​New pipeline project seeks to succeed where Energy East failed

Image: Brian Zinchuk/Pipeline News

A new transcontinental pipeline project similar in concept to the defunct Energy East project is in its formative stages.

It’s early on for Canadian Prosperity Pipelines Corporation, but their idea is to transport oil from Hardisty, Alberta, to Saint John, New Brunswick, and a marine tanker terminal for potential export.

As a matter of course, the mainline would pass through Saskatchewan, Manitoba, Ontario and Quebec to get there. The project is called the Canadian Prosperity Pipeline Project, or CP3, and is expected to cost $23 billion.

On Sept. 17 Pipeline News spoke to president and CEO Duane Lauritsen. He was born and raised in Grande Prairie, Alta., and graduated from civil and structural engineering degree from the University of Calgary. His career has been in the oilpatch in Alberta, principally designing and building oilsands projects for the last 25 years, including an industry-first undiluted bitumen pipeline between Suncor’s Firebag project and its Base Plant.

We also spoke to Doug MacLellan, who is director of project management and strategy, and a recent addition to the team which so far numbers four, plus three advisors.

About CP3, the company is holding most of their cards close to their chest. The size of the pipe is hypothesized to be 36 inches, although MacLellan indicated that could be increased. Lauritsen indicated capacity of 1.1 million barrels per day.

Creating unity

“It’s an amazing story for Canada on so many levels,” Lauritsen said. He noted that the recent attacks on Saudi Arabia’s oil infrastructure could have an impact on oil supplies in Eastern Canada. “Energy independence and energy security, for Canada, especially Eastern Canada, is getting heightened awareness.

“The vision for the Canadian Prosperity Pipeline is creating Canadian unity,” he said. Having lived in the west, and for the last two years in the east, he said, “I have experienced the polarization west to east. There’s a similar polarization, albeit a different story, east to west. The underlying vision of the CP3 project is creating Canadian unity achieved through breaking through communication barriers in an informed and factual manner.

Quebec

It’s no coincidence Canadian Prosperity is incorporated in Quebec headquartered and in Montreal. The choice was strategic.

Opposition to oil pipelines in Quebec was a leading factor in the collapse of the now defunct Energy East project.

Their messaging campaign is an “inside-out” marketing approach “to inform and educate the people of Canada about what the energy industry means to the Canadian confederation,” Lauritsen said.

This includes factually-driven broadcasts in both official languages. He thinks there is support among the people, and politicians across Canada.

Lauritsen approached TC Energy about this idea, but was told it is focusing on other projects, and they wished him good luck. He approached other pipeline companies, and received a similar result, so he decided to go it alone. “In alignment with our marketing strategy and campaign, I chose to incorporate and headquarter the Canadian Prosperity Pipelines Corporation in Quebec, where I now live,” Lauritsen said.

There will be a smaller, secondary headquarters in Calgary where much of the technical expertise would be based.

He said they intend on a national advertising marketing campaign from very early on in the process, addressing different social aspects in each province, but with an over-arching theme of Canadian unity and prosperity.

Lauritsen’s leadership philosophy is “collaboration equates to harmony.”

“Lots of people love the idea of unity, but at the end of the day, what 99 per cent of people care about is ‘What’s in it for me?’ The unity-prosperity equation actually results in them being able to see money in their pocket at the end of the day – every Canadian. Every Canadian that wants to be part of this has an opportunity to,” he said.

Pension plan investment is one of the avenues for potential funding. Lauritsen added, “This project is attracting significant attention, internationally, from an investment perspective.”

The results of the upcoming federal election don’t matter to him. One of the key issues has been Bill C-69, the recently implemented Impact Assessments Act.

Lauritsen said, “We have done a deep dive into Bill C-69, every section with a fine-toothed comb. We have completed a comprehensive review of Bill C-69 to identify specific risks in order to develop assessment and engagement strategies.”

He said the company is “well appraised of Bill C-69,” and the engagement expected of it.

“To that end, from a prosperity perspective, we will be putting into trust shares for Indigenous groups that do not have the ability to participate in an equity partnership with us, we will be intending to gift those shares from the corporation, to those Indigenous groups, those bands and so on. We are optimistic that we can generate prosperity for all Canadians,” he said.

“Our economic analysis indicates strong allocations of cash flow after debt service to Indigenous groups, federal, provincial and local governments whilst retaining strong returns for equity public-private-partnership project funders.”

The project will be in the black, and will spread prosperity to Indigenous stakeholders, he said.

”We are going to make meaningful equity available to them, that is typically not evidenced in projects of this nature, so they can capture some of the prosperity of what we are doing.”

“Our team includes deep experience of having successfully worked on and gained valuable insights to how empowerment is done to lift people out of poverty in other parts of the world where similar approaches were taken in other large infrastructure projects, and we intend on duplicating it here in Canada. We are moving the needle on empowerment and Indigenous benefit opportunity through participation via shareholding.

“We are going to empowerment and engagement like it’s never been done before, and it’s going to be the way projects are done here in future.”

Lauritsen said as a new company, Canadian Prosperity will have an advantage over the incumbents, as “All of our policies, procedures and actions are going to be done, right from the get-go, in compliance with C-69.”

Project details

Two-thirds of Energy East was already in the ground, as it would have repurposed an under-utilized 42-inch pipeline currently used for natural gas. This project, according to MacLellan, would be entirely new pipe – approximately 4,500 kilometres of it. It would be a new pipe, and a new right-of-way.

They’re aiming for 1.1 million barrels per day in capacity. There is identified market demand in Eastern Canada. “Whatever is surplus from that is able to go internationally,” Lauritsen said.

“We’ve done analysis of international markets for the viability for premium, heavy Canadian crude, and have affirmed that there is a demand internationally.

“At the end of the next 12 to 16 months, we have two objectives on the supply and marketing end. I want to have in place defined memorandums of understanding with supply in Western Canada, and with international markets, and with the refineries that effectively say, ‘We’re aware of you. We want you to succeed.’

As for the product through the pipe, that will depend on what those negotiations result in.

“It could be batched. It could be dilbit (diluted bitumen). It could be light oil from Saskatchewan. It could be a number of things,” Lauritsen said. “We know there’s a demand. That’s a start point.”

Three potential routes are being considered, he said, but the details are proprietary at this time.

Several premiers, including Saskatchewan’s Scott Moe and New Brunswick’s Blaine Higgs, have been trumpeting a “national energy corridor.” To that end, Lauritsen said there is good awareness, from a political perspective. “We’ve achieved outreaches with Alberta, Manitoba, and New Brunswick,” he said, adding they are waiting for their outreach to be successful with Ontario and Saskatchewan.

“Quebec is the last one we’re going to approach formally,” he said, He added they already have support from one major union there and are seeking support of unions and their pension plans by way of potential investment.

The big pension funds are also key. If they can get major Quebec pension backing, Lauritsen feels that will go a long way to bringing Quebec on board.

Lauritsen noted CP3 will be the largest intra-provincial infrastructure project in Canadian history and will be identified as the longest and safest operating pipeline in the world, after the Druzhba, in Russia, which is currently the longest oil pipeline network in the world. CP3 will also have the first ever fully-functional artificial intelligent reality (AiR)machine learning operating system on any currently operating pipeline in the world.

— Pipeline News

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