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Executives

James Miller

Russell K. Girling - Chief Executive Officer, President and Director

Alexander J. Pourbaix - President of Energy and Oil Pipelines

Trevor Nakka

Marc Joiner

Philippe Cannon

John Van der Put

TransCanada Corporation (TRP) Energy East Economic Benefits Announcement Conference September 10, 2013 8:00 AM ET

Operator

Good morning, ladies and gentlemen. Welcome to the Energy East Economic Benefits Announcement Conference Call. I would now like to turn the meeting over to Mr. James Miller. Please go ahead, Mr. Miller.

James Miller

Thanks, operator, and good morning. It's James Miller. I'm in Communication for TransCanada. First off, sincere apologies for what occurred this morning to journalists and others out there. Basically, we had some technical issues with the numbers that we sent you in the media advisory yesterday. Unfortunately, due to some issues at Bell, we weren't able to access those numbers. We've been working feverishly in the last half hour to get new numbers and get an issue put out through Marketwire and updated media advisory and also working with Bell to redirect those phone calls from the old number to the new number. So again, my apologies.

We'll get started, we'll get through this. We'll take your questions and as many of you in the media know, technical issues can be the bane of our existence, and it occurred to us today. So again, apologies.

We're here today to announce the release of a new study developed by Deloitte & Touche LLP that examines the economic benefits of the recently announced TransCanada Energy East Pipeline Project. A news release was issued earlier this morning that contains many of the details of the study and a copy of the Deloitte study is also available on the Energy East website at energyeastpipeline.com.

With me in the room today from TransCanada are Russ Girling, TransCanada's President and Chief Executive Officer; Alex Pourbaix, TransCanada's President of Energy and Oil Pipelines; and John Van der Put, Vice President, Eastern Oil Pipeline Projects. Trevor Nakka, Senior Practice Partner with Deloitte; and Marc Joiner, Partner with Deloitte are also with us in the room today to provide a breakdown of the study's findings, as well as answer questions from the media during the conference call.

With us on the phone are Steve Pohlod, President of the Energy East Pipeline Project; and Philippe Cannon, Energy East's Spokesperson. Both Philippe and Steve are available to answer questions on the call today and will be available after the call for further media interviews in Montréal.

As we did on August 1, when we announced the project, Philippe will manage any French media request during this teleconference. So please direct your questions to him, and he will ensure that questions and responses are repeated in both French and English. Today's call will run until about 10:30. We'll try to buy you some extra time, but Russ and Alex's time is limited. But respecting the fact we started late, we'll push this as long as we can for everyone on the call. As I mentioned, Russ and Alex will begin with some brief opening comments. We'll then turn it over to Deloitte to present a short overview of the study's findings. We'll do this overview first in English, and then again in French. Following the presentations, we'll take questions from reporters on the phone. As I just mentioned a moment ago, we'll do our best to answer all questions and push the time on this conference call. If I can ask you, as I did August 1, to limit your questions to 1 each. And if we have time again, we'll get you back in the queue, and we'll take questions again. I'll now turn things over to Russ and Alex. Russ?

Russell K. Girling

Thank you, James, and good morning, everyone. And thank you for joining us here in Fredericton. We just held our September board meeting here, and we appreciate the hospitality here in Fredericton [French] It's been an exciting past few weeks for us at TransCanada. In early August, we announced the Energy East Project, a $12 billion project. It involves converting a portion of our Canadian line -- Canadian Mainline gas system to oil service to transport more than 1 million barrels a day of oil from Western Canada to St. John in Brunswick. This announcement brought with it a new solution for addressing an overwhelming need by producers to receive greater value for the domestically produced crude oil and the recognition that a pipeline connecting West with the East could help eliminate Canada's reliance on crude oil imported from overseas, something that hasn't been possible in Canada until the announcement of this project.

