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TransCanada Mainline Conversion Raises Tanker Traffic Concerns

Hazardous cargo “sloshing” and tanker traffic rights have surfaced as concerns that Atlantic Coast industry will float during regulatory hearings on TransCanada Corp.’s Energy East plan for partial conversion of its natural gas Mainline to oil service.

Canaport LNG LP (CLNG) -- Canada’s lone liquefied natural gas marine terminal, 75% owned by Spanish energy conglomerate Repsol S.A. -- filed an opening statement that requests designation as a priority destination at a proposed oil tanker dock.

The TransCanada plan calls for the established LNG and new oil facilities to be close neighbors, only one kilometer (0.6 mile) apart, on a land point that juts into the Bay of Fundy at Saint John in eastern New Brunswick.

Roving hearings by the National Energy Board (NEB), which will eventually touch down across the country from the Atlantic to Alberta, start Tuesday (Aug. 9) in Saint John. The review is scheduled to last until November 2017, with a decision target of March 2018.

An opening statement script presented by Canaport reminded TransCanada that although environmental concerns and aboriginal resistance dominate publicity about Energy East, the C$15.7 billion (US$12 billion) project also faces scrutiny from widely varying regional economic interests.

Alberta applauds the plan as a reduction of expensive excess Mainline long-distance gas delivery capacity and a fresh chance to grow national and overseas markets for up to 1.1 million b/d of rising oilsands production.

In Ontario and Quebec, Energy East initially represented a loss of short-haul service for low-cost imports of shale gas from the United States that forced TransCanada to expand the project by adding a replacement called the Eastern Mainline.

In New Brunswick Canaport said federal and provincial authorities officially recognize its LNG terminal as “critical infrastructure” in maintaining secure supplies of heating and power plant fuel for eastern Canadians and Americans alike.

“CLNG serves as a strategic energy asset for the maritime energy supply chain and is one of the largest LNG storage facilities in the region with 10 Bcf of natural gas storage capacity,” according to the terminal’s statement to the NEB. “Characterizing CLNG as a ‘minor importer’ underestimates the importance of CLNG to the province and to the northeastern United States.”

While calling itself “generally supportive” of Energy East, Canaport calls for improved consultation by TransCanada and recognition of special marine traffic safety needs posed by liquefied natural gas terminals.

The proposed oil dock and the LNG terminal will be so close together that tankers for both commodities may have to maneuver around one another or wait in lineups. Oil vessels should have to yield the right-of-way to the gas tankers, Canaport said.

“An uninterrupted unloading window is necessary to safely commence and complete the LNG vessel berthing, discharge and departure processes,” said the statement to the NEB. “The reason LNG vessels require an uninterrupted window is that such vessels are unable to perform a partial unloading due to the risk of ‘sloshing’ -- that is, motion of the LNG inside a partially full tank as a consequence of a vessel’s rolling and pitching in a seaway, which could result in damage to the vessel’s tanks and loss of containment of LNG.” Canaport said, “Such sloshing could result from an LNG vessel being forced to leave the berth before the planned cargo unloading has been completed. The uninterruptible nature of the unloading window is unique to LNG vessels whereas crude oil vessels have the ability to partially load or unload oil and leave for anchorage virtually at any time.”

The minority 25% owner of Canaport, Irving Oil, runs Canada’s largest refinery at Saint John and is TransCanada’s partner in the proposed new crude tanker dock. But the relationship does not immunize the Alberta pipeline against scrutiny from its corporate conglomerate ally in New Brunswick.

In a separate intervention before the NEB Irving Oil’s parent company, J.D. Irving Ltd., said it has forest products and other branches that are affected, and not necessarily favorably, by Energy East.

The proposed extension of TransCanada’s network, by laying new pipe to Saint John from Quebec, crosses 100 kilometers (60 miles) of land that Irving owns plus 70 kilometers (42 miles) that it leases from the New Brunswick government.

J.D. Irving said it is “vitally concerned” with “commercial impacts and environmental effects of the [Energy East] project on its forestry and other operations and the appropriateness of the general route and land requirements.”

The New Brunswick corporation vowed to scrutinize TransCanada’s safety and security programs, emergency planning for spills, accidents or breakdowns, and conditions that the NEB will eventually put on Energy East as the regulatory review evolves.

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