TC Energy Corp.
‘s Line 2 has been inactive for more than a decade, but economists at National Bank say now is the time to restart the pipeline, which runs through Ontario and Quebec and forms part of the Canadian Mainline.
The Mainline currently transports gas from Alberta into the Prairies, Eastern Canada and the United States.
“Ottawa’s newly articulated defence industrial strategy, combined with a more unstable geopolitical backdrop, strengthens the case for eastbound gas infrastructure as a pillar of industrial resilience and national security,” Pat Kenny, Dan Payne and Stefane Marion said in a note.
“A stronger East–West energy corridor would anchor the Alberta–Ontario–Quebec industrial partnership, reduce reliance on foreign supply and ensure Canadian resources power Canadian prosperity.”
The trio estimate the additional natural gas from a reopened Line 2 could generate electricity equivalent to 20 per cent of the peak demand in Ontario.
Electricity demand in Ontario is expected to rise 75 per cent by 2050 from 2025 due to industrial expansion, electric-vehicle supply chain manufacturing, demand from data centres and an increasing population.
National Bank said electricity produced by gas-fired plants would act as a “reliable” stopgap until the province’s new
nuclear energy
facilities are up and running.
Ontario is building the first of four small modular nuclear reactors, with the first scheduled to start operating by the end of the decade. Ontario is also looking at constructing two other larger-scale nuclear projects.
Another reason why the economists think TC Energy should restart Line 2 is that a Mainline tolling agreement — the amount charged to ship gas through the pipeline — is set to expire at year-end.
Natural gas demand has doubled since the company signed a deal with shippers that runs from 2021 to 2026.
At the same time, TC Energy is looking into the feasibility of expanding its Mainline pipeline into eastern markets.
Meanwhile, the goals of the so-called energy transition have evolved into an energy “trilemma.” That leaves policymakers seeking to balance energy affordability, reliability/security and decarbonization, the economists said, so both companies and Canadians would support “optimizing … existing North American energy infrastructure, particularly assets that are already in place but underutilized.”
Finally, the Major Projects Office has identified several natural gas projects, including the expansion of
LNG Canada
and the construction of a floating liquefied natural gas terminal off the coast of British Columbia.
“Reactivating and optimizing existing capacity — rather than pursuing new greenfield corridors — is capital-efficient, operationally pragmatic and likely to encounter fewer social and environmental hurdles,” the economists said.
Last year in the early days of U.S. President Donald Trump’s assault on Canada’s economy, a Bloomberg poll found that a majority of Canadians supported the government paying for an oil pipeline to transport crude oil from Alberta to eastern Canada.
Crush your taxes: A live Q&A with Jamie Golombek from the Financial Post
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President Donald Trump says the United States will ensure the free flow of oil and gas shipments through the Persian Gulf with insurance guarantees and even naval escorts. But the shipping industry sees it — at best — as only a partial solution to a historic crisis.
U.S. and Israeli strikes on Iran over the weekend have triggered a spiralling regional conflict and multiple attacks on vessels have now effectively closed off the Strait of Hormuz. Without transit through the critical waterway, seaborne trade between some of the world’s biggest oil and gas producers and the rest of the world is all but cut off.
With ships unable or unwilling to transit the strait, producers cannot export, supertanker costs are skyrocketing and storage at many Persian Gulf refineries is filling up fast. The world’s largest insurance mutuals have withdrawn war risk insurance cover for ships in the area.
The effects have been swift. Iraq, the biggest Middle Eastern oil producer after Saudi Arabia, has already begun huge cuts to output and faces even deeper reductions, in the clearest sign yet of stress on suppliers in the region. — Bloomberg
Today’s Data: U.S. MBA mortgage applications, ADP employment change, ISM services index, Canada labour productivity index
Earnings: Strathcona Resources Ltd., MDA Space Ltd., Molson Coors Canada Inc., Tourmaline Oil Corp., Baytex Energy Corp., Kinaxis Inc., Vermilion Energy Inc.
Women are more likely than men to be appointed to positions of trust for tasks such as administering estates and making important decisions on behalf of someone who has become incapacitated, but they’re often not named as a beneficiary in the related will, says a new study by Willful. Find out why here.
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Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff and Bloomberg.
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