With federal government approval, Enbridge Inc.’s Northern Gateway pipeline has taken one step toward construction, but it’s likely to be years – if ever – before it carries oil to the west coast.
“Most of the heavy lifting is yet to be done,” says Andrew Leach, a professor at Alberta School of Business at the University of Alberta.
Enbridge must still fulfill 209 conditions laid down by a federal review panel before it can start the 525,000-barrel day carrying Alberta crude to Kitimat, B.C.
It must counter opposition by First Nations, court challenges, and an aggressive position taken by the government of British Columbia.
And it still has an uphill battle in persuading Canadians that the project is a good one – including the townsfolk in the terminal town of Kitimat, who voted 58 per cent against the project in a non-binding plebiscite in April.
Condemnation of the project flowed in almost instantly from many groups, once the decision was announced – such as this statement from Environmental Defence:
“Approving the Northern Gateway pipeline rejects science, disrespects First Nations, ignores the government of British Columbia and brushes aside the voices of millions of Canadians,” it said.
The opposition – legal and political – shouldn’t be underestimated, Leach said.
“I wouldn’t bet on a shovel in the ground in this decade,” he predicted.
“It’s almost assured that the First Nations dispute on this pipeline is going to go to the Supreme Court of Canada – in one or more forms.”
B.C. Premier Christy Clark is another factor.
Two years ago, Clark stated five conditions that she says must be addressed if the project is to win support of B.C.
• Creating a “world-leading” system to prevent oil spills on land or in water – and, should spills occur, systems to deal with them.
• Addressing First Nations treaty rights, and ensuring that benefits flow to aboriginal communities.
• Ensuring that B.C. receives a “fair share of the fiscal and economic benefits of proposed heavy oil projects that reflect the risk borne by the province.”
Enbridge also has to deal with 209 detailed conditions laid down by a federal joint review panel.
But the political questions – both with First Nations and the B.C. government – are especially difficult.
Leach points out that the idea of a “fair rent” to B.C. for allowing Alberta oil to cross its territory has never been defined, nor is there much precedent for figuring it out:
“From Alberta’s perspective, Alberta’s got 30 or 40 years of history of defending provincial jurisdiction over resource rent. It’s hard to see how they’re going to give that up in any meaningful sense to Christy Clark.”
That interprovincial scrapping comes, ironically, as the federal Conservatives try to push for interprovincial free trade across Canada.
There could be some wild cards in the game.
One possibility is that Enbridge could extend the line to Prince Rupert – which would mean tankers wouldn’t have to negotiate the long passage to Kitimat.
But Leach said that’s unlikely, as it would likely require a re-hearing by the National Energy Board, delaying the process even more.
Meanwhile, B.C. businessman David Black is pushing for a refinery to be built in Kitimat, at the end of the pipeline, to export finished products rather than crude.
While opponents have made Northern Gateway one of their biggest causes, the oil industry sees the stakes as being just as high.
The pipeline is needed to help carry the torrent of oil that’s due to flow out of the oil sands in Alberta and Saskatchewan.
The sands produced 1.9 million barrels of oil a day last year. But by 2030, that’s expected to swell to 4.8 million barrels a day.
To carry that volume of crude, the oil industry is looking to boost pipeline capacity to the Atlantic, Gulf of Mexico and Pacific coasts.
Northern Gateway is a 525,000 barrel a day piece of the puzzle.
It’s not the only project seeking to carry oil to the west coast. The TransMountain pipeline, owned by Kinder Morgan, hopes to twin its existing line to Burnaby, boosting capacity to 890,000 barrels a day from 300,000 barrels.
Others puzzle pieces include TransCanada’s 1.1 billion barrel a day Energy East project to Quebec and the Atlantic coast; TransCanada’s Keystone XL, which hopes to ship 830,000 barrels a day to the U.S. Gulf; and Enbridge’s reversal of its Line 9 through Ontario, which would send 300,000 barrels a day eastward.