Alberta oil shipped through Panama Canal to Atlantic Canada to avert COVID-19 threat to energy supply

Larry Hughes, Dalhousie University

On July 20, the tanker Cabo de Hornos delivered an estimated 450,000 barrels of crude oil to the Irving Oil refinery’s Canaport storage facilities in Saint John, N.B.

What made Cabo de Hornos’s delivery different was that it was the first time crude oil had arrived in Saint John by ship from Alberta. It came via the Trans Mountain pipeline to the Westbridge Marine Terminal in Burnaby, B.C., and then through the Panama Canal.

An oil tanker passes fishermen as it moves through a channel in Port Aransas, Texas, in May 2020. (AP Photo/Eric Gay)

By the end of April next year, a second tanker will arrive at Canaport carrying 350,000 to one million barrels of Western Canadian crude oil. In this case, the oil will have come via pipeline from Alberta to a crude oil exporting terminal in Texas or Louisiana.

For most of the Saint John refinery’s 50 years of operation, it has relied on crude oil from sources outside Canada, including Saudi Arabia, the United States, Norway and Nigeria, to meet most of its demand. In 2019, about 80 per cent came from non-Canadian sources, with the remainder from offshore Newfoundland and Labrador by tanker and Western Canada by rail.

Any event — such as a COVID-19 outbreak in any of these oil-supplying countries — that disrupts the flow of crude oil to the refinery threatens the energy security of most people in Atlantic Canada.

Crude oil supply

Relying on non-Canadian suppliers has never been an issue for the refinery. Even during the low points of Canadian-Saudi relations in the summer of 2018 and periods of increased tension in the Middle East, Saudi Arabia has been one of its principal suppliers. (Part of this may be attributable to the fact that about 60 per cent of the refinery’s output is shipped to New England and U.S.-Saudi relations could be affected if Saudi Arabia’s supplies to the Saint John refinery were disrupted.)

However, COVID-19 is a concern for those running the refinery. In April, Irving Oil applied to the Canadian Transportation Agency to use tankers from unspecified, non-Canadian suppliers for these two shipments, as per the requirements of the Coasting Trade Act. In each application it was made clear that the company’s overriding concern was the impact COVID-19 could have on about 80 per cent of its crude oil supply shipped from non-Canadian sources.

This is a legitimate concern.

Two cargo ships in the Panama Canal
Cargo ships navigate through Panama Canal waters in Gamboa, Panama, in June 2020. (AP Photo/Arnulfo Franco)

Globally, the health of ships’ crews has become an increasingly critical issue since the start of the pandemic. In many countries, fear of COVID-19 on ships has stopped shipboard crews from disembarking and returning home to their families, and new crews from boarding ships.

This is forcing shipboard crews to continue working well beyond the end of their contractual period of employment. Reports of mental anguish, self-harm and suicide have also been reported.

A COVID-19 outbreak in an oil-producing country or on board a tanker could disrupt the flow of crude oil to the Saint John refinery and, consequentially, disrupt the flow of its refined products to most of Atlantic Canada and New England.

Oil consumption in Atlantic Canada

Atlantic Canadians consume about 20 per cent more gasoline per capita than Canadians as a whole. With limited access to natural gas, about 31 per cent of the energy used for space heating in the region comes from heating oil (compared with 5.1 per cent nationally).

Irving Oil’s decision to find alternate ways to access Western Canadian crude oil from British Columbia via the Panama Canal or the U.S. Gulf Coast will undoubtedly increase the diversity of its supply. However, Irving’s concerns over COVID-19 and its international suppliers and shippers are equally applicable to Western Canada’s oilfields and any ships used to carry the crude oil.

To be fair, Irving has few other choices: crude-by-rail is a possibility, but there is limited capacity in its rail yard; TransCanada killed the Energy East project and even if it could be revived, it would take years to complete.


Read more: Regulations alone didn’t sink the Energy East pipeline


While restructuring Atlantic Canada’s energy system to become less reliant on oil is the obvious answer, there are few short-term solutions. For example, although Churchill Falls could meet part of the region’s energy demand for electricity, heating and transportation, it will not be available until 2041, when the electricity sales contract between Newfoundland and Labrador and Québec comes to an end.

