Pipeline takes double blow

Enbridge’s Northern Gateway project rejected in non-binding Kitimat vote; First Nations group formally opposes plan

Gary Park

For Petroleum News

Enbridge’s Northern Gateway pipeline has taken two more beatings in the court of public opinion, but the trouble-plagued project has yet to face its most critical verdict that most industry observers believe it will win.

For now the C$6.5 billion plan to ship oil sands bitumen from Alberta to the deepwater British Columbia port at Kitimat for export to Asia is left reeling by the results of a non-binding plebiscite in the resource District of Kitimat and what is described as a final rejection by a group of British Columbia First Nations.

Regardless of how the non-binding Kitimat vote is perceived among lawmakers, the most critical decision is expected in June when the Canadian government cabinet decides whether or not to accept the recommendations of its regulators that the project should be approved along with 209 conditions.

April 12 vote

The ballot count was 1,793 opposed and 1,278 in support, a margin of 58.4 percent to 41.6 percent.

Kitimat Mayor Joanne Monaghan said “the people have spoken. That’s what we wanted. It’s a democratic process.”

Kitimat is the proposed site of a two-berth marine terminal for 525,000 barrels per day of bitumen and a tank farm to store the product before it’s loaded on tankers, plus the import of 193,000 bpd of condensate for delivery to Alberta where it would be mixed with the thick bitumen to facilitate pipeline transportation.

Enbridge: ‘more work to do’

The plebiscite result “shows that while there is support for Northern Gateway in Kitimat, we have more work to do,” said Donny van Dyke, the company’s Kitimat-based manager of coastal aboriginal and community relations.

“Over the coming weeks and months we will continue to reach out and listen to our neighbors and friends so that Northern Gateway can build a lasting legacy for the people of our community,” he said.

Van Dyke said that as a long-time resident of northwestern British Columbia he “passionately believes that Northern Gateway is the right choice for Kitimat and for the future of our community.”

Douglas Channel Watch, a local environmental group which led the opposition in the Northern Gateway vote, said the risk from either a tanker accident or pipeline rupture was too high a price for the small number of jobs the project would bring to the area, which has been on a resource-driven rollercoaster for years.

Celine Trojand, a spokeswoman for the Dogwood Initiative, said the plebiscite result should inspire demands for a province-wide vote, but that would require signatures from 10 percent of registered voters in every one of 85 constituencies.

More support for LNG

Even without final investment decisions, that prospect has seen a surge in Kitimat house prices in the first three months of this year, with values soaring to an average C$289,000, up 71 percent from C$169,000 a year earlier.

Haisla Nation Chief Ellis Ross said the Northern Gateway vote is unlikely to have more than a symbolic impact, while Art Sterritt, executive director of Coastal First Nations, said the result makes no difference to the entrenched opposition of his community.

Sterritt said Jim Prentice, a former federal cabinet minister who has been hired by Enbridge in an effort to win over critics, has been discussing the possibility of an even larger aboriginal stake in the pipeline.

Jim Hatcher, a spokesman for Prentice, would not disclose details of what has been discussed beyond saying Enbridge has not shifted from its original 10 percent offer that is valued at C$280 million over 30 years.

In its latest testimony, Enbridge has claimed to have the support of 11 of 27 British Columbia First Nations who occupy land within 50 miles of the pipeline right-of-way.

Kinder Morgan on sales mission

To that end, the company’s Canadian President Ian Anderson is hitting the road to engage in face-to-face meetings along the pipeline right of way from the Alberta oil sands to the Burnaby dock in Port Metro Vancouver.

He has so far personally participated in at least 250 meetings with residents, landowners, business operators, First Nations and environmentalists.

Anderson told the Vancouver Sun that his company strongly believes it must spend time talking to affected parties and has taken that approach since the C$5.4 billion venture was officially launched 18 months ago.

He said it has been his choice to “make this somewhat personal. I think people appreciate a personal face, a personal approach to the issues. And we’ve tried to build the trust and confidence along with the personal approach.”

But the resistance shows no signs of weakening, with hundreds of activists staging a protest in the Burnaby area on April 12 against the pipeline and its plans to export oil sands bitumen.

However, Anderson is hopeful that the public appreciates Kinder Morgan’s “openness and honesty about issues” and its candor that accidents can happen involving pipeline spills or tankers in open oceans.

“When you talk about risk, you are talking probability and consequence,” he said. “The probability of a major incident is very, very low.”

The introduction of another 350 tankers a year into the densely populated Vancouver area will involve extensive study, research and evidence to deal with fears that risks cannot be managed, Anderson said.

He said the pipeline expansion is all about market demand and responding to growing production in the oil sands that has generated shipping commitments from 13 customers for 20-year periods.

Although Asia, especially China, is the ultimate prize, Anderson noted that 80 percent of the tankers currently leaving Burnaby are destined for California and “that’s still a market producers want to get to simply because Alaska North Slope crude continues to be in decline.”

In making an economic case for the pipeline expansion in British Columbia — despite the obvious benefits to Alberta from oil sands royalties and jobs — he said municipal property taxes from the project would almost double to more than C$40 million a year.

As well, about two-thirds of the capital cost would be spent in British Columbia, creating contracting opportunities, he said.

—Gary Park