|
No sign of quitting from Enbridge Committed to Northern Gateway, despite First Nations opposition; former minister says Canada needs to expand beyond ‘mere ownership’ Gary Park For Petroleum News
The tougher the opposition gets, the more determined Enbridge becomes to complete its Northern Gateway project.
But, just in case, it’s also dusting off plans to build pipeline extensions in the eastern and southern United States to handle fast-rising production from the Alberta oil sands and the Bakken play in Saskatchewan and North Dakota.
As well, Canada’s second largest pipeline has its eye on rebuilding international operations, possible in Asia, South America and Australia.
On May 10 and 11, it faced some of the most unyielding reactions yet from British Columbia First Nations to Northern Gateway.
But Chief Executive Officer Pat Daniel was similarly resolute, declaring Enbridge’s objective is to “turn ‘no’s’ from some First Nations into ‘yes’s’,” adding there is already significant support for Enbridge’s offers of equity stakes in the pipeline and estimates that First Nations could benefit from C$1.5 billion in jobs and business opportunities over 30 years.
“We think there are huge benefits, not only nationally, but also regionally,” he said. “Our intent is to work with everyone to make sure we can bring them on side.”
Daniel has been an increasingly vigorous proponent over recent months of Northern Gateway as vital to Canada’s energy security “from a movement of crude oil perspective.”
Route to Asia He said opening a route to Asia is the only way Canada can grow from being merely a price-taker in crude oil markets to a price-maker. Otherwise it will remain trapped in North America, dependent on a shaky outlook in the United States.
Although the Canadian government of Prime Minister Stephen Harper has gone silent while Northern Gateway is before regulators, Enbridge received one of its strongest endorsements from Jim Prentice, once considered the likeliest successor to Harper until he quit politics last fall.
The former federal environment minister and now vice chairman of the Canadian Imperial Bank of Commerce, one of Canada’s five largest banks, told the Calgary Chamber of Commerce that Canada needs to strengthen and diversify its energy markets to become a global energy player over the next decade.
“Mere ownership of resources does not make us a superpower,” he said. “We are the world’s largest producer of energy in all forms … but we are still missing one vital component: A diversified market.”
Prentice said opening energy trade with the Asia-Pacific region for both crude oil and LNG is imperative.
“It’s in our national interest that we have the capacity to export into the (region),” given predictions that the U.S. need for Canadian oil will be “offset by biofuels, higher fuel efficiency standards and suppressed by rising energy prices,” he said.
Emerging economies On the other hand emerging economies such as China and India will drive world consumption to 89 million barrels per day, which means a rising demand for heavier crudes, Prentice said, while cautioning that will not translate into a “free ride” for the oil sands industry.
He noted that 47 separate jurisdictions in the U.S. are developing their own low-carbon fuel standards which could download U.S. compliance costs on Canadian producers.
In addition, he said environmental questions in the U.S. about how destructive the oil sands are pose a “significant and worrying” challenge for Canada, which should do everything it can to make sure TransCanada’s Keystone XL project gets built.
Prentice said the industry and the governments of Alberta and Canada must be able to make a credible case that they are protecting the environment and not just build their defense around the “absence of credible, science-based data” on the causes of climate change.
Road grows bumpier For Enbridge the road to Northern Gateway approval grows bumpier, not helped by a spill of 28,000 barrels on a Plains Midstream Canada pipeline near a First Nations hamlet in northern Alberta.
Following a meeting with the Enbridge board of directors and a protest outside the company’s annual meeting, leaders of a delegation from British Columbia First Nations hammered home their message that they will not negotiate with Enbridge.
“There’s nothing in this project … that is positive for our people,” said Peter Erickson, hereditary chief of the Nak’azdli First Nation. “We have allowed industry into our territory, but this project will not be allowed in.”
He said Enbridge has been unable to provide the alliance of five First Nations he represents with a “full guarantee of zero (pipeline) spills.”
So far 61 indigenous nations of the Fraser River watershed in British Columbia have signed a declaration opposing construction of any pipeline from the “tar sands” across their lands, territories or watersheds.
However, Bill Gwozd, a vice president of Ziff Energy Group, said the opposition could delay, but is not likely to prevent approval of Northern Gateway.
Second proposal While engaged in that battle for regulatory, government and public support, Enbridge is relaunching a second proposal to deliver Canadian crude to U.S. Gulf Coast refineries.
Backed by a new 10-year pipeline toll agreement, it is using that certainty to test interest among shippers in extending the reach of its network into the U.S. PADD I market and south from Cushing to the Gulf Coast.
Confident that U.S. demand will eventually support two pipelines from Cushing, Daniel said “confidential discussions” are under way on Enbridge’s Trailbreaker project which was designed to carry 130,000 barrels per day to the Gulf Coast and 70,000 bpd to Montreal refiners, but was shelved in early 2009 amid a slump in crude prices.
Enbridge is also mulling construction of its proposed Monarch pipeline to carry 350,000 bpd south from Cushing to address oil glut-induced price discounts at the trading hub.
Daniel also said his company is open to exploring opportunities in Colombia, a fast-growing energy player in South America, along with building LNG infrastructure in Asia and Australia.
| 