Without access to low-cost electric vehicles and easily accessible charging stations, gasoline will remain the principal fuel of choice for transportation in Atlantic Canada. On the other hand, there are alternatives for space heating, notably electricity and wood, each of which already meet about 30 per cent of the region’s residential demand for heating.

In the meantime, Atlantic Canadians can hope for an effective, widely accepted vaccine and prepare for periodic oil supply disruptions.

Larry Hughes, Professor and Founding Fellow at the MacEachen Institute for Public Policy and Governance, Dalhousie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

54 thoughts on “Alberta oil shipped through Panama Canal to Atlantic Canada to avert COVID-19 threat to energy supply

    • Because of opposition from Quebec, there is approximately zero chance of a new pipeline to the east coast.

      Quebec has a plentiful supply of cheap hydroelectricity which they want to sell to others at as high a price as possible. Hmmm, I wonder if there’s a connection between that and their opposition to pipelines.

      • I think we can safely assume that the “protesters” are being paid by vested interests. “Rent a mob” is very popular in Canada. It has been the mainstay of protests against oil projects in Western Canada that would permit Canada to sell oil to China. The funding channels include the Tides Foundation, 360.org, Sierra Club and other fronts used to hide the origin of politically active money pretending to be environmental concern.

        It is a new phenomenon in the USA. The current protesting is said to have significant European money behind it.

        • Soros has been behind this in every country from the US to Ukraine to China, why would he skip Canada?

          • He hasn’t. Even the National Post roundly critiqued a Canadian member of Parliament a few days ago for criticizing the newly minted Finance Minister (Chrystia Freeland) for doing a soft interview with Soros when she was a journalist in 2009. As soon as you criticize a Jew, it becomes racist, even though no one mentioned anything about Jews. I have a lot of respect for Jews and am 1/4 myself, but this is too much about the sensitivity of critiquing a rich billionaire Jew for supporting Liberal/Socialist/Marxist mayhem. And he does have an unfortunate (bad) past with Nazi Germany, as does Chrystia Freeland’s Ukrainian Grandfather, who was a very senior Nazi collaborator during the 2nd World War. She denied it, but there is scads of proof.

            https://nationalpost.com/pmn/news-pmn/canada-news-pmn/conservative-mp-kerry-lynne-findlay-apologizes-for-tweet-linking-freeland-soros/wcm/db04960e-c78b-4bb6-aa09-466d67b56dd6/

            https://ottawacitizen.com/news/national/defence-watch/chrystia-freelands-granddad-was-indeed-a-nazi-collaborator-so-much-for-russian-disinformation

          • Earthling2 August 30, 2020 at 3:53 pm

            The Soviets killed millions of Ukrainians. link So, when the Ukrainians had a chance to help the Germans fight the Soviets, what would you expect them to do?

            Similarly, when the Soviets attacked Finland and nobody but the Germans sprang to Finland’s aid, what would you expect the Finns to do?

            I say that both the Finns and the Ukrainians get a pass on that one.

            Chrystia Freeland has been criticized by the Conservatives and their friends for softball interviews. I suppose that’s how she became persona non grata in Russia. Freeland is the one Liberal who actually understands what a s**t storm the USSR was. It would be a very good thing if she were to replace Dances with Unicorns (Trudeau).

            Depending on how Erin O’Toole does, I might be willing to vote for a Liberal Party led by Freeland.

          • My previous reply has obviously escaped to the Ether and is now past the Oort Cloud.

            Freeland will be scandal free but will be a loyal foot soldier to Fancy Socks and implement the Canadian version of the Green New Deal. She might be a better stable PM as Liberal leader, but she is still a Liberal/Socialist. Not a Marxist though. I still couldn’t vote that party ever again. But yes, she shouldn’t be held responsible for any sins of her grandfather, which is a different subject.

      • Quiet bizarre isn’t it.

        No pipeline to the east coast, so oil requirements for Quebec have to be shipped through the Panama Canal or imported fro overseas.

        Go for it, Canada. !! 😉

        • The oil should be shipped from the US or western Canada via the St. Lawrence Seaway so that the tankers will need to sail through Quebec. Many smaller tankers, many trips, greater chance of accident in the waters of Quebec. No pipeline allowed so provide a far more dangerous (although not really dangerous) method. If an accident happens resulting in a spill, they will have gotten what they deserve.

