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Going public with a ‘critical issue’
Gary Park For Petroleum News
Enbridge and Kinder Morgan are emerging from years in the shadows to make a public case for their plans to ship bitumen from the Alberta oil sands to Asia.
For Enbridge, the Northern Gateway project is Plan A and, for that matter, Plan B, the company’s Chief Executive Officer Al Monaco told a meeting of business and government leaders in Edmonton, emphasizing that his company has no alternative proposal.
He said the project, which includes shipping 525,000 barrels per day to Asia and U.S. West Coast refineries, has become a national priority if Canada is to overcome the current slump in prices for its crude.
“There is no more critical issue facing Canada today,” Monaco said.
“Failure to develop a consensus around energy development will have serious consequences for this generation and generations to come,” he said, estimating the price gap between U.S. and Canadian crudes is costing governments and companies about C$75 million a day.
‘Sense of urgency’ On the same day Monaco was delivering his message, Kinder Morgan’s Canadian President Ian Anderson was telling analysts in Houston that “there is a significant sense of urgency throughout Canada to access and tap into (the Asian) market” at a time when producers in Russia, Saudi Arabia, North Africa and Venezuela are all competing for a share of the Chinese market.
Kinder Morgan’s hopes are pinned on expanding its Trans Mountain pipeline to 890,000 bpd by 2017 from the current 300,000 bpd, taking advantage of binding commitments from 13 companies to cover 708,000 bpd of those volumes.
The long-term contracts have prompted Kinder Morgan to build an additional 1.2 million barrels of storage at Trans Mountain’s Edmonton terminal boosting capacity there to 9.4 million barrels.
The $5.9 billion Trans Mountain expansion is primarily targeted at increasing tanker traffic from the Westridge dock in Port Metro Vancouver to 30-34 tankers per month from the current five to six vessels, the likely trigger for heated community opposition. Some of the additional volumes would also be destined for refineries in Washington state’s Puget Sound.
Monaco said that with “so much at stake, this is no time to be standing on the sidelines,” conceding that Enbridge and Trans Canada had failed to appreciate that their Northern Gateway and Keystone XL projects had such potential to be lightning rods for “conflict and protest.”
He admitted Enbridge should have been better prepared by reaching out earlier to affected communities and doing a “lot more ground work in terms of building trust.”
Monaco said opponents of the pipelines have figured out that by stopping pipelines they also achieve their objective of stopping energy development.
He said industry’s answer is to “build effective coalitions” by drawing on governments, service providers, labor unions and people “within communities that we operate in.”
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