project is consistent with sustainable development, for the environmental footprint would be even greater if the oil were to be refined in the United States and then redirected to Québec. Pipelines are the safest means of transportation and they have the lowest level of carbon foot print emission. In fact, if it weren't transported by Line 9, 300,000 barrels per day means one tanker truck every minute, 24-7, 365 days a year.

These are the reasons that the FCCQ believes it is important for the Enbridge project to proceed.

For your information, we are not the only ones in Québec who support Enbridge.

According to a CROP survey we requested a year ago, more than 7 out of 10 Quebeckers (71%) are in favour of the project. This survey also showed that 4 out of 5 Quebeckers (79%) agree that the project would make Québec less dependent on oil from Africa and the Middle East and that 3 out of 4 Quebeckers (74%) believe that it is safer to transport oil by pipeline than by boat.

The survey also clearly showed that Quebeckers expect their government to establish the conditions necessary to ensure a supply of Canadian oil: three-quarters of the population (76%) would choose oil from the oil sands over oil from North Africa (24%).

This pipeline would provide us with both energy independence and a secure supply of oil from less expensive reserves. The Enbridge project is therefore vital to all Quebeckers, who, it should be remembered, pay nearly $16 billion annually to foreign countries for the oil they consume. Moreover, the project offers benefits to all Canadians.

Canada has extensive oil reserves. An efficient economy should provide every refinery in Québec and Ontario with access to a supply of Canadian oil.

This issue, however, concerns much more than the specific project of one company. It is about our capacity as a country to proactively exploit our oil resources responsibly rather than succumbing to inaction.

I would therefore invite you all to join efforts in making this project a reality as soon as possible.

Thanks

Full Speech by Françoise Bertrand, President and Chief Executive Officer of Fédération des chambres de commerce du Québec (Québec's Federation of Chambers of Commerce), at the Toronto Region Board of Trade luncheon on May 22, 2013.

SOURCE: Fédération des chambres de commerce du Québec

For further information:

Media Contact:
Camilla Sironi
Office : 514-844-9571 x. 3227
Mobile : 514-647-4745
Email : Camilla.Sironi@fccq.ca

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Fédération des chambres de commerce du Québec

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