By Dow Jones Business News,
December 19, 2013, 05:35:00 PM EDT
CALGARY-- Enbridge Inc.'s proposed 7.9 billion Canadian dollar ($7.4 billion) Northern Gateway project cleared a key
hurdle Thursday after a Canadian advisory panel recommended it. The pipeline would connect Alberta's landlocked oil
sands to a Pacific coast port for export primarily to markets in Asia.
The panel attached 209 conditions to its recommendation, including that Enbridge develop a marine mammal protection
plan and conduct emergency-response exercises.
The decision is expected to spur a final finding in favor of the project by Canada's federal cabinet within a
mandatory 180-day window, and will likely influence a debate over other proposed pipeline projects that aim to reduce
market bottlenecks amid a boom in North America oil production.
A joint review panel of the Canadian National Energy Board and federal environment ministry issued the recommendation
following 18 months of public hearings at the end of nearly four years of red tape. Enbridge submitted an application in
2010 for the project, which it first announced in 2004.
Construction could begin as early as next year and be completed by late 2018, according to the NEB, citing Enbridge.
The panel found that "opening Pacific Basin markets is important to the Canadian economy and society."
The pipeline has been designed to carry up to 525,000 barrels a day of crude on a 731-mile (1,177 kilometer) route
westward from an area near Edmonton, Alberta to a deep-water port in Kitimat, British Columbia where 18 tankers a month
would load and ship the oil abroad, mostly to Asian countries where demand is highest.
A parallel eastward pipe will also be built to carry condensate inland to oil-sands producers in Alberta who use it to
thin their heavy and sticky form of crude.
The project is the first of a series of planned new or expanded mega-pipelines designed in tandem with a rapid rise in
Canadian oil production. On Monday, Kinder Morgan Energy Partners L.P. applied with Canada's NEB for permission to
triple the size of an existing oil pipeline from Alberta to the Vancouver area.
Industry officials say Northern Gateway will be a key test of Canada's willingness to build infrastructure over
environmental objections from nongovernment organizations.
Alberta's oil-sands producers say the proposed pipelines are critical for reaching tidewater, where their routinely
discounted oil can fetch higher prices on global markets. They also are eager to expand into Asia as exports to their
biggest customer-the U.S.-wane due to its own oil boom.
Enbridge says a combination of 10 "Asian market area interests" and oil producers have committed to offtake up to
50,000 barrels per day each. Among those publicly identifying themselves as backers are Suncor Energy Inc., Cenovus
Energy Inc. and Chinese state-owned Cnooc Ltd. unit Nexen Inc.
But Canadian pipelines also face some entrenched opposition. Northern Gateway has sparked more controversy in Canada
than TransCanada Corp.'s Keystone XL project, a rival proposed pipeline connecting the oil sands to the Gulf Coast that
has encountered stumbling blocks winning approval from Washington.
Fear of a large crude spill inland or from oceanic tankers in offshore waters rich in salmon and other fish have
galvanized critics who say Enbridge has been highhanded in its consultation with stakeholders. Noting the planned route
traverses the pristine northern Rocky Mountains and large tracks of land claimed by Native American groups in Canada,
many aboriginal communities and environmental groups have vowed to block the pipeline even if it receives government
Enbridge has said its outreach efforts have been exhaustive and fair.
The panel acknowledged that "the environmental, societal and economic burdens of a large oil spill, while unlikely and
not permanent, would be significant." It also said the company had taken steps to minimize a large spill's likelihood in
part through a precautionary design approach.
Public opinion on the spill seems divided, especially in British Columbia where the bulk of the route is located.
Write to Chester Dawson at email@example.com
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