Well, those 2 points are significant in and of themselves. We are here today to discuss another import aspect of this project, and that is the potential jobs and economic benefits for the communities across this country that will stem from the Energy East Project. The recently released Deloitte economic impact study for the Energy East Project confirms what we already knew. That is the project would help support thousands of jobs and millions of dollars and government tax revenues over the short- and long-term life of the project. With this new study, we now have an objective and intangible understanding of the full economic benefits that communities across this country will receive that are directly related to its construction and operation.

Specifically, the analysis conducted by Deloitte estimates that the Energy East Project will generate approximately $35 billion in additional gross domestic product for Canada during the development and construction and over the first 40 years of its operating life. The report also estimates that more than 10,000 full-time jobs will be directly created during the development of the construction phase of the pipeline between 2013 and 2018, and another 1,000 full-time jobs directly supported once the pipeline is in service.

Furthermore, Energy is expected to generate an additional $10 billion in government tax revenues over the life of the project. Energy East will do all of this safely and reliably while still ensuring TransCanada meets the needs of our gas customers in Eastern Canada and the Northeastern United States.

To be clear, we are committed to maximizing the utilization and the benefits of our infrastructure for all of our customers, gas and oil, and we are committed to sufficient capacity is available to meet all of their growing needs. There has been enormous support and interest since we first voted the Energy East's idea more than a year ago, and again, after we announced it a month ago. And I think that is because this project makes sense for all Canadians, and this new study helps us understand why that's the case.

As you know, we still have a lot of work to do with all of our stakeholders, and we're just getting underway. But again, I'd like to thank you to those who have supported our efforts along the way so far, and we will continue to work with you as we continue to implement this very important project for Canada.

James Miller

Thank you, Russ. And I'll turn the mic over to Alex Pourbaix for a few comments before we hear from our colleagues at Deloitte. Alex?

Alexander J. Pourbaix

Thanks, James, and thanks for those who have joined us on the call today. This new Deloitte study provides another layer of understanding to the overall economic benefits that Canadians will receive from this project. When we first embarked on the idea of Energy East, we didn't know what the full interest for a pipeline from Western Canada to the East Coast would be. What we did know was that there was a need to connect and secure new domestic supplies of crude oil resources to Eastern refineries. The open season confirmed that need. Interest for the project was so strong that it exceeded the initial design capacity we proposed of 850,000 barrels per day. And so we modified it to accommodate more than 1 million barrels of oil per day of oil movement from receipt points in Alberta and Saskatchewan to refineries in Montréal, the Québec City in St. John region and the 2 terminals in Québec and New Brunswick.

Right now, the refineries we are connecting within Québec and New Brunswick must rely on foreign imports for 86% of their feedstock. That is 700,000 barrels per day. Most of that oil comes from Saudi Arabia, Nigeria, and Libya. Foreign oil typically costs as much as $30 to $40 more per barrel than domestic crude and is producing countries that lack the strong environmental regulation we have here in Canada. Energy East is going to change that. We'll provide a lower cost source of supply for Eastern Canada and reduce our dependence on foreign oil to ensure Canadians receive greater value for their resources.

And as we will hear today, this $12 billion project will create thousands of jobs across the country and bring new revenues and business opportunities to local communities. It will achieve all of this safely with minimal environmental impacts and all with private sector funds.

Since the beginning of this project, we have been out in the field collecting data and engaging with Aboriginal and stakeholder groups. Over the past several weeks, we have continued that engagement, holding dozens of public open houses and meetings with landowners, community groups and government leaders across the country to find out how we can make Energy East the safest and most environmentally responsible pipeline possible. We will continue to engage with Canadians as we move forward in each step of this process. I would like to echo Russ' thanks to those who continue to support this project. Thank you.

James Miller

Thanks, Alex. I'll now turn the conference call over to Trevor from Deloitte to provide a detailed breakdown of the study's findings. Trevor?

Trevor Nakka

Thanks, James, for your introduction. I will proceed first in English and turn it over to my partner to present this material in French. Please let me start by turning to the topics summary on Page 2 of the presentation. We'll spend a moment on the nature of Energy East itself and then turn our attention to some discussion on the manner in which the study was conducted. It's important for those reading the study to have a solid understanding of the scope of our work to recognize those factors that were included, as well as recognizing those areas that were not included.

