Northern Gateway: countdown to the decision

Canadian Finance Minister Joe Oliver has said that failure to find new markets for the country's energy products would have stark economic consequences, signaling that the government is moving toward approving a contested pipeline to transport Alberta crude to the Pacific Coast.

Without new markets, long-term growth in oilsands production will likely slow, Mr. Oliver said.

The Northern Gateway pipeline

This is a critical time for Canada's oil producers, who have invested tens of billions of dollars in recent years to expand production as distribution bottlenecks have forced them to accept steep discounts for crude oil.

A decision on Enbridge’s Northern Gateway project will be the first test of industry plans to ease that bottleneck by building pipelines to reach high-growth areas of Asia. The US is the biggest customer for Canadian crude but its need for foreign oil is declining.

The decision is imminent

Canadian Prime Minister Stephen Harper is expected to rule on Northern Gateway by 17th June. His Conservative government in the past month has attempted to address concerns of pipeline opponents by introducing measures to increase tanker and pipeline safety and pledging to ensure that aboriginal communities in western Canada have more input.

Concerns over water

Supporters of the 525 000 bpd Northern Gateway want access to tidewater to support growth in Alberta's oil patch.

Opponents say an oil spill could pollute the northern Rockies or British Columbia's coast. Environmentalists and Native American tribes have vowed to take their battle to court if the federal government approves the project.

The need for the pipeline

"Market diversification has become an obvious and crucial strategic objective," Mr. Oliver said at an economic conference in Montreal. "Simply put, we need new customers." Canada is emerging as an obvious supplier of energy to Europe as well as to Asia, he said.

Growing US supply and a lack of pipeline infrastructure meant Canadian producers sold their crude at a discount to benchmark oil prices last year, leading to lost revenue of nearly Cdn$ 30 billion, he said. The estimate translates to about US$ 28 billion.

Without sufficient pipelines, Canadian oil producers have turned to railroads to ship crude.

Talks proving successful?

With the clock ticking down for his government's decision on Northern Gateway, Natural Resources Minister Greg Rickford said on Monday that there have been significant strides forward on pipeline and marine traffic safety in talks between Ottawa and First Nations.

For at least the fourth time in as many weeks, Rickford was in British Columbia. This time, he was speaking at an aboriginal summit on pipeline and marine tanker safety.

"Obviously, there are varied reactions. We've all, I think to a certain extent, agreed that there are issues around a specific project or a specific aspect of energy infrastructure, energy transportation, but we're plenty capable to have those conversations," Rickford told reporters following his speech.

"I'm confident that we've laid the foundation for an effective dialogue moving forward."

Putting LNG negotiations at risk?

Three top native leaders have blasted Ottawa for a lack of meaningful dialogue over resource issues and warned that if the government approves the oil pipeline – as it is expected to do shortly – it could turn First Nations against proposed LNG projects.

Leaders of the three most powerful aboriginal organisations in B.C. said the answer remains "no" to Northern Gateway.

"In the event that the Harper government attempt to ram this through... it will serve to poison the well with respect to the LNG efforts to develop First Nations' support for that set of proposals," warned Grand Chief Stewart Phillip of the Union of B.C. Indian Chiefs.

"It's going to completely undermine and damage what's left of the relationship between First Nations and both provincial and federal governments."

Edited from various sources by Elizabeth Corner

Read the article online at: https://www.worldpipelines.com/business-news/10062014/northern_gateway_countdown_to_the_decision/