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New economic age for Canada Final terms for Northern Gateway regulatory hearing coincide with Harper’s declaration that Asia-Pacific supplanting US, Europe Gary Park For Petroleum News
The pieces are now in place for a Canadian regulatory hearing that carries profound overtones for Canada’s economic future, now that Prime Minister Stephen Harper has rated the Asia-Pacific region ahead of the United States and Europe.
The Canadian Environmental Assessment Agency and Canada’s National Energy Board issued an agreement Dec. 7 on the terms of reference for a review of Enbridge’s proposed Northern gateway pipeline project.
The project consists of a 525,000-barrel-per-day, 36-inch crude oil pipeline to deliver oil sands production from Edmonton to Kitimat’s deepwater port in British Columbia and a 20-inch line to transport 193,000 bpd of condensate in the reverse direction.
The current timetable for Northern Gateway includes an estimated 18 months of regulatory hearings and three years of construction, pointing to pipeline commissioning and startup in the 2015-16 period.
But Enbridge is not expected to make an official application until late in the first quarter of 2010.
Preliminary construction costs were set in 2005 at C$4.5 billion, but have not been publicly updated since then.
An Enbridge spokesman said crude from Northern Gateway would be primarily directed at Asia and possibly California, which are “important markets that are currently underserved.”
Patricia Mohr, a commodities expert at Scotiabank, said the project would benefit the Canadian energy sector by providing a second export outlet after the United States, which currently takes up to two-thirds of Canada’s oil and natural gas.
Mohr said forecasts of slow growth in U.S. energy demand over the next decade elevate energy-hungry China and India as necessary escape valves for Canada.
Looser ties with U.S. The step forward for Northern Gateway came just two days after Harper — who has made trips to Singapore, India, China and South Korea in the last month — set Canada on the road to loosening its economic ties with the U.S.
“I think we have every reason to believe that the markets in the United States and in Europe that have been our more traditional market will probably experience slower growth for some time to come,” he said after meeting South Korean President Lee Myung-bak. “So the greater opportunity is obviously in the Asia-Pacific region.”
In a speech to the South Korean National Assembly, he directed his remarks to the G20 — a collection of the world’s largest economies that is scheduled to meet in Toronto next June following a summit of leaders from the G8 group of the world’s major economic powers.
“The G20 will serve as the world’s pre-eminent forum for economic cooperation,” Harper said. “It is this group that has worked together to minimize the effects of the global recession.”
He has openly acknowledged that the G20 — which includes the U.S., China, Japan, Canada, South Korea, Russia, Mexico and Indonesia — has supplanted the G8 as he ponders spreading Canada’s economic risks beyond the U.S.
Harper: Canadian assets Harper said Canada has two assets that give it an edge over other competitors in cracking the emerging Asian markets.
First, he said, “we can supply some of the raw materials, resources, that very few developed countries have to offer,” and, second, “unlike most developed countries, Canada has very, very deep cultural links (the result of admitting millions of immigrants from China, India and other Asian countries) with this region and that also should give us somewhat of a privileged position.”
Without making any specific reference to Northern Gateway or other proposed energy links with Asia, including Kitimat LNG’s proposed Kitimat terminal, he has set the stage for a crucial test case when the Enbridge application faces regulators and anticipated strong opposition from environmentalists, First Nations, local governments and landowners.
The terms of reference for the environmental and regulatory review allow a full airing of concerns from all stakeholders, notably environmental groups which will raise the issue of increased greenhouse gas emissions from oil sands production that will underpin Northern gateway.
The joint review panel has a mandate to consider whether the pipeline is likely to cause significant adverse environmental impacts and whether it is in the public interest.
No tanker moratorium In issuing the agreement, the panel discredited a widely held belief that there is a moratorium on tanker traffic off the British Columbia coast.
“It is the government of Canada’s position that there is presently no moratorium,” it said, noting that tanker traffic already uses the ports of Vancouver, Kitimat and Prince Rupert.
The environmental group Forest Ethics wasted no time attacking the terms of reference, claiming they “fall short of what is required for a project of this magnitude,” based on more than 2,000 comments that were made on the draft terms.
“The process the federal government has selected for considering this project turns a blind eye to the climate impacts of tar sands expansion,” said Forest Ethics campaigner Nikki Skuce. “This is a review process that has historically approved 99 percent of the projects it has considered.”
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