In addition, it's important to gain an understanding of the source of the study input variables, various model assumptions applied and other important elements. So let's spend a few minutes on that piece to ensure that folks understand the fundamental underpinnings of the study. After that, we'll turn to the actual outcomes, the economic impacts on GEP, employment and tax revenues for governments. We'll wrap up our presentation with some qualitative comments, along with some perspective on the illustrative-only analysis related to the economic impacts for oil producers and refineries. At the conclusion of our presentations in English and in French, we'll turn to questions.

Turning to Slide 3. You see the map of the project and key project facts that have been prepared and released by TransCanada. Many of you will be familiar with the project already, but I will highlight a few items.

First, Deloitte has used the preliminary estimated capital budget of $11.3 billion during the study preparation timeframe because that was the best estimate available as we were preparing the study. This number has since moved up closer to the $12 billion range to accommodate recent estimates by TransCanada. And of course, this number will continue to be revised if the project proceeds to execution.

Second, it's important recognize the different project characteristics in various regions of Canada, because these project characteristics influence the net economic impacts related to provinces. In broad terms, the majority of the project west of Québec involves converting a portion of the existing mainline, along with some new pipeline that connect the Hardisty and the Bakken. While storage facilities will be added in Saskatchewan and Alberta, as well as in Québec and New Brunswick, then Québec and New Brunswick will have the Marine Terminals. The development and construction phase impacts, as well as operating phase impacts, will differ between provinces as a result. And I'll comment on these effects later in the presentation.

On Slide 4. Turning to the nature of the study itself. It is important to first recognize that the scope of the economic impact study are those arising from Energy East on a stand-alone project-only basis. The economic impact is based strictly on the effects arising from the development and construction of the project and then the operation of Energy East only. The study does not include the potential benefits that may arise due to possible impacts on all pricing due to increasing market access, does not consider the benefits that may arise through refineries in East being able to access lower price feedstock nor any impacts associated with the refining and distribution of products or other matters, such as the price of gasoline at the pumps.

The study takes into account only the incremental expenditures to operate Energy East beyond the current proportionate cost to operate TransCanada's present mainline. While a portion of the mainline's rate base will be transferred from gas service to oil service, that capital contribution from the mainline to Energy East was not considered to be an economic impact in and of itself. In this context, the study is conservative in nature. It doesn't seek to extend the boundary or scope of economic impacts. The economic impacts are estimated to be only those related to the project itself.

Also of note, this is strictly an economic impact study. The study does not contemplate any aspects other than economic impacts arising from the development construction and operation of Energy East. TransCanada's numbers are preliminary and there are many, many specific decisions for procurement or product and services that will be made pending on large number of regulatory environmental routing and other factors. Accordingly, in order to develop the best available estimate at this time, Statistics Canada's input-output model was employed. The StatsCan's input-output model first looks to historic actual statistical information from past oil pipeline construction and operation, and then, assumes similar patterns of expenditures will arise from TransCanada's overall capital budget and operating expenditures.

When you step back from this, you'll observe that this allows a level of independence and objectivity with respect to the resulting economic impacts. Rather than assume that we can predict today the precise expenditures on various aspects of construction and operation of Energy East, the foundation of the study uses historical actual expenditure data and the result estimated economic impacts determined by StatsCanada.

Finally, it's critical to know that the study contains a significant number of estimates, assumptions and statistical modeling. It should be considered directionally correct but not scientifically precise. It's an order of magnitude study that needs to be considered in its overall context. We have been transformed -- transparent in the recording of the study and have provided significant tabular details and specific input-output model table outputs. Accordingly, one is best to focus on the overall study outcomes rather than, say, a specific line item in the various tables provided.