      • Nor only that, and very oil Canada pipe line that runs through the US through Minnesota need replacing, it terminated at Duluth so the oil can be loaded on ships. Protest here in the US are holding the replacement up. You cannot run pipelines across the granite the is the Canadian shield. You need to go south and that rout is being shutdown down by useful idiot of the left. Remember as Dennis Prager puts it “the left destroys everything it touches” if the left gets it’s way you will live in a cold dark brutal world where slavery will again be the rule, not the exception.

      • I would not have thought Quebec blocks that possibility. Pipe the oil to a port on Lake Superior and ship it through the St. Lawrence Seaway. Why wouldn’t that work?

        • Wrong approach, force the pipeline through and let Quebec continue to live without petroleum products and gas. Refuse to sell them anything. Oh, yea!! Quebec gets the lion’s share of it all PLUS taxes the f**k out of the rest of the country. My bad.

    • Also via phone lines. Try to reach the Hamilton Beach customer service:
      **Currently our phone lines are closed in order to protect our customer service staff and our communities from the spread of the Coronavirus Disease 2019 (COVID-19). With staff limitations, please use our online Customer Service form for assistance and we will reply via email. Thank you.**

      Stay safe, don’t approach phone lines.

    • “Without access to low-cost electric vehicles and easily accessible charging stations,”

      Some one has forgotten where the electricity comes from!

  1. Not a word about how stupid the situation is, since the Energy East pipeline was cancelled. What’s the carbon footprint of shipping oil all the way around the whole continent vs the almost straight line through the country? Why are we buying oil from countries that treat women like dirt and kill gays?

  2. The last thing we need is COVID 19 getting into our oil. Think of how that will affect all our cars! The next thing you know, leftists governors would be banning the use of them!

    • Robotic shipping?
      Much work being done; Nautical Institute and the Royal Institute of Navigation – amongst others – are heavily involved.
      Collision Avoidance is still a problem; radar is imperfect [though good].
      Maintenance – and crew boarding for pilotage/port operations – still need some attention.
      Short, quiet seas, passages may get simple UMV efforts – but oceanic shipping is still some years away, I feel. Reliability, noting that electronics and salt water don’t always play well together, may continue to be a serious drawback.
      And then you would need to convert the world fleet – mostly after scrappage [so twenty years plus], if that is where the industry, which is conservative with a small ‘c’, as the sea [the other ‘c’!] doesn’t change, will go

      Not in my time, I believe. But I am a pensioner, now!

      Auto
      UMV – Unmanned Maritime Vessel.

  3. Far more logical to build a pipeline,but ships are the preferred transport mode, check into the ship owners and you will find friends of our prime minister. Why the deviation from Saudi oil?, well it seems our prime minister is on the outs with the Saudi’s, too bad as his corrupt SNC lavilin friends had oil infrastructure contracts with the Saudi’s, but at least our ultra green carbon taxing leader is able to supply his friends at Irving oil even if it takes fuelling ships for a long distance cruise instead. I expect he’ll feel guilty at some point, for the largesse of burning vast amounts of Bunker-C to fuel the transport ships and make the difficult decision to further increase carbon taxes

    • Oil rich Canada running on ME oil?

      Stupidity can’t explain that, only crooked politics can, will the rest of the planet say.

  4. A pipeline from Alberta to the east has been blocked by the greenies and Quebec. Quebex and the east would rather buy conflict oil such as Saudi Arabia. Quebec blocks the pipeline but takes billions in equalization payments from Alberta with no conscience.

  5. This is due to the blocked Energy East Pipeline by the treasonous leftist t*rds in the federal government, in the province of Quebec and the eco-fascists that pander to hypocritical Canadian politicians, it is not about anything else. Canada the country that undermines it’s own resource wealth to appease UN policy. I tell you one
    thing, Canada better extricate itself from this leftist hell it’s mired in, because if it doesn’t then it is headed on a fast track to a Venezuela style future.

  6. Use Swedish crews on the oil tankers, we are over the COVID-19 season.
    I know this will not work with the maritime policy of using cheap Philippine deck personnel and only the officers being well payed westerners.

    P.S.: As a Swedish resident aged 68, it occurs to me that I most likely had COVID-19 a few days last week. Two days in bed with slight increased temperature, a bit of stomach uneasiness, a bit itchy mussels and feeling very tired. Today Sunday I am fresh again. – Oh well, it could have been common cold.

