Enbridge's Line 9 oil pipeline to displace foreign crude in Quebec

By Nia Williams
CALGARY, Alberta, Oct 1 (Reuters) - Enbridge Inc's ENB.TO
long-awaited start of its Line 9 oil pipeline to Montreal will
allow Quebec refineries to run on 100 percent cheap North
American inland crude, leaving around 100,000 barrels per day of
foreign crude searching for a new home.
The Calgary-based energy company received approval from
regulators on Wednesday to finally start operating the 300,000
bpd pipeline carrying mainly light crude from Sarnia, Ontario,
to Montreal, Quebec, nearly a year after it was first expected
in service. ID:nL1N1203IH
For Quebec's two refineries, Suncor Energy's SU.TO 137,000
bpd Montreal plant and Valero Energy's VLO.N 265,000 bpd Jean
Gaulin facility, the approval is a welcome boon.
Both will be able to switch to a diet of 100 percent West
Texas Intermediate-linked crude such as Canadian light synthetic
or North Dakota Bakken, displacing pricier Brent-linked
feedstock from regions including West Africa and the North Sea.
At present the refineries receive crude by rail, seaborne
imports into Quebec, and volumes from the Portland-Montreal
pipeline, which transports imported crude north.
Data from Statistics Canada show in July, the most recent
month available, Quebec imported 113,000 bpd of crude from
Azerbaijan, Algeria and Nigeria. Another 206,000 bpd came from
the United States and Canada.
Total foreign crude imports into the province from outside
North America vary from month-to month, according to the data,
but range around the 100,000 bpd mark.
Other countries that have exported to Quebec so far this
year include Norway, Russia, Angola and the United Kingdom.
"Once Line 9B is operational, the refinery will replace
more-expensive crude with less-expensive crude," said Valero
spokesman Bill Day.
A recent Valero investor presentation showed the refinery
currently takes around 80 percent North American crude, with the
rest imported from overseas.
Suncor did not specify how much overseas crude it processes
but spokeswoman Sneh Seetal said some of the Brent-linked crude
comes from Suncor's own offshore Atlantic Canada projects.
Analysts said Line 9's ability to deliver crude to Montreal
will be a further blow to the struggling crude-by-rail industry.
Suncor has capability to receive 40,000 bpd by rail, while
Valero has capacity to take 60,000 bpd, although the actual
volumes vary depending on economics.
"Some of those railed barrels will be displaced by piped
barrels because of cheaper transportation costs," said ITG
Investment analyst Judith Dwarkin.
Dwarkin said Valero also imports barrels from the Gulf
Coast, shipping them north on foreign-flagged vessels to
Montreal, and those flows will likely be disrupted too.