Enbridge Ups Northern Gateway Indigenous Stake, Seeks Delayby and
Company asked for extenstion to allow for legal certainty
First Nations and Metis ownership raised to 33% from 10%
Enbridge Inc. is increasing the indigenous ownership stake in the Northern Gateway pipeline proposal and seeking, along with the partners, a three-year extension before construction must start in a bid to ensure support.
Northern Gateway, which was approved by the previous federal government but still faces hurdles, would carry Alberta oil sands crude to British Columbia’s Pacific Coast. Its approval permit required that it begin construction by the end of 2016.
Enbridge announced Friday that it has asked the National Energy Board for a three-year extension to allow for "legal and regulatory certainty and to continue important discussions with First Nations and Metis communities." The company said it erred in its approach to building indigenous support.
"Our priority is to continue to build respectful relationships with First Nations and Metis communities," Northern Gateway President John Carruthers said in a statement. "While we had the right intentions, we should have done a better job of listening and fostering these critical relationships and developing our plans together as true partners."
Enbridge rose 0.7 percent to C$50.69 in Toronto, extending it’s rally this year to 10 percent.
The NEB said Friday it had received the request and would consider it. The board has approved extensions in the past but handles each on a case-by-case basis, said Sarah Kiley, a spokeswoman for the regulator.
"We’ll be taking a thorough look and then we’ll determine an appropriate process," Kiley said. Asked if it’s possible the board would approve an extension but allow fewer than three years, she said "it will be up to the board to determine what we will say or won’t say."
Enbridge and the project’s proponents now favor reducing their ownership in the project to increase First Nations and Metis ownership to 33 percent from 10 percent, while also proposing a "joint governance structure" including indigenous and industry voices. Enbridge also proposes doubling First Nations and Metis benefits to C$2 billion ($1.6 billion) from C$1 billion.
"I think it’s a step in the right direction,” said David Galison, an equity analyst at Canaccord Genuity Corp. in Toronto. “There are still many obstacles to overcome.”
The project was initially estimated to cost C$6.5 billion. The company is weighing an updated cost estimate, said Ivan Giesbrecht, a Northern Gateway spokesman.
A total of 31 First Nations and Metis communities now support the project, according to the statement.
Canadian Prime Minister Justin Trudeau has opposed Gateway in the past and pledged a "moratorium" on crude oil tanker traffic in the region, but has since softened his position and demurred on whether certain ships, or types of petroleum products, would be permitted under the moratorium. Trudeau remains committed to a moratorium, a spokesman said last month.
“The Government has been clear that development must occur in an environmentally sustainable manner and that it is committed to regaining public trust by ensuring that resource projects undergo credible regulatory reviews before final decisions are made,” Alexandre Deslongchamps, a spokesman for Natural Resources Minister James Carr, said by e-mail. “We encourage all proponents of major resource projects to consult and engage Indigenous peoples throughout the application and development process."
Transport Minister Marc Garneau last month said the government still had not decided how it would proceed on any moratorium. “It’s a formalized moratorium and, when we have worked out exactly what that means, we’ll let you know,” he said.