Turning to Slide 5. There's additional commentary on the nature of the data and input-output model, but I'll touch on 2 key elements on this slide. The first is the use of 40 years as a study period operating period. As with any study of this nature, you need to select an assumed timeframe for the operating period, and we've chosen 40 years. It should be made clear though that the actual physical life of the pipeline will be much be in excess of 40 years with regular maintenance. Second, it's important to observe that the outcomes of the input-output model from StatsCan were not modified by Deloitte or TransCanada.

Slide 6. Now with all of this as background, here are the results of the study. Starting with GDP, we estimated GDP in the development and construction stage of about $10 billion. This compares reasonably to the capital budget of $11.3 billion, although, of course, there are a lot of pluses and minuses, and there's not a linear relationship from capital spending to GDP impact. The StatsCan model has assumed a level of important products and services because the model computes its best estimate of likely sourcing of products and services based on prior projects. Imported products and services do not have the same GDP benefit as domestically sourced products and services.

TransCanada's procurement decisions are not yet made and dependent on a large number of factors: availability of equipment, products, human capital, et cetera, along with pricing and other factors. The actual mix of imported or domestic products cannot be forecast, but for study or process, the model has assumed the level of imported products and services of $3.7 billion that you will see in the study itself of the $11.3 billion capital spend.

In terms of the GDP impact on the 40-year model operating period, there is a $25.3 billion estimated impact. This compares directionally to 40 years of operations with annual incremental expenditures in the range of $665 million per year, which is in the range of $26 billion.

Turning to jobs. I should comment that there are 3 types of economic impact categories, including for jobs. There are direct, indirect and induced jobs. Simply put, direct jobs are those that are closely employed in developing, constructing, and operating the pipeline and related facilities. These are jobs that we can envision most clearly; people constructing the pipeline, TransCanada employees at pumping station, people contracted to do work, maintaining facilities, people operating the Marine Terminals and other jobs literally directly related to Energy East. And we have indirect jobs, which are one step removed from the operations. These are jobs such as electricity power providers, suppliers of technical devices, computer software and other people that provide products and services to the project but are less likely to be directly working in Energy East sites.

Finally, you have induced jobs. Jobs that are sometimes referred to as spinoff jobs or jobs that result when people employed by a major capital project now spend their incomes in consumer products like furniture, electronics, eating out at restaurants, purchasing new cars and that sort of thing. These induced benefits are the least visible as a result of an economic project, but there's good statistical support and credibility in recognizing that these are certainly the real economic effects. However, these induced jobs are further removed, so when it comes to talking about Energy East jobs, we place the greatest emphasis on direct jobs as those jobs can be pictured more clearly.

We do produce and report upon the indirect and induced jobs in our report, however, because those jobs are important. And they do play into GDP -- GEP and government tax impacts, of course.

With that as background, we see 2,300 plus full-time equivalent annual jobs in the development stage for the first 3 years, followed by 7,700 plus annual full-time equivalent jobs during the construction phase. The complete array of full-time equivalent annual job supported and maintained in the 6-year development construction phase is about 90,000 in total. When the project enters the operating phase, we see over 1,000 annual direct full-time equivalent jobs every year in operation. Again, there are also indirect jobs and the spinoff induced jobs, and the total of these every year are estimated at more than 4,000 annually.

So over the 40-year model period, this becomes a lot of full-time equivalent jobs, about 170,000. This is an important figure, but again, we bring more prominent emphasis to the thousand annual direct jobs expected to be supported and maintained to operate Energy East.

Turning to government taxes. We have estimated about $3 billion of income taxes, value-added taxes, excise property and various other taxes during the 6-year development and construction phase, which compares directionally to the $11.3 billion capital spend. During the course of the model, 40-year operating period, we estimate about $7 billion of these same types of taxes. This compares directionally to about $26 billion of incremental operating expenditures during the 40-year model operating period.

