Prime Minister Stephen Harper’s cabinet must decide by midnight tomorrow whether to approve the C$6.5 billion ($6 billion) pipeline, which would carry diluted bitumen from Alberta’s oil sands across British Columbia. Canada’s petroleum industry is seeking measures to move landlocked crude to offshore markets with another proposed pipeline, TransCanada Corp’s, Keystone XL, in regulatory limbo in the U.S.
Saskatchewan Premier Brad Wall said signs point toward the federal government permitting Northern Gateway. “We’re hopeful approval’s coming,” Wall said in a June 12 phone interview. “I’m reading the tea leaves and picking up on signals like everyone else.”
Alberta Energy Minister Diana McQueen said in an interview last week that she was “very optimistic” the project will be approved.
Harper, who has called Canada an emerging “energy superpower,” has made it a national priority to build infrastructure that can ship more of the world’s third-largest recoverable crude reserves to markets such as Asia. While the federal government’s endorsement would be the last major regulatory hurdle, environmental and aboriginal groups have vowed to delay its construction.
New Markets
Wall was one of 40 politicians and business leaders to sign a letter last week urging the government to allow the pipeline, a group that included former Liberal deputy prime minister John Manley and Perrin Beatty, a former Conservative minister who now leads the Canadian Chamber of Commerce.
“It is critical that Canada open up new markets so that taxpayers get full value for our energy resources and that our natural resources find a way to those markets as quickly as possible,” the people wrote in a letter published in newspapers including the Globe and Mail and National Post.
A regulatory panel recommended in December the government approve the line, subject to 209 conditions. “We have a regulatory process in Canada that’s independent,” Finance Minister Joe Oliver said in a June 11 interview at Bloomberg’s headquarters in New York. “It’s objective and we rely on it, and we believe that can form the basis of government decisions.”
Punt Unlikely
While Harper’s cabinet has the option of referring the project back to regulators for more study, that would be an awkward move for a government that has criticized Obama for delaying Keystone, said Chuck Strahl, a former aboriginal affairs minister under Harper.
“Politically, it seems to me that given the words that we’ve given to Obama about the Keystone decision and the fact that’s been punted, I find it unlikely they’ll punt it here,” Strahl, who is advising Enbridge’s Northern Gateway division about its discussions with aboriginal groups, said by telephone June 13 from Calgary.
The State Department said in April it would extend its review of TransCanada Corp.’s Keystone XL to give government agencies more time to comment.
The Canadian government will probably heed the recommendation of its regulatory panel, which studied Northern Gateway for more than three years, Strahl said. “The federal government is loathe to go against expert opinion on science-based reports.”
Coastal Forests
Calgary-based Enbridge first proposed the pipeline a decade ago as production from the oil sands -- and demand in Asia for fossil fuels -- started to increase. The route would traverse the Rocky and Coast mountains before descending through the coastal rain forests of northwest British Columbia, home to aboriginal groups who harvest shellfish and other seafood from the surrounding waters.
Only 29 percent of British Columbia residents said they favor immediate approval of the project by the federal government, according to a June 3 Bloomberg-Nanos poll. Thirty-three percent of respondents wanted Harper to delay approval for further study, while 34 percent wanted the project rejected.
Enbridge has “more work to do” on Northern Gateway, Chief Executive Officer Al Monaco said in a June 11 interview on Bloomberg Television. The company has reached out to local communities along the proposed route in an effort to build trust, he said. The company is also re-evaluating the estimated cost to build Northern Gateway, Monaco has said, after the review panel put the 209 conditions on the project’s approval.
B.C. Premier Christy Clark has said her government will only back the pipeline if it satisfies five conditions: successful completion of an environmental review, “world-leading” oil-spill response systems on water and land, adequate involvement of aboriginal groups and the allocation of a “fair share” of the fiscal and economic benefits.
Natural Resources Minister Greg Rickford said last month his department would open a branch office in Vancouver to step up talks with aboriginal groups, some of whom say the government has failed its constitutional obligation to consult them.
Original Article
Source: bloomberg.com/
Author: Jeremy van Loon and Andrew Mayeda
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