REGINA -- The Canadian Wheat Board (CWB) and TransCanada Pipe (TCP) have agreed in principle to a $12 billion project that would see Western Canadian grain piped from Alberta to the east coast, where it will then be shipped worldwide through a world-class port facility to be built in St. John, New Brunswick.
The project known as EnergyYeast (TSX listing: EYP) will re-purpose a section of an existing 50-inch natural gas pipeline stretching from Alberta to Southern Ontario, and see the construction of two new pipelines to Montreal (Ligne de Crescent-Rohl) and to St. John, New Brunswick (Irving-Owen MacKay Line).
TCP will finance the pipeline portion of the project while the new port infrastructure in N.B. will be financed with private, federal and provincial funding.
The EnergyYeast pipeline will transport up to 900,000 bushels of grain a day to the open market, an amount unparalleled anywhere in the world.
The project will economically benefit Western Canadian farmers greatly -- not only from reduced transportation costs, but (more importantly) from predictable and reliable delivery to markets, something it doesn't have now. Farmers currently suffer from lengthy, crippling delays caused by growing congestion of the rail lines from dirty Alberta oil shipments to Texas. Canadian Pacific Railway Ltd. is presently appealing a $50,000 fine levied by the Federal Government for failing to meet weekly minimum grain shipment volumes.
A spokesperson for the CWB said that delays caused by dirty oil trains are costing farmers money and markets. "If we can't get our product to overseas customers on time and all the time, we'll be out of business. Period," said CWB's Doug Graves. "Game over rover...that's the reality if we can't move our product."
The project will directly employ more than 1,500 skilled tradespeople and 24,000 temporary foreign workers during the construction phase alone. An additional 115,000 jobs will result indirectly in the supply chain, and in the animal feed, bagel and baking sectors.
At a press briefing yesterday in Ottawa, Federal Agribusiness Minister, the Hon. Gary Ritz, said this project will be "the best thing since sliced bread" for Western Canadian farmers. "It's a big deal," said the head of the Calgary Chamber of Commerce, Robin Banks. "Canadian grain farmers will be the envy of the world."
Industry analysts are also applauding the project and predict the 'initial public offering' (IPO) in April will generate a lot of buzz and will be watched closely by markets around the world. The respected trade association group Cargill & Fiends also applauds the project saying the industry could no longer tolerate the shipping delays and unpredictability.
The project announcement today by CWB and TCP is the result of extensive meetings over 30 months with several levels of government and industry officials. "We did this the right way," said TransCanada CEO, Anita Grant. "We got the social license we needed before we started laying pipe. It's good for industry, landowners, farmers and bread lovers -- a win-win-win-win."
Broad vision, broad support
Federal Transport Minister Lisa Fraitt said this approach to pipeline use and development is safer, more sustainable, and greatly supported by local communities. "People don't want dangerous, leaky, and risky pipelines carrying oil through their backyard," said the Transport Minister. "I don't blame them. I wouldn't. Duhhh."
We have embraced communities along the route of the pipeline," said TCP Chairman Yule Kneidtamoov. "We are sensitive to environmental concerns around climate change, and the impact our past oil spills have had on families and communities," said Mr. Kneidtamoov. "We're sincerely sorry about the past and that's why we decided to go in this direction and focus our efforts on grain. It's the responsible thing to do."
The proposed pipeline will rely on advanced continuous flow augur technology developed by the scientists at University of Saskatchewan and Ontario's University of Guelph. "It's a clever -- yet simple -- technology," said University of Saskatchewan Prof. Powell Flowe. "Essentially, using powerful magnets and augur-shaped metal alloys, we're able to propel the grains through the pipeline at roughly 70 Km/H. Its beauty lies in its simplicity."
The project will also be a first in that 100 per cent of the pipeline infrastructure exterior will be fitted and used for advertising space. This is predicted to raise over 100 million dollars in advertising sales, especially in the Montreal corridor and surrounding area. The new world-class port facility in St. John will sell naming space of the main terminal and its five surrounding buildings.
The project will commence upon completion of a thorough environmental assessment conducted by the Canadian Agricultural Association. No delays are anticipated as the project has been pre-approved by the PMO.
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