Turning to Slide 7. You can see the overall impacts for Canada as well as by province, and I'll make a few observations here. First, you'll recall the differences I spoke to you regarding the project variations between conversion and new pipe installation and the different facilities in various provinces. When you look at the complete study, you need to first reflect on those differences and the resulting impact on each province. Second, further to this, I will highlight the disproportion to capital expenditures in Québec and New Brunswick because of the new pipeline, the oil storage facilities and the Marine Terminals. This plays out in terms of the GDP, jobs and taxes figures during the 6-year development and construction phases for those provinces. As we turn to the operating phase, however, you will observe a disproportionate set of impacts to Ontario. This is due simply to the length of the pipeline in Ontario and the significant consumption of electric power by the 30 pumping stations there. This electricity factor alone results in a boost to Ontario's economy that is certainly plausible and reasonable within the model results. While we have provided the raw data from the input-output model without modification, we believe that the electricity factor should be considered carefully. It is a question regarding the impact to GDP jobs and taxes do simply to significant power purchases.

If one analyzes the impact related to electric power purchases in Ontario, you may find that Québec and New Brunswick proportionate GDP jobs and taxes and the operating phase of Energy East could come more closely into line with expectations based on the pipeline, oil storage and Marine Terminals located in those provinces on a percentage basis relative to Ontario.

Wrapping up on Slide 8, as I mentioned earlier, Deloitte did not include any benefits to oil producers or refineries in the computation of the net economic benefits of Energy East. However, we did perform some level of qualitative study on those areas, and we believe there is likely to be a net benefit to those parties.

In addition, we have performed illustrative guidance for the estimated GDP jobs and taxes impacts if Eastern Canadian refineries were to increase capital investment. And that information has been provided in the study. In addition, we have computed the range of estimated feedstock cost reductions that may be available to refineries under a series of assumed market and transportation factors. And further details, including the computations for both of these, are included in the Deloitte study.

This concludes my remarks on the briefing summary in English. I'll now turn over the presentation to my partner, Marc Joiner, who will take us through it in French.

James Miller

Thanks, Trevor. And as you mentioned, we'll have Marc now present these findings in French. Marc?

Marc Joiner

[French]

James Miller

[French] Thank you. We will now begin the question-and-answer portion of the event. [Operator Instructions] Operator, I'll turn things over to you, please.

Question-and-Answer Session

Operator

[Operator Instructions] [French] The first question is from Shawn McCarthy from The Globe and Mail.

Shawn McCarthy

In terms of the job creation numbers, I mean, you've seen a lot of criticism and questions, skepticism around the numbers that you've put out on the Keystone project in the U.S. And I wonder whether -- how you would anticipate the reaction to these numbers and just in terms of being able to defend the full time -- as it gets very confusing with full-time equivalent and accumulating the numbers and so on, making cumulative estimates. So I just wanted to get a sense from you as to just how you feel you communicate the benefits across the country.

Russell K. Girling

Shawn, it's Russ Girling. Thanks for the question. I guess what we're trying to achieve, obviously, we know of it. There's certain folks that are finally opposed to the development of our pipelines and, I think, have purposely tried to confuse the job numbers. What we're trying to do here is be as transparent as possible in terms of the communication of the job numbers. The job numbers that you're seeing here today were produced by Deloitte using a stats can model. It produces sort of full-time equivalent kind of numbers. The numbers that we've put out from a Keystone perspective, the 13,000 job numbers, are directly related to our application and our job numbers of the company that we can break down job by job and exactly who's going to be employed in the project. When we look to reconcile the 2 numbers, we look at this project, for example, over the construction phase. Deloitte has estimated around 7,700 annual jobs that they're going to create over a 2-year to 3-year period. You're talking about a number that's in the 20,000 range. That will probably be about what our number is when we file our application -- when we finally, file it with the National Energy Board. We'll have to do the same thing we did with Keystone, which is break it down job category by job category. But in the case of Keystone, we estimated about 13,000 for a project of this capital size. Relative to this capital size, I think their numbers are roughly equivalent. Our objective here is not to confuse anybody, it is to be as transparent as possible. And there are different ways to calculate these things. And that's the best way I can -- guess, I'd give you that to sort of reconcile the difference between the 2.

Shawn McCarthy

And as a follow-up, is there -- not to mention that the study does not take into account benefits from higher -- better returns to producers and the potential for lower-cost feedstock to refiners. Is there -- how would you describe that? And then is there going to be an effort to quantify that?

