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Daniel tightens screws Enbridge warns of delays, litigation for Canadian leg of Alaska gas pipeline Gary Park Petroleum News Canadian Correspondent
Enbridge has tightened the screws in its campaign to reopen bidding for the Canadian leg of an Alaska gas pipeline.
In a letter to nine federal cabinet ministers and Deputy Prime Minister Anne McLellan, the Calgary-based pipeline company has spurned TransCanada’s claims to sole right for the Canadian section, while inviting its rival to participate in a consortium.
Enbridge Chief Executive Officer Patrick Daniel bluntly warned the government that relying on the 1978 Northern Pipeline Act, the underpinning of TransCanada’s argument, “simply will not obtain the commercial support required.
“The regulatory and litigation risks associated with the NPA will result in the project not moving forward, with consequential lost benefits to Canada and higher gas costs for Canadian consumers.”
For the first time, Enbridge publicly committed itself and its 50 percent owned Alliance Pipeline to work with TransCanada and any other parties in a partnership.
But it was equally emphatic that any such arrangement would “require a clear understanding of the need to create value for the pipeline’s customers.”
It would also be essential to hold fresh hearings under the National Energy Board and the Canadian Environmental Assessment Agency (which did not exist when the Northern Pipeline Act was legislated in 1978) to “ensure we have a modern project configuration that can properly address the needs of key stakeholders and environmental standards.” Enbridge acknowledges ‘residual rights’ Daniel said Enbridge was not attempting to remove or set aside the “residual rights” held by TransCanada and Foothills Pipelines, conceding that “no one seriously argues that Foothills has exclusivity on the shipment of Alaska natural gas.”
“We only request that the federal government does not arbitrarily confer any additional rights upon TransCanada,” he said.
“Furthermore, we request the government clarify that all feasible projects will be given due consideration.”
Daniel noted that the National Energy Board has previously issued certificates to build new pipelines that compete with and follow a parallel route to an existing pipeline.
“We believe the NEB should apply the same logic to the Alaska-Canada pipeline,” he said.
To that end, he endorsed TransCanada’s own argument when it acquired Alberta-based Nova in 1998: “Competition is a driving force in today’s natural gas industry. Our industry and regulatory policies should not only promote and sustain competition, but provide all participants with the equal opportunity to provide greater customer choice, provide incentives for pipelines to build incremental transportation capacity, promote competitive pricing and technological and service innovations.”
Against that, Daniel said the NPA “stands out as a fundamentally flawed anachronism,” coming more than 15 years before environmental, socio-economic and land claims statutes.
Even if the NPA did apply to the current TransCanada project, the legislation would require legislative changes to “force-fit” it into the old NPA process, resulting in “inevitable delays and possible litigation,” Daniel warned.
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