Enbridge’s Northern Gateway Hits Snag After Losing Local Vote

Enbridge Inc. (ENB)’s Northern Gateway, a pipeline proposed to link rising Canadian oil production with Asian markets, hit another snag after residents in the port of Kitimat voted against the $5.9 billion project.

Voters in the town of 9,000, the planned western terminus of Northern Gateway, voted 58.4 percent against the proposed pipeline, according to the results released by the District of Kitimat in an e-mail. The pipeline would begin west of Edmonton and run for 1,178 kilometers (732 miles).

The setback is the most recent for Enbridge, which has faced opposition to Northern Gateway throughout British Columbia from aboriginals and environmental groups since the project was first proposed a decade ago. Other municipalities, including Smithers and Fort St. James, have adopted resolutions against the pipeline, complicating the Calgary company’s efforts to ease a bottleneck for the growing supply of oil from northern Alberta’s oil sands and reduce the discount for Canadian crude.

“The people have spoken,” said Kitimat Mayor Joanne Monaghan, in an interview after the results were released. “What happens now will depend on what council decides” today.

Producers including Cenovus Energy Inc., Royal Dutch Shell Plc and Total SA are counting on projects such as Northern Gateway and TransCanada Corp. (TRP)’s Keystone XL pipeline to ease a transportation bottleneck that has suppressed the price of Canada’s heavy crude relative to its global peers, costing the economy C$50 million ($46 million) a day, according to the Canadian Chamber of Commerce.

Carbon Intensity

Western Canada Select, the nation’s benchmark heavy crude, traded at an $18.90 discount to West Texas Intermediate at the close on Friday. The gap has been as wide as $42.50 in recent years.

Construction of pipelines has been hindered across North America following Enbridge’s 2010 rupture of a pipe that polluted a tributary of the Kalamazoo River in Michigan, as well as BP Plc’s Macondo disaster the same year. Opponents point to the carbon intensity of Alberta bitumen and the difficulty of cleaning it up after a spill as reasons to halt infrastructure development.

In December, Canadian regulators approved Northern Gateway, subject to 209 conditions. Prime Minister Stephen Harper, who has promoted Canadian oil and natural gas resources to Asian buyers, has until June to make a decision on whether to allow the pipeline to go ahead.

“Today’s result shows that while there is support for Northern Gateway in Kitimat, we have more work to do,” said Donny van Dyk, Enbridge’s representative in Kitimat, in an e-mailed statement.

Dogwood Initiative

A total of 3,071 people cast votes, which are non-binding, according to the District of Kitimat. The results followed a decision by aboriginal leaders along the proposed route east of Kitimat to reiterate their ban on the pipeline crossing their claimed territory.

“Our decision to refuse consent for the Enbridge pipeline is a decision according to our own laws,” said Chief Fred Sam of the Nak’azdli First Nation.

The Dogwood Initiative, a Victoria, British Columbia-based environmental group, is considering a petition if the provincial and federal governments approve the Northern Gateway project.

“This shows what happens when you actually give people the chance to vote on Enbridge’s proposal,” Kai Nagata, a director at the Dogwood Initiative, said in an e-mailed statement. “This project would have serious ramifications for the whole province, so all British Columbians deserve to vote on it.”

Under British Columbia law, residents may push for a province-wide vote on any matter under provincial jurisdiction if they are able to collect supporting signatures from at least 10 percent of registered voters in each riding.

Alberta Finance Minister Doug Horner last week said the federal government isn’t doing enough to convince aboriginal groups and the public that the Northern Gateway pipeline is in the country’s best interest.

“A lot of what we do in western Canada creates economic activity and jobs in eastern Canada,” Horner said in an April 9 interview at Bloomberg headquarters in New York.

To contact the reporter on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editors responsible for the story: David Scanlan at dscanlan@bloomberg.net; Susan Warren at susanwarren@bloomberg.net Sylvia Wier, John Simpson

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.