Russell K. Girling

I believe that when, again, when we file our application, we'll try to give a compressive view of the benefits for Canada across the spectrum. Obviously, you'll -- lower feedstock costs will manifest itself in better economics and greater longevity and viability for Eastern Canadian refiners and potentially, the impacts for consumers as well. We haven't quantified those. I think as we move towards our filing, we will try to quantify those estimates. Similarly, upstream, the producing industry is investing some $55 billion a year in the development of new oil sands. We haven't tried to capture or take credit for any of that development in this study. This is directly related to the development of the pipeline itself. But obviously, efficient and reliable transport does support the development of infrastructure on both ends of the pipeline. And again, as we move towards the filing, we will look to ways to quantify those for when we make our application. And the National Energy Board, the discussion there will be based around the national interest and the benefit to all Canadians. And they'll want a comprehensive view, and we'll try to provide that for them.

James Miller

Trevor, anything to supplement from a Deloitte point of view?

Trevor Nakka

No, nothing to add to that, James.

Operator

The next question is from Jeff Lewis from the Financial Post.

Jeff Lewis

Québec stands out as an obvious winner in some of these projections. How do you anticipate these numbers will play in that province, given that the Premier hasn't really said too much on these projects, whether she supports or opposes it. Yes, I'll just leave it at that.

Russell K. Girling

I think for all provinces, what we've tried to do here is understand what the potential economic benefits would be from construction jobs, operating income, tax revenues and some of the indirect benefits in terms of hydroelectricity. For example, that we're going to require and the capital and operating costs associated with those and the economic spinoffs. So I think, for Québec as for other provinces, I think what we're demonstrating here is that the benefits are spread across the country and that they're significant in each of the provinces.

Jeff Lewis

But given that the support doesn't seem to be sort of obvious at this point for the project, would you hope these numbers could just sort of sway opinion in that province?

Russell K. Girling

I guess, as I said earlier in what we're trying to do in our process here, is engage with stakeholders at all level. One of the benefits of the project, obviously, is the economic benefits to the provinces and to the province of Québec. But as well, there'll be other issues with respect to routing of our pipeline impacts on land owners and other stakeholder issues that we're going to need to understand and manage our way through. And those other issues along with the economic benefits, I think, will play into the support that we garner or don't for this project. This will be a major component of it, because it speaks to the benefit side, but we're going to have to address all of the other issues as well. And I think that all provincial leaders, and local leaders as well, are mindful of the potential benefits. But as well, the impacts, and as a company, it's our responsibility to make sure that we address both sides of that equation. And I would expect that we will be able to do that, and we'll be able to garner support from all the communities along the pipeline. But this is just part of the job or the economic benefits. And obviously, it's an important part which plays into this, but as TransCanada, we sort of -- our largest job is ensuring that we responsibly go about developing this pipeline, listen to the folks along the route and build it in a way that creates the least impact and the greatest benefit for the folks along the route.

Operator

The next question is from Julien Sano, Laprice Canada [ph].

Unknown Analyst

I have always -- better address my question in English, one French. But I would like to get a French comment on my question, would that be possible?

James Miller

Absolutely.

Unknown Analyst

Yes. Should I ask in English or...

James Miller

You can do either. We have the ability to translate the question or to take it in English. Your preference.

Unknown Analyst

[French]

James Miller

Philippe, can you translate, please?

Philippe Cannon

Absolutely. [French].

Unknown Analyst

[French]

Philippe Cannon

He is asking in regard to yesterday's study and the fact that, it shows that in the study that was released yesterday, there isn't or close to no benefits for moving oil from the oil sands to the refiners out east. How do we expect to turn opinion around? And where do we find that it -- how our numbers differ from the study that was released yesterday?

