June 17, 2012

Maine part of oil flow trend

By Tux Turkel tturkel@pressherald.com
Staff Writer

Maine has been a transit point for crude oil flowing west to Canada for 72 years.

More than 4 billion barrels have been pumped from tankers in Portland Harbor since World War II, when the Portland-Montreal Pipe Line was built to thwart enemy warships that threatened tanker traffic to Canada.

Today, Maine finds itself positioned for a different battle.

On one side are environmental activists. They say a hard-to-extract, corrosive crude oil that will speed global climate change and raise the risk of pipeline leaks will soon begin flowing east across Maine.

On the other side are pipeline companies. They downplay the effects of extracting and moving the controversial crude. They also stress that there are no current plans to reverse the pipeline's flow and pump crude 236 miles from Montreal to Portland.

But several ongoing developments in North American's petroleum market suggest that the flow of crude oil already is shifting east, and Maine is seeing the start of the trend.

Late last month, a train carrying 104 tank cars filled with crude traveled 2,435 miles from the Bakken oil fields of North Dakota across Maine to the Irving Oil refinery in St. John, New Brunswick. First reported outside of trade journals by the Portland Press Herald, the test trip signifies how far Canada's largest refinery will go for a cheaper source of petroleum.

The Bakken fields contain oil that's locked in shale formations. It's released by injecting pressurized water and chemicals, a controversial process called fracking.

The Bakken deposits have made North Dakota the nation's fourth-largest oil producer, and railroads say they expect Irving to take increased quantities from there in the months ahead.

Irving apparently has a deal with an American fuel broker to ship as much as 15,000 barrels of Bakken crude daily to Saint John later this summer, according to the Telegraph-Journal of New Brunswick. The route was not disclosed, but could include Maine.

Railroads also have begun moving test quantities of Canadian tar-sands oil across Maine, and are preparing to transport more.

Canada sits atop the world's second-largest proven petroleum reserves.

New technologies and rising oil prices have made our northern neighbor the biggest single source of imported crude for the United States.

Imports to the U.S. are projected to triple over the next 10 years, the federal Energy Information Administration estimates.

Most of that crude is bitumen, a tar-like oil as thick as peanut butter, buried in sand deposits under Alberta. Large volumes of energy and water are needed to extract bitumen. It's then diluted with natural gas compounds so it can flow through pipelines.

Despite the challenges, maximizing the economic potential of so-called tar sands deposits is a national ambition for Canada. There's so much oil in Alberta, and billions of dollars to be made extracting and exporting it, that energy companies are working on multiple fronts.

They want to build or repurpose pipelines heading west, to British Columbia, for export to Asia; heading south to the United States' Gulf Coast and -- most relevant for Maine -- east to Quebec.

The rush to transport diluted bitumen helps explain the recent actions of TransCanada Corp., which faces opposition to its Keystone XL pipeline to the Gulf Coast.

TransCanada recently proposed converting a natural-gas pipeline to move tar-sands oil to refineries in Ontario and Quebec. From Montreal, oil could move on the St. Lawrence River, or in the Portland Pipe Line, and to American East Coast refineries, according to published reports.

The potential also shows why TransCanada's chief Canadian pipeline rival, Enbridge Corp., announced in May that it will seek permits to reverse the flow of a 240,000 barrel-per-day line between Westover, Ontario, and Montreal, to bring Alberta oil to refineries in Quebec.

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