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Providing coverage of Alaska and northern Canada's oil and gas industry
April 2014

Vol. 19, No. 16 Week of April 20, 2014

Northern Gateway faces rival

First Nations, BC industrial giant unveil plans for C$18B energy corridor to BC coast in bid to attract aboriginal participation

Gary Park

For Petroleum News

A First Nations’ company, backed by one of British Columbia’s wealthiest families, is trying to seize the initiative in moving synthetic crude rather than controversial bitumen from the Alberta oil sands to the Pacific Coast by proposing an alternative to Enbridge’s floundering Northern Gateway project.

Only two days after the residents of Kitimat registered clear-cut opposition to Northern Gateway in a community plebiscite, the alternative scheme surfaced.

Eagle Spirit Energy Holdings, formed two years ago to promote a First Nations energy corridor across northern British Columbia, unveiled its plan and disclosed that the Vancouver-based Aquilini Group, a powerhouse developer whose principal investors own the Vancouver Canucks of the National Hockey League, was ready to underwrite the cost of the pipeline.

The C$18 billion venture has set a tentative startup date of 2020 to deliver 1 million barrels per day of oil sands bitumen to Prince Rupert along with natural gas to serve local communities and as feedstock for LNG projects, a fiber optic cable, electrical and water lines.

Backing claimed, dismissed

The announcement April 14 was joined by about 20 British Columbia First Nations chiefs, with the promoters claiming to have the backing of most First Nations along the right of way, although some aboriginal leaders were quick to dismiss the idea.

Eagle Spirit Chairman and President Calvin Helin said the proposal has First Nations’ backing because it would be largely Native controlled and would be routed to Prince Rupert rather than Kitimat.

He said some of the aboriginal support comes from communities that have been “staunchly opposed” to Northern Gateway, but non-disclosure agreements prevent him from naming the First Nations other than the 150 members of Nee Tahi Buhn, which has withdrawn its endorsement of the Enbridge pipeline.

Enbridge has long claimed it has 26 equity partnerships in place with First Nations and Metis communities for Northern Gateway representing about 60 percent of the native population along the proposed route.

An Enbridge spokesman said the company has not received notification that any of the aboriginal partners have withdrawn, or been told that non-disclosure agreements have been cancelled.

Aquilini says it has customers lined up

Aquilini President David Negrin told reporters his company decided 18 months ago to back Eagle Spirit and has customers “lined up,” using its leverage from business dealings with China.

Helin said the Eagle Spirit energy corridor would be located away from the congested and “torturous” routes that have undermined the connection to Kitimat.

In addition, First Nations “do not believe Kitimat is an appropriate terminus because it exposes the coastline to too much risk,” he said.

The proposal will be further strengthened by converting oil sands bitumen to synthetic crude by refining the output at an upgrader that First Nations are open to building in eastern British Columbia to gain some of the key economic benefits associated with producing and refining bitumen, Helin said.

“Money and technical expertise is not going to be a problem,” he said. “It is very clear what the problem is: First Nations’ social license.”

CERI says this may be ‘road ahead’

Peter Howard, chief executive officer of the Canadian Energy Research Institute, said Eagle Spirit may have found a “road ahead” if it is able to assure First Nations of financial compensation and active participation in the project.

David Collyer, president of the Canadian Association of Petroleum Producers, told the Calgary Herald that the Eagle Spirit proposal could offer a “way through” the current impasse with Northern Gateway.

For producers, the objective is to get bitumen to the British Columbia coast and Asia, so “the more options the better.”

Chief Archie Patrick of the Stellat’en First Nation said in a statement that “everyone knows oil is coming through British Columbia at some point. There is a cost to doing nothing. We do not want someone else to determine our future.”

Matt Horne, a British Columbia executive with the Pembina Institute, said Eagle Spirit is pitching an idea that “seems similar” to a C$26 billion plan by media owner David Black to refine oil sands crude at Kitimat, to reduce the dangers of a bitumen spill in open water.

He said the Black idea has attracted a “lot of skepticism around its economics” and Eagle Spirit may face the same doubts.

Black has conceded that oil sands producers are unwilling to participate in his project, preferring instead to sell their raw bitumen outside North America.

Art Sterritt, executive director of the Coastal First Nations, representing eight aboriginal communities, doubted Eagle Spirit’s claims of Native backing, noting that only two small First Nations sent representatives to the Vancouver news conference.






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