Feb. 11 (Bloomberg) -- Adrian Dix, British Columbia’s main opposition leader who opposes Enbridge Inc.’s proposed Northern Gateway pipeline, says he will take back the power to block such projects if his New Democratic Party forms the next government in the Canadian province.
Dix, who leads in public opinion polls ahead of the May 14 election, said he’d scrap the Environmental Assessment Equivalency Agreement with Canada’s National Energy Board. That would restore provincial environmental oversight of proposed projects such as Enbridge Inc.’s planned C$6 billion ($6 billion) Northern Gateway pipeline, which would carry crude from Alberta’s oil sands, the world’s third-largest deposits, to overseas markets.
The equivalency agreement means “a federal decision is the province’s decision,” Dix said in a Feb. 7 interview in Vancouver. “There’s a 30-day withdrawal clause in the agreement and we would invoke that in the first week in government.”
Dix, 48, is positioning himself and the NDP as defenders of B.C.’s rights on proposed energy transportation projects, foreshadowing battles with Calgary-based Enbridge and advocates such as Prime Minister Stephen Harper and neighboring oil-rich Alberta.
Harper’s government is encouraging new pipeline construction to reach coastal refineries and overseas markets to relieve a supply glut that has constrained prices. Environmental and political opposition has delayed TransCanada Corp.’s Keystone XL pipeline from Alberta to the U.S. Gulf Coast, and there are no immediately available routes to ship oil north or east.
The lack of pipeline capacity and processing costs have cut the price of Western Canada Select, a blend of oil-sands bitumen produced in Alberta, to about $25 a barrel below U.S. benchmark West Texas Intermediate oil. That discount may lead Alberta to collect C$6 billion less in revenue this year, Premier Alison Redford said last month, and is cutting into the country’s income and economic growth, according to the Bank of Canada.
Dix’s NDP has 46 percent voter support, ahead of the 31 percent for the ruling Liberals, according to an Angus Reid Public Opinion online poll of 802 people published on Jan. 21. In terms of who would make the best premier, Dix rated 29 percent, ahead of current Premier Christy Clark’s 19 percent, according to the poll.
Signed by B.C. and the federal regulator NEB in 2010, the equivalency agreement was designed to avoid costly overlap in provincial and federal environmental reviews.
After withdrawing from the agreement, Dix said B.C. will conduct its own environmental review of the project. “I’m respectful of provincial jurisdiction and I expect other provinces to be respectful of B.C.’s jurisdiction,” he said.
The Northern Gateway project has sparked concern about potential environmental damage along the pipeline’s route and governments’ ability to respond to oil spills that would threaten coastal ecosystems. Project supporters say those concerns are overblown.
“British Columbia already has approximately 2,700 kilometers of provincially-regulated oil and natural gas liquid pipe,” John Winter, chief executive officer of the B.C. Chamber of Commerce, said in a letter in August to the joint panel that’s reviewing Northern Gateway. “These pipelines have been operating since the 1950’s with an excellent safety record and very little concern raised by the public.”
Clark said in July her government had five conditions for supporting the project, including receiving a “fair share” of economic benefits, according to a statement from her office.
A decision by the panel on Northern Gateway is expected by the end of this year, said Todd Nogier, an Enbridge spokesman.
“We continue to engage all political parties on the progress of the project in order to address any questions or concerns, including the British Columbia NDP,” Nogier said in an interview from Calgary Feb. 8.
Dix said his party’s position is clear: “Northern Gateway is not in the economic or environmental interests of British Columbia.”
Northern Gateway isn’t the only oil pipeline on Dix’s radar. He said he has “concerns” about a proposal by Kinder Morgan Energy Partners LP, the biggest U.S. pipeline operator, to expand its Trans Mountain pipeline that originates in Alberta and terminates at Vancouver.
Environmentalists and Canadian aboriginal groups have said they oppose Houston-based Kinder Morgan’s plans to expand the line because it will increase oil-tanker traffic in the harbor and may lead to spills.
About 34 percent of British Columbians in an October Angus Reid poll of 800 respondents said they completely opposed Northern Gateway and another 23 percent said they are opposed but could change their minds, according to a statement on the polling company’s website.
Enbridge rose 14 percent to C$44.65 in the past 12 months through Feb. 8 on the Toronto Stock Exchange. Kinder Morgan gained 1.6 percent to $88.38 in New York trading over the same time span.
Dix’s position on the pipelines contrasts with efforts by his party to portray him and the NDP as being friendly to business.
Dix in recent months has addressed the Vancouver Board of Trade, met with movie moguls in Los Angeles to help to revive the province’s film industry and rung the opening bell at the Toronto Stock Exchange, Canada’s largest bourse. The NDP historically has had close ties to organized labor.
“We’re going to be a serious government with serious plans to support economic growth” that won’t overwhelm itself with new legislation as the NDP did when it last held power in the 1990s, Dix said. “We have a thoughtful, but modest, agenda and we’re going to be prudent.”
That agenda includes addressing a looming shortage of skilled workers, lifting labor productivity, and reinstating a 3 percent capital tax on banks with headquarters outside the province -- which was eliminated by the Liberals in 2008 -- to help tame the province’s expanding debt.
Moody’s Investors Service signaled a possible downgrade of the province’s top-tier Aaa credit rating in December, when it cut B.C.’s outlook to “negative” from “stable.” The ratings company cited weak commodity prices and an increasing debt burden for the change.
Liberal Finance Minister Mike de Jong forecasts a budget deficit of C$1.47 billion in the fiscal year that ends March 31, followed by a surplus of about C$200 million in the next year. He is scheduled to release the B.C.’s next fiscal plan Feb. 19. The province of 4.6 million people has about C$38.5 billion of taxpayer-supported debt, according to the government’s latest economic update.
Implementation of the NDP’s pledge to reinstate the tax on banks will “cast a shroud” over B.C.’s finance sector, discouraging investment, de Jong said in a Jan. 29 interview in Vancouver. The recent underperformance of B.C. bonds relative to other provinces may be related to investor concern about potential “regime change,” he said.
The province’s 6.3 percent unemployment rate is below the 7 percent national average and 7.7 percent rate in Ontario, but above the 4.5 percent seen in Alberta. The finance department projected 2 percent growth in real gross domestic product last year, slightly above the 1.9 percent growth forecast for all of Canada by the central bank.
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