National energy plan needed to replace focus on individual projects: Valero CEO

MONTREAL – The owner of one of Canada’s largest oil refineries hopes a first ministers’ meeting later this month will begin to develop a national energy strategy to replace what he sees as a piecemeal focus on individual projects like Keystone XL and Energy East.

“We have to have a road map here nationally so that we understand what we want to do here with the different forms of energy,” Valero Energy CEO Ross Bayus said Monday.

While not willing to criticize the former Conservative government, Bayus said he’s hopeful the Nov. 23 meeting chaired by Prime Minister Justin Trudeau will build on the work of the premiers to reconcile to limit emissions with the continued use of different forms of carbon, including oil.

What is required are “bigger thinkers” at that table who can have a “realistic” assessment of the challenges for jobs and long-term prosperity, rather than focusing on one company, project or activity, he said.

“Everyone is starting to realize we have to have a vision going forward, not just sort of call things as we see them today,” he said in an interview after a speech to the Canadian Club of Montreal.

Bayus said there has been too much focus on a few very contentious projects instead of how they fit into meeting the country’s energy needs and exportation requirements.

The Obama administration recently rejected TransCanada’s US$8-billion Keystone XL pipeline after seven years of delay while its $12-billion Energy East project is beginning a long process to win regulatory approval.

Bayus was also critical of oilsands opponents, saying blocking access to crude won’t change consumer behaviour but could lead to job losses.

While he applauded the energy strategy signed by premiers in July, some environmentalists panned the effort, saying the language around climate change was too vague and would likely encourage more of the status quo.

Those criticisms were before the Liberals were elected on a promise of addressing climate change.

Enbridge’s Line 9B flow reversal that will soon begin to carry Alberta crude to Eastern Canada will supply just half the daily needs of Canada’s second-largest refinery. The remaining 160,000 barrels could eventually come through Energy East, a pipeline that has raised concerns in Ontario and Quebec about environmental impacts.

The pipeline would supply exports and 672,000 barrels per day to three refineries – the Valero facility in Quebec City, Suncor’s (TSX:SU) in Montreal and the Irving Oil refinery in Saint John, N.B. It could replace imports from the U.S., Norway, Venezuela, West Africa and the Mediterranean.

Valero has spent up to $150 million on its facility in Montreal where crude will be extracted from the 9B pipeline and loaded on ships carrying up to 350,000 barrels for transport along the St. Lawrence to Quebec City. Gasoline is then shipped back to its main market in Montreal through a pipeline.

Refineries need the flexibility to access the cheapest energy, Bayus added. Right now that’s from Western Canada and the U.S Midwest.

Energy supplied through 9B would support the Quebec City refinery for years to come but its future would have been less certain if it couldn’t access Western crude at all, Bayus said.