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Legal showdown looms Enbridge will fight with ‘every means,’ if Canadian government sticks with 1978 Northern Pipeline Act; TransCanada worries about pipeline getting caught in legal quagmire; ministry spokesman agrees decision needed soon — may come in March Gary Park Petroleum News Calgary Correspondent
TransCanada Chief Executive Officer Hal Kvisle regards talk of a battle with Enbridge over rights to carry Alaska gas through Canada as a news media creation.
For Kvisle, the issue is simple. TransCanada has the sole rights under the 1978 Northern Pipeline Act to control the Canadian segment and has invested millions of dollars to secure that position.
Leaving the NPA in place will speed up construction of the pipeline, which could be on stream within a decade, he said.
For Enbridge Chief Executive Officer Pat Daniel, the choice is just as clear-cut. The NPA is outdated and should give way to a more contemporary, free enterprise-based approach that opens the project up to competing bids.
With little sign of peace breaking out between Canada’s two largest energy pipeline companies, the Canadian government is about to decide between the conflicting views and perhaps set the stage for a drawn-out legal showdown that would undermine the expedited regulatory process being sought by Alaska Gov. Frank Murkowski and the Bush administration.
If the Canadian government ruling does not favor a “fair, competitive process,” Enbridge will “not lie down,” said Steve Letwin, vice president of strategy and corporate development.
Dennis McConaghy, TransCanada’s executive vice president of gas development, said that if Ottawa veers from the NPA “it will obviously set off recourses which are not going to help advance this project.
“The NPA is the law of Canada today,” he told an Arctic gas conference in Calgary earlier in March. Enbridge uneasy about Ottawa While lobbying intensively for a fresh start that would allow other bidders to submit pipeline proposals to the National Energy Board, Enbridge is growing uneasy about the Canadian government’s response.
Speaking at the Arctic conference, Letwin said that if the Canadian government “takes the position of exclusivity, we will fight it with every means we have available — in court.
“In what country of the world are you not given a chance on a $20 billion project to compete? What country does that?
“It’s not right. Our view is you’ve got a process to have fair competition.”
But he conceded that Enbridge is “bewildered” by what it perceives as government support for the NPA.
“Cooperation to get (the Alaska) gas to market is obviously required and seems to be ever more difficult to achieve,” he said.
Letwin told the Financial Post that his company has been “getting pretty strong signals that the government is prepared to take a position that has us concerned.
“We’re worried that the government could take a position that the Northern Pipeline Act is the only way to do this. We’re just saying let the best project win.”
But, for now, he does not think that Enbridge is “getting a fair hearing” in Ottawa. Canadian decision expected soon A spokesman for Canada’s Natural Resources Minister John Efford would only say the government agrees a decision is needed “sooner rather than later,” giving a broad indication that the verdict will be delivered in March.
For a project on the scale of Alaska gas development to succeed, local distribution companies must be prepared to sign long-term contracts — a step they are unlikely to take unless there are assurances of reliable, low-cost delivery, Letwin said.
He said consumers must be convinced that “long-term supply contracts are back in vogue and they can trust producers and pipelines that the cost of gas they receive is fair and reasonable.
“In order to get that, you have to have competition.”
But the “rumors and rumblings” about Ottawa’s preference prompted Enbridge to take out full-page newspaper advertisements arguing for a contemporary approach that would see the Alaska pipeline built on principles of “fairness and free enterprise.”
It has proposed to take the lead role in a partnership of producers, pipeline companies, aboriginal organizations, the state of Alaska and market participants to develop Alaska’s 35 trillion cubic feet of proven reserves.
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