November 5, 2015 / 2:46 PM / 2 years ago

TransCanada to build only one Energy East oil export terminal

A depot used to store pipes for Transcanada Corp's planned Keystone XL oil pipeline is seen in Gascoyne, North Dakota November 14, 2014.Andrew Cullen

CALGARY, Alberta (Reuters) - TransCanada Corp said on Thursday it has scrapped plans to build a port in Quebec and will have only one crude oil export terminal for its proposed Energy East pipeline, a possible setback for the controversial project.

The move comes days after TransCanada asked the U.S. State Department to pause its review of the company's long-delayed Keystone XL pipeline, a request that Washington turned down amid speculation President Barack Obama will ultimately reject the pipeline.

Like Keystone, Energy East is opposed by environmentalists who want to stop expansion of the oil sands industry. The 1.1 million-barrel-per-day project is intended to carry crude from Alberta across Canada to New Brunswick, where it could be shipped abroad.

Calgary-based TransCanada had originally planned to build two ports for shipping crude overseas by tanker - one at the pipeline terminus in Saint John, New Brunswick, and the other in Cacouna, Quebec.

However, the company abandoned the Cacouna location in April after environmentalists raised concerns about the impact on beluga whales in the St. Lawrence River. It had been looking at the feasibility of other Quebec locations.

Quebec Premier Philippe Couillard said the absence of a Quebec terminal made it harder to calculate the economic benefits, one of its criteria for supporting the pipeline. But his spokesman later noted the province has not decided on the project because it has not seen the final proposal.

CIBC World Markets analyst Paul Lechem said scrapping the second export terminal did not affect the financial viability of Energy East as Saint John had always been intended as the primary port.

TransCanada said it had reached the decision after listening to local communities, stakeholders and customers, and it will be amending the Energy East project application before the National Energy Board.

Canadian Natural Resources Ltd Chief Executive Steve Laut, whose company would be a customer of the pipeline, said he accepted the decision but would have preferred to have a Quebec export terminal since it would create more options and Quebec jobs.

"But you have to put the environment first and it just makes sense to go to Saint John," Laut said. "Overall we are okay with it."

If approved, Energy East would still supply crude oil to the Suncor Energy and Valero Energy refineries in Quebec and is targeted to come into service in 2020.

TransCanada shares were last down 0.6 percent at C$44.82 in Toronto.

Additional reporting by Kevin Dougherty in Quebec City and Mike De Souza in Calgary; Editing by Jeffrey Benkoe, Frances Kerry and Marguerita Choy

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