    • Carl,
      Good Filipino officers are comfortably as good as most western officers, and cost almost exactly the same in wage and pension costs.Maybe cheaper in air fares [depending on where the ship is . . . .], and perhaps training costs.
      But, as junior officers, they are less likely to question a pilot [or Master] who is making a questionable decision.
      Culture.
      Can be overcome, but needs a lot of reinforcement (especially if the Master is two metres tall, and the officer is about half a metre shorter, and thirty years younger . . . .).

      Auto

    • In spite of the corruption and stupidity I guess. A pipeline would be a lot faster, safer and easier. But for some reason we can’t have a pipeline.

      • Justin,
        A [pipeline is excellent – provided the start and end are likely fixed geographically, for decades.
        That would seem – to this Brit – to be the case in Canada.

        But a ship can go to many discharge ports [so allowing flexibility].

        Auto

        • But they are only going to the east coast Canadian ports, that is the point here. Far more economical and safe to use pipelines instead of shipping across thousands of miles of ocean, and paying to transit Panama Canal on top of it.

  7. Canada is an oil-rich country, but most of the resource is in the western part. New Brunswick needs some of this for their refinery and local use. Greenies in the middle block pipelines, because, your know, something? Anyway, Canadians should put their pipeline where the sun doesn’t shine! That’s right, across the frozen north. There, fixed it. Next?

    • That seems even less practical than trying to move oil through the Northwest Passage (for all the reasons that made the Alaska pipeline expensive, but for twenty times the distance).

      • The railroad to Churchill is open again…Store it and ship it for the 3+ month shipping season that is open at the port of Churchill which handles Panamax sized tankers and is fairly close to Atlantic Canada via Hudson Bay.

  8. Prof. Hughes needs to brush up on his ship types, the vessel passing the fisherman is a bulk carrier in ballast. You can see the hatch covers, there are no derricks / cranes midships to take the weight of the cargo hoses and there are no gas vents.

  9. Talking about oil tankers there is one aground of the coast of Mauritius dumping oil over the beach and it’s reefs. I don’t get is why it’s a big issue isn’t the whole country supposed to go underwater soon 🙂

    • That ship in Mauritius is bulk ore carrier. Not a tanker. The oil it is spilling is it own bunker fuel oil and some diesel. If it were a tanker the spill would be orders of magnitude worse.

  10. If Quebec is so anti-oil they should stop using all products that come from it. Refrigerators, plastics, asphalt, cement, etc. And they should stop using products that are refined or cultivated using oil, like food, purified water, sewage pipelines, the electrical grid…

  11. **there are alternatives for space heating, notably electricity and wood**

    — I live in a distant suburb, considered as semi-rural. Many of my neighbors are heating their house with wood. There are no particulate emission regulations in my area. Thus, on calm winter days and nights, a smelly haze of smoke is hanging over town. I have an efficient, well-insulated house with an air exchanger, but I often have to refrain from running the air exchanger, as it’s just pumping smoke into my house.

  12. crew memebers being prevented from returning to their families is the stupediest things I have ever heard … simple ingnorance and fear mongering …

      • Indeed.
        It is a very sad situation.
        Ignorance and fear have prevented many tens of thousand [probably hundreds of thousands by now] of seafarers from returning home – and similar numbers from joining ship, refreshed – and ready to work and earn.

        Auto

  13. Without access to low-cost electric vehicles and easily accessible charging stations, gasoline will remain the principal fuel of choice for transportation in Atlantic Canada.

    No schist Sherlock!

    How well are those plug-in EVs going to work in Fredericton (NB) during January when the average low is -15C and the record low is -37C?

    • They won’t work in most of Canada during the winter, period. There is not one charging station for a Tesla in northern Minnesota or most of North Dakota.

      • ” There is not one charging station for a Tesla in northern Minnesota or most of North Dakota.” GOOD! Keep it that way.

  14. Why can’t they just ship it across the Northwest Passage? Didn’t Al Gore promise the Arctic would be ice-free by now?

    /sarc

  15. So someone catching a cold and having a runny nose for a few days is going to close down the entire global oil trade. Right. Got it.

  16. We need a National Energy Policy —
    – how silly of me to suggest this.
    That would require a Energy East pipeline!
    And, rational critical thinking.
    Impossible.

Comments are closed.