Enbridge plots next steps for Northern Gateway

Earliest possible in-service date is 2018, 209 conditions to meet.

CALGARY — Enbridge Inc.’s controversial Northern Gateway proposal has passed a key milestone, but the Calgary-based pipeline giant says it has a long-way to go before it decides to break ground.

Ottawa gave the green light to the multibillion-dollar Alberta-to-West Coast project, subject to 209 conditions recommended by a regulatory panel late last year. But Enbridge still needs to cross a number of federal and provincial regulatory hurdles, fight a bevy of legal battles launched by opponents and win over communities along the proposed route.

Enbridge CEO Al Monaco described the economic case as “straightforward” for a pipeline that would connect growing oil sands crude with eager buyers on the other side of the Pacific. But he acknowledged that’s not enough to proceed.

“If we can’t prove out safety and environmental protection on these projects, the economic benefits won’t matter,” he said. “In other words, the economic benefits alone are not enough to sustain public support.”

Enbridge will be working to meet the panel’s conditions – more than 100 of which must be met before shovels can even hit the dirt – during the next 12 to 15 months. The earliest possible in-service date would be 2018.

He said Enbridge won’t put off building the pipeline indefinitely, but it’s in no hurry to give it the final go-ahead either.

“We’re not going to be driven by our calendars or watches here. We’re going to take this one step at a time,” said Monaco.

Monaco touted the slate of pipelines it has in the hopper to connect Alberta crude to eastern and southern markets.

The good news, some observers say, is that Enbridge has time to look westward.

“There is some flexibility on timing to ensure that it’s done right,” said Greg Stringham, with the Canadian Association of Petroleum Producers.

CAPP predicts that oil sands production will hit 4.8 million barrels per day by 2030, about two and a half times higher than last year’s output of 1.9 million barrels.

At that point, the capacity of all pipelines currently proposed will be needed, said Stringham.

Jack Mintz, with the University of Calgary’s School of Public Policy, said demand from new markets isn’t going to diminish.

“There’s huge Asian coker demand for oil and I think that demand is not going to disappear,” he said. “In fact, the Asian market is actually the growing market for oil products and there is a very big demand for Canadian oil.”

Laura Lau, a senior portfolio manager with the Brompton Group, agrees the window of opportunity should stay open for some time, given the rate at which oil sands production is expected to grow.

“We still need as many pipelines as possible, so perhaps it would be past the end of this decade,” she said.

However, Lau believes other pipeline proposals to the south and east, such as TransCanada’s Keystone XL and Energy East, have a much better chance of going ahead than Northern Gateway, given the First Nations and political challenges that are specific to BC.

Enbridge’s most recent estimates put the price tag of the project at $6.5 billion, but the company has said costs are sure to go up. The joint review panel’s report pegged the cost at $7.9 billion, including $500 million for marine infrastructure.

“The ultimate question is whether the pipeline just becomes way too expensive to build,” said Dylan Jones, with the Canada West Foundation. “And if there’s something that kills it, it’s going to be a combination of the challenge of building support in British Columbia and the cost.”

The Joint Review Panel set December 31, 2016 as a deadline for Enbridge to start building the project, unless the National Energy Board says otherwise.

Some Northern Gateway opponents weighed in after the announcement was made June 17.

WWF-Canada said in a statement the federal government has not listened to Canadians or considered sound science in its decision to approve the project.

“We are deeply disappointed the federal government has not heard the people of BC, and thousands of others across Canada, who agree oil pipelines and tankers present too great a risk to Canada’s Great Bear region,” said WWF president and CEO David Miller.
“Responsible development means determining where risks should never be taken. The Great Bear region is a global ecological treasure that should not be jeopardized.”

Erin Flanagan, analyst at the Pembina Institute, expressed concern the project was approved that will allow oil sands development — and its associated carbon pollution — to grow faster at a time when industry and regulators are failing to manage the impacts and risks of current production.

“The Pembina Institute’s analysis shows the carbon pollution generated by filling the Northern Gateway pipeline would be equivalent to adding over three million cars to Canada’s roads.”

Flanagan said approving pipeline infrastructure that incents further oil sands expansion is not in the public interest in the absence of credible regulations to curb the growth of carbon pollution from the sector.

“It’s time to modernize Canada’s pipeline review process. The federal government should reform its National Energy Board Act to include upstream carbon pollution in all future reviews of oil sands infrastructure projects.”

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