Weyburn oil company reacts to Energy East cancellation

The cancellation of the Energy East pipeline project has companies in the southeast Saskatchewan oil patch looking for other options to move their oil.

Dan Cuget is the chairman of Valleyview Petroleum in Weyburn and he told Discover Weyburn on Thursday morning that the changes made to the approval process basically killed the pipeline.

“It’s unfortunate that the federal government feels like they need to be the ones that pick the winners and losers in this,” Cugnet commented.

He said this decision will simply force the oil industry to find other ways to access markets.

Cugnet said the trend towards cancelled pipeline projects is why he decided to get involved in the Comtrax Commodity Rail Hub project planned for the Weyburn area. The rail hub on the Canadian Pacific line will move grain and oil from the area.

“You’re just going to see way more oil on rail, which is to be honest, quite a bit more dangerous than moving it in a pipeline,” Cugnet admitted.

He sees the rail hub as an opportunity to generate revenue in the community.

In the meantime, he noted that prairie crude oil will continue to be sold at a discount to refineries in the U.S. instead of eastern Canada.

“I don’t think people realize that we’re selling it for less because of the trouble to access markets and we take a loss on it,” Cugnet explained.

Energy East was projected to carry 1.1 million barrels of crude oil from Alberta and Saskatchewan to refineries in eastern Canada. The route of the pipeline through Saskatchewan is already in the ground and would have been converted to carry oil instead of natural gas.

—with files from Discover Weyburn