Alberta Energy Minister Diana McQueen said she expects Canada’s government to approve the Northern Gateway pipeline this month, putting crude producers a step closer to easing bottlenecks that are suppressing prices.
“We’re very optimistic that Gateway will be approved by the federal government,” McQueen said today in an interview at Bloomberg headquarters in New York. “It’s a very important pipe for us in Alberta but certainly nationally as well.”
Prime Minister Stephen Harper’s cabinet must decide by June 17 whether to approve Enbridge Inc.’s Northern Gateway, which would transport crude from Alberta’s oil sands to the British Columbia coast. The C$6.5-billion ($6 billion) route would enable Canada to ship more crude to Asia, fetching higher prices.
The National Energy Board recommended approval in December, subject to 209 conditions. While Harper’s cabinet could send the route back to regulators, McQueen doesn’t expect the government to defer. “We expect a decision,” she said.
Producers such as Royal Dutch Shell Plc and Total SA are counting on pipelines such as Northern Gateway and TransCanada Corp’s Keystone XL to ease a glut that’s holding down the price of Canadian heavy crude. Finance Minister Joe Oliver said this week the discount cost the world’s 11th biggest economy C$30 billion last year.
The pipeline shortage is threatening to curb development of the oil sands, which contain the majority of Canada’s recoverable crude reserves, the world’s third largest. The Canadian Association of Petroleum Producers this week lowered its forecast for crude production by 2030, citing high costs and project delays. Output in western Canada will exceed pipeline and rail capacity by next year, the association said in a June 9 report.
Federal Natural Resources Minister Greg Rickford declined to comment on the Gateway decision in an interview in New York today. “We’ve taken a report that they have submitted that includes 209 conditions,” Rickford said, adding the government can approve, reject or add conditions to the proposal. “We’re making careful considerations of that.”
McQueen, 53, said the province is pursuing several options to relieve the bottlenecks, including TransCanada’s Energy East pipeline to a refinery in New Brunswick and shipping more crude by rail.
“Market access is job one,” said McQueen, who took over as energy minister last year after serving as environment minister. “But it’s from different perspectives, whether it’s crude or rail.”
B.C. Premier Christy Clark has said her support for Northern Gateway hinges on five conditions: completion of an environmental review, “world-leading” oil-spill response systems on water and land, adequate involvement of aboriginal groups, and the distribution of a “fair share” of the fiscal and economic benefits to her province.
A majority of British Columbians want the federal government to either delay or reject the pipeline, according to a Bloomberg-Nanos poll released this month. Environmentalists say it will raise the risk of an oil spill, while aboriginal groups have threatened lawsuits and protests.
President Barack Obama said in April he was delaying Keystone XL, which would transport Canadian crude to Gulf Coast refineries, because of a court battle in Nebraska, extending a review now in its sixth year.
Obama has said he won’t approve Keystone XL if it significantly exacerbates the “problem of carbon pollution.”
Alberta requires companies that emit more than 100,000 metric tons of greenhouse gases a year to cut emissions per barrel by 12 percent or pay a penalty of C$15 per ton. The proceeds of the levy are paid into a fund that invests in technologies that cut carbon output. The provincial rules expire in September.
The province shouldn’t increase its carbon levy until the U.S. imposes its own regulations, former federal industry minister Jim Prentice said in an interview last month. Prentice is running to replace Alison Redford, who stepped down as premier in March. The governing Progressive Conservatives will choose their next leader in September.
McQueen said the province may extend the existing rules past the September expiry deadline. “We could choose to just renew for a few months as we review this file,” she said.