Enbridge CEO confident for Gateway approval despite opposition

By Shaun Polczer, Calgary Herald December 15, 2010

CALGARY-The head of a pipeline company proposing to build a $5.5-billion pipeline to the West Coast says he's confident the controversial project will get the green light from Canada's regulatory authorities even as opposition to the line hardens.

In an interview, Enbridge CEO Pat Daniel predicted the National Energy Board, which is reviewing the project, will let it move forward because it's in Canada's strategic interest to diversify markets away from a sole customer - the United States.

An offshore outlet would ensure higher prices for Canadian oil producers and provide a "negotiating chip" with buyers in the U.S. that have threatened to boycott oilsands crude.

"We feel very strongly the regulator will rule in favour of the project and it's very much in Canada's national best interest, which is the main test the NEB will apply."

Daniel's comments came even as Vancouver Quadra Liberal MP and former B.C. environment minister Joyce Murray on Tuesday introduced a private member's bill to permanently ban tanker traffic along key sections of the British Columbia north coast that would effectively kill the pipeline.

Bill C-606 would entrench a 1972 moratorium on oil tankers in the waters around Haida Gwaii - the Dixon Entrance, Hecate Strait and Queen Charlotte Sound - negating the use of Kitimat as a deepwater port to facilitate exports of Alberta oilsands to markets in Asia.

"We cannot allow what happened with the Exxon Valdez in Alaska or the catastrophe in the Gulf of Mexico to happen in British Columbia," Murray said at a news conference in Vancouver Tuesday. "There's no going back; our coast would never be the same. Legislation is essential to prevent a major oil spill environmental disaster in B.C.'s renowned coastal waterways."

A similar private member's motion by New Democrat Natural Resources Critic Nathan Cullen calling to formally legislate a northern water tanker was carried by the House of Commons last week by a 143-138 margin.

Enbridge is proposing to build a 520,000-barrel-per-day line from Bruderheim, outside of Edmonton, to Kitimat where it would be loaded on tankers for markets in Asia and the United States. In the interview, Daniel said the tanker issue is separate from the pipeline and insisted the line can be operated safely.

But Eric Swanson with the Victoria-based Dogwood Initiative said "clear public rejection of tankers equals clear public rejection of a pipeline."

In addition, Enbridge is trying to assuage the opposition of natives by offering equity stakes to groups whose territory would be crossed by the line.

Daniel said the company has received positive initial response to the offer without disclosing details. He further said the company would continue to try to win over opponents with promises of jobs and "significant economic benefits" for northern communities.

And while he couldn't guarantee there wouldn't be another spill, "hopefully they will realize the benefits far outweigh the risks of the project," he said.

Daniel agreed a pair of breaks in Michigan and Illinois last summer underscored the dangers of pipeline spills but also the risks associated with relying on a sole outlet for the majority of Canadian exports.

Enbridge is still awaiting the outcome of an investigation by the U.S. Transportation Safety Board into the Michigan leak, which dumped 19,500 barrels into the Kalamazoo River and forced the closure of the 680,000 barrel per day main line for almost six weeks.

The outages forced refiners to scramble for feedstocks to fill their refineries and sent prices for Canadian crudes sharply lower as crude backed up on this side of the border. Producers like Cenovus Energy, Imperial Oil and Husky Energy complained the outage cost them tens of millions of dollars each in lost third quarter revenues and Enbridge was forced to operate the line at reduced pressures which limited the volumes available for transport into the U.S.

An electrical outage and other maintenance issues prompted another round of apportionment, but Daniel said he expects the backlog to be cleared by January.

Despite his personal disappointment with the leaks, Daniel said the Michigan incident showed that the company is responsive and takes responsibility for its mistakes. The company has previously estimated spill costs on the order of $500 million not including any fines or other penalties that could be levied by U.S. authorities.

Although he admitted the incidents hurt Gateway's prospects, Daniel was also adamant that they shouldn't be the sole reason for rejecting it.

"The Gateway project does put on the table a whole lot of important issues for consideration, the most important of which to my mind is the strategic importance to this country and the almost strategic imperative that we seek broader markets for our products in Canada."

Enbridge shares were down 26 cents on the Toronto Stock Exchange Tuesday, at $55.50. The stock is up more than 15 per cent this year.

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