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Gateway proposal no simple pathway
Gary Park For Petroleum News
Trailblazing an oil route from Alberta to China was never going to be easy.
Enbridge has always been candid about that.
But whether it expected such a bumpy road is another matter.
It will likely be known within a couple of months whether Enbridge has succeeded with its C$4 billion Gateway proposal to ship as much as 280,000 barrels per day of oil sands production by pipeline and tanker to Asia.
That’s when Enbridge hopes to have long-term shipping contracts in place to file regulatory applications and open a new market for Alberta oil in China by late 2010 or 2011.
Enbridge set the ball rolling in spring 2005 when it reached a memorandum of agreement with PetroChina to aggregate about 200,000 bpd to make the Chinese oil giant the anchor tenant for Gateway.
At that time it hoped to have firm contracts in place by the end of 2005, a goal it later moved to March 2006, and now the end of 2006.
The delays don’t mean failure.
In fact company spokesman Glenn Herchak told Petroleum News it is possible the projects to provide oil sands production could delay commissioning the pipeline until 2011.
Chinese refiners want ‘level of familiarity’ But Enbridge Chief Executive Officer Pat Daniel conceded three months ago that the process has been slowed by the desire of Chinese refiners to develop a “level of familiarity before they do a deal.”
He said then that the potential shippers and refiners were growing “more comfortable doing business with each other.”
Herchak echoed Daniel’s assessment Oct. 27, saying that discussions with PetroChina “continue to go well, but we understand that familiarity is important for both parties.”
He said negotiations are also moving ahead with potential California buyers to take 30 percent of Gateway’s volumes.
Herchak said the 70-30 ratio could change, but was unable to say whether a minimum percentage has been set for Asia.
In addition to serving Chinese refineries, Enbridge has said it could line up buyers in South Korea and Japan, both of which have companies involved in various stages of upstream oil sands projects.
Meanwhile, another hitch has developed, with the filing of a lawsuit by the Carrier Sekani Tribal Council — a coalition of eight British Columbia aboriginal communities representing 5,000 people — seeking a halt to the Gateway regulatory process until federal Environment Minister Rona Ambrose deals with the council’s environmental concerns.
The suit claims Ambrose failed to properly consult with the Carrier Sekani before appointing a joint environmental review panel to conduct hearings on the project.
Carrier Sekani Chief David Luggi said it would be only a matter of time before a spill from Gateway would threaten natural resources such as water and fish on land claimed by the First Nations.
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