Over the past few years, demand for refined petroleum products has increased steadily in markets served by Ultramar, particularly in Quebec, but also in Ontario and the Atlantic Provinces.

Thanks to its Lévis refinery, which produces gasoline, diesel fuel, jet fuel, home heating oil and other products, Ultramar is able to accommodate this increased demand. However, the Company will have to diversify its means of transportation in order to ensure uninterrupted supplies to its primary distribution centre located in Montreal East.

Currently, unit trains and coastal ships are the means of transportation used to transport products between the Jean-Gaulin refinery in Lévis and the Montreal East terminal. However, to accommodate further increases in demand, Ultramar has to significantly step up the number and frequency of shipments via these means of transport.

In the medium term, this could involve doubling the number of rail shipments between Lévis and Montreal East, resulting in increased traffic on already highly-used rail lines, as well as causing additional inconveniences for the residents of densely populated regions. As for coastal ship transportation, the increase in traffic on the Lévis and Montreal loading docks would entail major logistical constraints and this, combined with the already difficult challenge of winter navigation at times, could result in supply shortages in the Montreal Metropolitan region.

That is why Ultramar undertook the project of constructing a pipeline linking its Lévis refinery and its Montreal East Distribution Centre. Called the Pipeline Saint-Laurent, it will measure approximately 240 km long and will constitute a complementary means of transport that is safe, reliable and environmentally sound, thereby enabling the Company to reduce its reliance on the current means of transport.

The Pipeline would ensure constant supplies while boosting efficiency at the Montreal East terminal, the primary distribution center for Ultramar products destined for the Montreal Metropolitan area, Western Quebec, Ontario and the Northeastern U.S. In a context where the Jean-Gaulin Refinery is a major supplier of refined petroleum products to these regions, the future pipeline represents a strategic venture of the highest importance.

Since February 2005, when it informed the Quebec Ministry of Sustainable Development, Environment and Parks (MDDEP) of its intention to construct this Pipeline, Ultramar has taken a number of steps towards the completion of its project.

Accordingly, basing itself primarily on an exhaustive Environmental Impact Assessment, it selected, from among several possible corridors, the one presenting the fewest human and environmental impacts. It consulted widely and frequently with and kept informed the various stakeholders involved, namely, the communities living on the territories affected by the project, the landowners directly concerned, the political, administrative, municipal, regional, provincial and federal authorities, the different constituted bodies, the professional and industry associations, as well as various environmental groups. Its project was also submitted to the review process of the Quebec environmental public hearings bureau (BAPE) and for review by the Quebec agricultural land protection commission (CPTAQ).

All of these steps led to the final selection of an optimal route for the future pipeline, the one primarily running along the right-of-way of Hydro-Québec's high-voltage lines.

Once all the required permits have been obtained, construction of the Pipeline may begin, but only after Ultramar has negotiated agreements for the rights of way (agreements that it hopes will be mutual) with each of the landowners located along the selected pipeline route.