Russell K. Girling

I can try to take a shot at that in English here. I'm not totally familiar with the methodology by which the study you referenced calculates its benefits. But I think it's clear that there's a large differential between oil prices in Western Canada and the price which refineries in Eastern Canada pay for their crude oil. And that's a fact and that's a large number. What I would expect is that difference will be shared amongst the producers and the refiners and governments and other stakeholders. This study has estimated that, that number is somewhere between a couple of dollars in low double-digit kind of numbers, $10, $12, something like that, that will manifest itself in benefit to someone along the system. This study hasn't defined who will get that benefit. But what we know is that there's a large benefit there. To suggest that there's no benefit there, I think, is disingenuous at best. I mean, if one just needs to look at a posting of crude oil prices in Western Canada, look at a posting of WTI prices and look at a posting of Brent prices and say that there's a large delta, we're not suggesting how that delta is going to be split up. But it's either going to manifest itself in better refinery margins, which will make those refineries more economic and more viable for the long term. It may manifest itself in more government revenues via taxation or some other methodology which, again, results in revenue that's available for social programs and job creation; or it's going to manifest itself in a better netback for Canadian producers which, again, improves the netback, improves the viability of the business and leads to job creation on that front. My gut feel would say that it's probably a combination of all of those things. We haven't actually quantified any benefit for any of that in this study. But what we do know is that it's there and that, over time, others will quantify that. And my view would be is it will be a positive number, it will be a large positive number.

James Miller

Would you like a response in French as well?

Unknown Analyst

Maybe just a small comment.

James Miller

Okay. I'll get our VP of Eastern Oil Pipeline Projects, John Van der Put, to offer you a response in French.

John Van der Put

[French].

James Miller

And just a supplemental comment from Trevor Nakka from Deloitte.

Trevor Nakka

Just would be inappropriate for us to just talk about the methodology or the background to another study, but you alluded to the study in relation to the study that we performed. Certainly, these are estimates using the best available information we have before us today. The estimated economic impact was performed by Statistics Canada. The input-output model is widely regarded as being credible. We've not modified those estimates. We find the estimates reasonable relative to the nature of the project. Many people would reasonably expect that spending $11.3 billion on development and construction of a major energy pipeline project, along with incremental annual operating expenditures of $665 million, will result in the creation of a significant amount of jobs, taxation and general economic benefits. And so those are the best estimates we have available to us today.

James Miller

Thank you, Trevor. [French]

Operator

The next question is from John Chilibeck from Telegraph-Journal.

John Chilibeck

With some of the officials in New Brunswick expressing concern about the route and some of the environmental -- possible environmental consequences of the pipeline, for instance, the Mayor of Edmunston is -- has been unhappy with the route it will take. What numbers are you going to highlight for people in New Brunswick, specifically to convince them that it's a good idea?

Alexander J. Pourbaix

John, it's Alex Pourbaix. The study obviously breaks out the benefits to New Brunswick. And as I think you can see from the information that has been presented, it is a very significant benefit, given that a lot of the new construction is going through the province of New Brunswick. And I would just say that part of this very comprehensive process we're going through right now prior to filing our application with the National Energy Board is to spend a great deal of time with all of our stakeholders along the route. And the reason we do that is not only -- we don't come up with this route by ourselves, we come up with it through a combination of all the work that we do, but also listening very closely to stakeholders along the route. We certainly are aware of those comments. We're engaging with the stakeholders in that part of the province, and that will be specifically from a perspective to ensure that the route we choose is not only the safest route, but enjoys the support of stakeholders in that area.

John Chilibeck

Now, someone mentioned the Pauline Marois in Québec and also the possibility of the pipeline being scuttled there. If that happened, and New Brunswick still really wanted this pipeline, is there a plan b to reroute it through Maine?

Russell K. Girling

No. This is Russ Girling. I mean, our objective is to build a pipeline that services the needs of Canadians, and there are 2 large refineries in Québec that currently import their oil from overseas. I think everybody can see the benefits of using Canadian oil in those refineries and transporting it there in the most efficient, safe and reliable way. I think those facts are clear, and that's been our objective. So going through Maine, obviously, isn't going to achieve those objectives. So that's not a plan b for us at all. Our objective, as Alex has said, is to understand how we can best meet those needs that are obviously there in the safest and most reliable way, and we'll work hard to find a solution that best fits for everybody. That's our objective and that's our plan, and we're going to stick to it.

