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Rising from the dead Enbridge ponders rerouting Northern Gateway, faces uncertainty over talk of imposing tanker ban off northern B.C. coast GARY PARK For Petroleum News
Crude carrier Enbridge has found hope amid what seemed like unrelenting setbacks, led by unexpected signs from the Canadian government that the Northern Gateway proposal may only be moribund, not dead.
In addition, the company got approval, which must be ratified by the federal cabinet, to replace an aging crude oil export line to the United States, an upgrade that will allow the so-called Line 3 to raise its capacity to 790,000 barrels per day from 390,000 bpd.
The most startling turn of events involved Northern Gateway, when Alberta Premier Rachel Notley raised the possibility with the cabinet of Prime Minister Justin Trudeau of rerouting the proposed pipeline from a tanker terminal at Kitimat to another site, including Prince Rupert.
That would enable Enbridge to bypass the 250-mile-long Great Bear Rainforest, rated as a world ecological treasure.
The existing C$7 billion Northern Gateway plan involves exporting 525,000 bpd of oil sands crude to Asia and importing 193,000 bpd of condensate for blending with bitumen to facilitate the flow through the pipeline.
Studying exemptions Along with that, Trudeau is reported to be wavering on his pledge to impose a ban on tankers operating off the northern British Columbia coast.
Federal officials are said to be studying what petroleum products might be exempted from a moratorium, which could still mean that raw bitumen would be prohibited because of the environmental risks it would pose in a tanker accident.
For now cabinet ministers are noncommittal on what a tanker ban would entail.
“It would be a formalized moratorium and, when we have worked out exactly what that means, we’ll let you know,” said Transport Minister Marc Garneau.
But when asked if a moratorium would mean the end of Northern Gateway, he left the door partly open. “It’s premature to say anything,” he said.
A spokesman for Trudeau said the government remains “committed to a crude oil tanker ban on British Columbia’s northwest coast,” although he added that the government is “currently conducting consultations and examining science and facts to ensure we protect Canadian coastlines.”
Notley urges pipeline Notley, after meeting with the Trudeau cabinet at a resort in the Canadian Rockies, said she emphasized in a private meeting with Trudeau the “importance of getting a pipeline built so we can get Alberta’s energy product to market.”
Having seen evidence of progress by Enbridge to overcome some of the barriers to Northern Gateway, she has shifted her stance on the project after gaining signs of optimism by people who are involved in negotiations with Enbridge.
Northern Gateway is Canada’s only major export pipeline proposal to have federal approval, although 209 conditions must be met before construction can start, including support from First Nations.
An early deadline is fast approaching for Enbridge to file shipping agreements by June 30 and start construction by Dec. 31.
A spokesman for Enbridge said that “building support is the number one priority right now.”
Also complicating matters is the prospect of opposition from the United States if Canada tries to implement a ban on tanker traffic that would affect the Dixon Entrance boundary between British Columbia and Alaska and would affect tanker movements from Alaska to the Lower 48.
Garneau said that opposition “is a possibility. We’re not sure at the moment. We’ll see how we go about it.”
The British Columbia government has said it won’t support Northern Gateway unless the project meets five conditions, including environmental approval and a “world-class” spill response system.
Natural Gas Development Minister Rich Coleman said the province will continue to “work with industry, First Nations, communities and the federal and provincial governments to ensure the five conditions are met.”
Relocation discussion On the terminal location, Notley said the possibility of relocating from Kitimat and the narrow Douglas Channel is being discussed and avoiding any threat to the highly-prized Great Bear Rainforest.
Sources say Enbridge has looked at a number of alternatives, including Prince Rupert, now that the residents of Kitimat have voted against the pipeline in a non-binding plebiscite.
The Enbridge spokesman said there are “no current plans for a route change,” but added that Enbridge is “open to change” to meet its commitment to build the pipeline.
He told the Financial Post that “discussions are on-going ... and any significant developments on any aspect of the project would be communicated at the appropriate time.”
Conditions on replacement On Line 3, NEB has attached 89 conditions to its approval for Enbridge’s plan to replace all segments of the line that covers almost 1,000 miles between Hardisty, Alberta, and Superior, Wisconsin, by 2019, as part of a C$7.5 billion cross-border undertaking.
The approval applies only to the Canadian section of the line. U.S. regulators are dealing with the southern leg, but, unlike Keystone XL, the project does not require a permit from President Barack Obama because Enbridge is only restoring the line to its original capacity.
However, separate permitting processes will be required in the U.S. before construction can start.
Robert Steedman, chief environmental officer at the NEB, said the regulatory panel concluded the project was in the public interest and unlikely to cause significant adverse environmental effects.
The NEB conditions require Enbridge to continue consultation with landowners and aboriginal groups that live along the pipeline right of way.
Federal Natural Resources Minister Jim Carr said the cabinet will make a final decision this fall.
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