Enbridge’s Toughest Gateway Pipeline Tests Still to Come
Enbridge Inc. now faces its sternest challenge -- selling Northern Gateway’s benefits to skeptical British Columbians -- after the Canadian government approved the C$6.5 billion ($6 billion) pipeline project.
Aboriginal and environmental groups are preparing legal challenges and blockades to halt construction of the pipeline, which would transport Alberta oil to the Pacific coast for shipment to Asia. Prime Minister Stephen Harper’s cabinet endorsed Northern Gateway late yesterday subject to Enbridge satisfying 209 conditions set by a regulatory review panel in December.
“Regardless of this decision, the Enbridge Northern Gateway pipeline will never be built because First Nations and others in British Columbia won’t allow it,” said Art Sterrit, executive director of the Coastal First Nations, as some aboriginal groups are called. “This pipeline is doomed because it is highly risky and provides no reward to the people being asked to bear that risk.”
Enbridge Chief Executive Officer Al Monaco acknowledged the company faces an uphill battle convincing British Columbia residents the benefits of the project outweigh the risks. Even with federal-government approval, the Calgary-based company has yet to fulfill four of five deal-breaking conditions set by the province, which holds local licensing rights, Environment Minister Mary Polak said yesterday.
“There’s not much disagreement about the economics,” Monaco said in a conference call after the government released its decision. “The economic benefits alone are not enough to sustain public support.”
That’s probably an understatement.
As a tangible symbol of their resistance, the Gitga’at First Nation, based in the village of Hartley Bay at the entrance to the Douglas Channel, plan to stretch an 11,500-foot chain stitched with yarn and fishing floats across the waterway on June 20. Oil tankers would pass through the channel, an ecologically rich maze of islands stretching 90 kilometers (56 miles) from the port of Kitimat, Gateway’s endpoint, to the open Pacific.
More than 150,000 British Columbians have joined the LetBCvote.ca website which asks signatories to support a citizens’ initiative for a vote on pipeline expansion and oil tanker traffic.
The federal government is largely to blame for the “entrenched opposition” to the Northern Gateway pipeline in British Columbia because politicians and officials allowed Enbridge to deal with complex aboriginal issues on its own, Doug Eyford, the prime minister’s special envoy on aboriginal and energy issues, said last week at a conference, the Globe and Mail reported on June 16.
Enbridge fell 1.1 percent to C$51.38 at the close in Toronto. The shares have gained 11 percent this year.
The West Coast Environmental Law Association is drafting legislation which, if introduced via a citizens’ initiative, would ensure British Columbia uses its legislative authority to keep “our rivers and streams free from Enbridge oil,” said Jessica Clogg, the group’s executive director.
Proponents of the pipeline are seeking ways to get land-locked and price-depressed Alberta crude to world markets, especially after delays to TransCanada Corp. (TRP)’s proposed Keystone XL pipeline to the U.S. Gulf Coast. Harper’s government has made building energy infrastructure a national priority, part of C$650 billion of industry investment in more than 600 existing or planned projects over the next decade to develop the country’s natural resources. Canada boasts the world’s third-largest pool of recoverable crude reserves.
Crude producers such as Canadian Natural Resources Ltd. and Cenovus Energy (CVE) Inc., facing a five-year average discount of almost $20 a barrel for their oil relative to U.S. benchmarks, are seeking new markets. Canadian oil-sands output is set to more than double to 4.1 million barrels a day by 2025 from 2013, according to the Canadian Association of Petroleum Producers, an industry group.
The 1,177-kilometer (731-mile) conduit would start in the eastern Alberta plains at Bruderheim, about 35 miles northeast of Edmonton, and cross the Rocky and Coast mountain ranges to Kitimat, carrying as much as 525,000 barrels a day of diluted bitumen.
“The proponent clearly has more work to do in order to fulfill the public commitment it has made to engage with Aboriginal groups and local communities along the route,” Natural Resources Minister Greg Rickford said in a statement yesterday from Ottawa.
British Columbia Premier Christy Clark has said her government will only back the pipeline if it satisfies five conditions: successful completion of an environmental review, “world-leading” oil-spill response systems on water and land, adequate involvement of aboriginal groups and the allocation of a “fair share” of the fiscal and economic benefits.
Opponents have 15 days after the government’s decision to file their objections. Cases would be heard in the federal court of appeal, said Thomas Isaac, a Vancouver-based lawyer at Osler, Hoskin & Harcourt LLP.
“The issue from a legal perspective is whether the decision was decided based on a fair process,” Issac said in an interview. “The law is the law and presumably it will be applied.”
Even with government approval, Enbridge hasn’t yet made a final call on Gateway.
“The cabinet decision is important, but it’s just one of a bunch of important moments before the final investment decision,” said Chuck Strahl, a former federal minister of aboriginal affairs who works for Enbridge’s Northern Gateway unit on its discussions with aboriginal groups.
“There’s going to be several of these pivotal moments, and they’re going to involve the provincial government, aboriginal people and the communities in the north,” he said. “There’s a lot more to do.”
Residents along the proposed route and in Vancouver are planning protests and will begin training to learn about protesting and resistance, said Nikki Skuce, a Smithers, British Columbia, campaigner for Forest Ethics.
“There will be a lot more monitoring of activity by Enbridge,” she said in an interview. “We’ll be watching closely where the B.C. government draws a line in the sand.”
To contact the editors responsible for this story: Paul Badertscher at email@example.com Chris Fournier, David Scanlan