Operator

[Operator Instructions] [French] The next question is from the Dina O'Meara from Angus Media (sic) [Argus Media].

Dina O'Meara

That's Argus Media. Are the East Coast refineries in need? That's -- there's -- Mr. Girling, you said that the study did not quantify the refinery margins. But how much support have you actually gotten from refineries? And have they stated the need for that additional volumes coming from Western Canada?

Russell K. Girling

There's a -- the major refiners including the Irving, Suncor, Ultramar, have all indicated that they're very supportive of this project. I think that you've probably seen them all in the media, supporting the development of an East-West project for the reasons that we've identified. They're in a very tough spot economically, having to import the most expensive oil on the globe into their refineries today. And they have looked at ways of accessing Western Canadian, Western U.S. crude oil. A lot of that crude oil is moving today by rail out of the Western Canada, out of the block into those refineries. So it's a need that they've already -- or an opportunity that they've already identified and they're trying to capitalize on. And obviously, if we can do it by pipeline versus other forms of transportation, that's going to provide significant benefits to both them and to the public.

Dina O'Meara

Do you anticipate -- is there any anticipation that the price of Canadian oil could respond to that increased demand? I mean, would it go up or down?

Russell K. Girling

Again, as I said, there's a difference between the price of oil on a global basis and the price that producers are receiving in Western Canada. As I said earlier, that difference between those 2 prices, I don't know exactly how it's going to benefit all the constituents along the value chain, but I would expect that some of that benefit will go to Canadian producers. Some of that benefit will go to the refiners. Some benefit will be passed through to consumers. And I suspect some benefit will be passed through to governments via some form of taxation. So I think that all 4 sort of political stakeholders along the value chain will likely benefit. So the interesting about this project is oil prices can go up for Canadian producers, that's a good thing for Canada. Gasoline prices could go down for consumers, that's a good thing for Canada. The refiners could enjoy better margins, which makes their facilities more viable and makes employment prospects far greater and more opportunity for greater government revenue. So this truly is a win-win-win situation for all folks along the value chain. I guess, at the expense of international producers which are capturing all of that economic rent for themselves today, that economic rent will stay right here in Canada.

Dina O'Meara

Would you be filing possible tolls when you make the application to the NEB?

Russell K. Girling

Part of our application with the National Energy Board will includes tolls.

Dina O'Meara

Do you have any sense of what they might be?

Russell K. Girling

We do. But at this point in time, it's a confidential discussion between ourselves and our shippers. But we will make those tolls available publicly when we make our filing with the National Energy Board.

Operator

There are no more further questions at this time. I would like to turn back the meeting back over to Mr. Miller.

James Miller

Thank you, operator. So that completes our Q&A session. I'll send it back to Russ for some brief concluding remarks, and then we'll end the call.

Russell K. Girling

Thanks, James. As you have heard, the national pipeline connection will create thousands of jobs and economic benefits across the country, helping to strengthen Canada's economic stability. In closing, I'd like to say that we are excited to have an opportunity like this and look forward to working with all of our partners and stakeholders as we continue through the process. You have my commitment that we will do our utmost to provide you with the information you need and to make informed decisions when we're in -- the information you'll need to make informed decisions when you're working with us. We'll answer your questions in a timely fashion, we'll be transparent, and we'll listen to any concerns you might have in a respectable fashion. That's the way we do business at TransCanada, and I think that will lead to the most successful outcome for all of us. Thank you, again, for your support and joining us in the call today.

James Miller

Thanks, Russ. And as Russ said, thanks to everyone. And again, our apologies for the technical difficulties that occurred off the top. These things will happen, but we got through it. And we appreciate your interest. And I'll turn it back to you, operator, to close things up. Thank you.

Operator

Thank you. The conference has now ended. Please disconnect your lines at this time. And we thank you for your participation.

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