Election holds high stakes for Enbridge pipeline

March 29, 2011
BY SHAWN McCARTHY — GLOBE AND MAIL

The future of Enbridge Inc.’s Northern Gateway project is riding on the success of Stephen Harper’s re-election campaign.

Even with a Conservative government in office, Enbridge faces an uphill fight to get approval for the $5.5-billion pipeline, given adamant opposition from environmentalists and many of British Columbia’s native people.

Now, growing resistance to the project by opposition parties heightens the risk it will be blocked. Both the Liberals and New Democrats have demanded the government impose a moratorium on oil tanker traffic in the Queen Charlotte Sound, near the proposed pipeline’s terminus in Kitimat, B.C., fearing the increased traffic could result in an environmentally devastating oil spill. Such a moratorium would effectively kill the project.

“The possibility of an election bringing a change in government is clearly material to Enbridge’s Northern Gateway plans,” said Steven Paget, an analyst with First Energy Capital Corp. in Calgary.

At risk is the Canadian energy industry’s vision to capitalize on soaring growth in Asia. The Gateway pipeline is a key part of a strategic effort by oil and gas producers to diversify their export market beyond the United States and take advantage of rapidly growing demand in China and other Asian markets. Among the financial backers is China’s state-owned Sinopec Corp., which also owns a 9 per cent stake in Syncrude Canada Ltd., and is partnering with France’s Total SA on the Northern Lights oil sands project.

The Gateway pipeline would carry 525,000 barrels per day of diluted bitumen from Alberta’s oil sands to Kitimat for export to Pacific Rim markets. The project is under assessment by a joint review panel of the National Energy Board and the Canadian Environmental Assessment Agency, whose recommendations must be confirmed by the federal cabinet.

But that review would be meaningless if a future government imposed a ban on tanker traffic through the coastal waters of northern B.C.

Liberal Leader Michael Ignatieff has promised to adopt such a moratorium if elected, extending an existing policy that prohibits oil tankers travelling from Alaska to the lower U.S. from using B.C. waterways such as Queen Charlotte Sound, Hecate Strait and Dixon Entrance.

Under Mr. Harper, the Conservatives have defended the existing ban on U.S. tankers, but opposed a non-binding opposition motion passed in December that extended the prohibition to ships servicing Canadian ports.

Enbridge insists the tanker traffic would be safe, and has promised to ensure all ships entering B.C. waters are double-hulled, have a Canadian pilot on board and are equipped with enhanced radar and navigational aides.

New Democratic Party MP Nathan Cullen – who represents the Skeena-Bulkley Valley riding that includes Kitimat – is looking to turn the election campaign in his northern B.C. riding into a referendum on the Enbridge pipeline project.

He said his constituents see little economic benefit for them, but considerable risk to the environment and an economy that depends on fishing and tourism.

“Every second voter is bringing it up – and they don’t want [the pipeline],” Mr. Cullen said in an interview Tuesday. “I’m usually pretty nervous about a one-issue campaign but in this case, I feel so confident. The people at the door are so supportive.”

Mr. Cullen is squaring off against Conservative candidate Clay Harmon in what is typically a two-party race. The NDP candidate handily won the riding in 2008 against a different Conservative candidate.

Mr. Cullen wrote the December motion that called on the government to legislate a ban on tanker traffic. Both the Liberals and NDP have introduced private-member’s bills that do the same, though the Conservative-dominated Senate could block their passage.

The tanker ban would not only kill Enbridge’s project; it would also block a plan by Canadian National Railway Co. for a “pipeline on rails” to deliver oil sands bitumen by rail to ports like Prince Rupert.

During the debate on the parliamentary motion in December, Conservative MPs said Canadian oil producers need access to Asian markets and there are enough safeguards in place to ensure the tanker traffic is safe.

“What has made Canada’s West Coast and Pacific gateway even more important to our national prosperity is the dramatic growth of economic opportunities in places such as China and India,” Ed Fast, a Conservative MP from Abbotsford, B.C., said during that debate. “Tankers are an indispensable way of getting our resources out to those markets.”

Mr. Paget said an adverse decision on Gateway would not affect his assessment of Enbridge’s share value since, like most analysts, he has not built a successful project into his forecasts. He also noted there was tremendous opposition to the Mackenzie Valley natural gas pipeline when it was first proposed but that it recently received regulatory approval.

Election holds high stakes for Enbridge pipeline

March 29, 2011 BY SHAWN McCARTHY — GLOBE AND MAIL

March 29, 2011
BY SHAWN McCARTHY — GLOBE AND MAIL