By Dow Jones Business News,
June 17, 2014, 06:59:00 PM EDT
By Paul Vieira and Chester Dawson
The push to expand pipeline links from Alberta's landlocked oil sands to Canada's Pacific coast got a boost Tuesday
when the federal government approved Enbridge Inc.'s Northern Gateway project.
Enbridge faces other hurdles before it can start construction on the 7.9 billion Canadian dollar (US$7.3 billion)
project. Like TransCanada Corp.'s proposed Keystone XL pipeline in the U.S., Northern Gateway has come up against
opposition, from politicians in British Columbia to environmentalists and aboriginal groups who have vowed to stop the
In approving Gateway, the federal cabinet said Enbridge must satisfy the 209 conditions set out by Canada's main
energy regulator when it approved the project in December after 18 months of highly-charged public hearings. Enbridge "
clearly has more work to do in order to fulfill the public commitment it has made to engage with aboriginal groups and
local communities along the route," Natural Resources Minister Greg Rickford said in a written statement.
Northern Gateway would carry 525,000 barrels a day of crude oil from near Edmonton, Alberta, to a marine terminal
at Kitimat, British Columbia, where the oil would be loaded onto tankers bound for Asia.
With the U.S. increasingly energy self-sufficient, building pipeline capacity to get crude to new markets has
become a priority for Canada, which currently sends almost all of its crude exports to the U.S. Keystone XL, which has
yet to get a green light from the White House nearly six years after it was proposed, has added to the urgency around
tapping new markets.
Failure to win approval for more pipelines could lead to delays for planned oil-sands projects and lower prices for
oil from Alberta, which already trades at a discount to other North American crudes. Canadian Finance Minister Joe
Oliver this month warned that Canada's failure to find new energy markets would carry stark consequences for its
economy. The natural-resources sector accounts for 20% of Canada's economic output, according to the government.
Enbridge has spent C$400 million of the estimated cost to prepare and promote Gateway and has received firm
commitments from major oil-sands producers, including domestic companies Suncor Energy Inc., Cenovus Energy Inc. and
Husky Energy Inc., as well as the Canadian units of China'sCnooc Ltd. and France'sTotal SA.
Many of those shippers have hedged their bets by also making commitments to other pipeline projects, including a
proposal backed by Kinder Morgan Energy Partners LP to nearly triple the capacity of its Trans Mountain pipeline, which
already carries Alberta crude to the Pacific coast.
People in the industry say that not all those pipelines are needed today, but that their capacity will be spoken
for over the next decade as oil-sands production grows.
Gateway has polarized Alberta neighbor British Columbia, with opposition strongest among aboriginal groups and
environmentalists. The provincial government had demanded environmental guarantees and compensation before construction
permits can be issued.
Many of the native tribes that exercise control over land and coastal waters along the proposed route through
British Columbia have signaled that they will oppose the project, citing environmental risks and what they say is their
lack of influence on a pipeline that will run through land they have lived on for centuries.
"It traverses some of the most rugged terrain in North America and crosses hundreds of streams and river that
represent the spawning grounds for B.C.'s wild salmon," said Chief Stewart Phillip of the Union of British Columbia
Indian Chiefs. "The specter of a tanker spill along the north coast is something that people are not prepared to risk."
The issue also has threatened to complicate discussions between aboriginal groups and provincial government and
industry groups seeking to build pipelines to carry natural gas from inland to proposed liquefied-natural-gas terminals
on the Pacific coast. The British Columbia government and First Nations have been more receptive to those natural-gas
Alistair MacDonald contributed to this article.
Write to Paul Vieira at firstname.lastname@example.org and Chester Dawson at email@example.com
(END) Dow Jones Newswires
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