Trick to Dodging Keystone Woes in Pipe Projects: Pledge No Oil

Canada’s energy industry may have figured out how to build a pipeline without the uproar that stalled Keystone XL: promise it will never carry oil.

Plans to transport natural gas to multibillion-dollar shipping terminals proposed by the likes of Royal Dutch Shell Plc are winning favor in British Columbia as TransCanada Corp. and other pipeline builders sign no-crude commitments. The terms are helping allay fears about future oil spills from lines designed to carry gas.

The pledges for a crude-free route to Canada’s Pacific Coast are being made as TransCanada faces mounting opposition to its plan to convert a gas pipe to send oil to the Atlantic. The C$12 billion ($10 billion) Energy East would be North America’s largest oil pipeline and would provide an alternative to the Keystone link to the Gulf of Mexico.

In British Columbia, TransCanada’s Prince Rupert Gas Transmission line won’t carry oil, according to a compensation agreement the company announced last week with the 600-member Kitselas First Nation. The aboriginal community has rights to hunt and fish along the path of the 900-kilometer (559-mile) line, which would feed a liquefied natural gas terminal proposed by Petroliam Nasional Bhd.

“It was the game-changer we all needed to hear,” Kitselas Chief Councillor Joe Bevan said in a phone interview. “If a gas line breaks, it’s going to add to greenhouse gases, let’s not kid ourselves, but it’s less intrusive than oil.”

The Kitselas first asked TransCanada to vow it won’t transport oil back in 2012, when the project’s opponents were stoking fears on social media about the threat of spills, Bevan said. The company, which was under siege from environmental groups opposing Keystone XL, quickly agreed.

Greenpeace Birthplace

British Columbia, where Greenpeace was born, has become a battleground for groups seeking to stop oil-sands development over environmental impacts including carbon emissions. Plans by Enbridge Inc. and Kinder Morgan Inc. to carry crude from Alberta to coastal waters for export are being delayed after facing scrutiny for the risk of pipeline and tanker spills.

For TransCanada, it’s been important to keep talks with aboriginal groups and the provincial government focused on gas, Chief Executive Officer Russ Girling said this month in an interview at Bloomberg’s Toronto office.

In January, after concerns raised by aboriginal groups, the provincial government introduced regulation barring conversions for six lines proposed to supply gas export projects, including two that would be built by TransCanada.

Other proponents of gas pipelines in Canada’s westernmost province include Spectra Energy Corp., Chevron Corp., Fortis Inc. and Pacific Northern Gas Ltd.

“In our discussions with local communities including aboriginal communities, we’ve had to commit that we would never convert our gas pipeline to an oil pipeline,” Girling said. “My guess is down the road there will be a rational discussion around oil, too.”

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