The National Energy Board (NEB) approved Enbridge's (TSX:ENB) controversial Northern Gateway project on December 19, subject to a whopping 209 conditions.
The NEB's endorsement is not an official approval of the pipeline, rather a suggestion to the federal government, which, ultimately, sanctions the project. Ottawa now has 180 days to make a decision.
The NEB's decision was based on report drafted by a three-person joint review panel, tasked with assessing the environmental effects of the $6.5 billion pipeline.
The panel – led by Sheila Leggett, vice-chair of the NEB – participated in 180 days of hearings in communities both in Alberta and B.C.
"Based on a scientific and precautionary approach to this complex review, the panel found that the project, if built and operated in compliance with the conditions set out in its report, would be in the public interest," the panel wrote.
"After weighing all of the oral and written evidence, the panel found that Canada and Canadians would be better off with the Enbridge Northern Gateway project than without it."
The economic impacts of Northern Gateway – a 1,177-kilometre twin pipeline running from northern Alberta to Kitimat B.C. – are significant. According to Enbridge forecasts, the pipeline will create $1.2 billion in tax revenue for B.C., 3,000 construction jobs and 560 full-time positions in the province. Over the next 30 years, the company expects the project to generate $270 billion to Canada's gross domestic product.
If built, the westbound pipeline will carry up to 525,000 barrels of bitumen per day, earmarked for Asia. The eastbound pipeline will carry 193,000 barrels of condensate per day. Condensate is used to thin bitumen for transport in pipelines.
"It's a major step forward for the Canadian economy, of which BC is a part," John Winter, president and chief executive officer of the BC Chamber of Commerce, told Business in Vancouver.
""It augers well for our ability to market these products [bitumen] and get full value for them."
But a substantial windfall comes with substantial risk. Some of the panel's conditions, to be enforced by the National Energy Board, require Enbridge to:
- develop a marine mammal protection plan:
- draft a caribou habitat restoration plan;
- develop a training and education monitoring plan;
- develop a research program on the behaviour and clean-up of heavy oil spills; and
- coordinate an emergency preparedness and response exercise and training program.
The provincial government has also insisted on its own five conditions for approval:
- the successful completion of an environmental review process;
- world-leading marine spill response;
- world-leading land-spill prevention;
- extensive First Nations participation; and
- that B.C. receive its "fair share" of the economic benefits of the project.
In a press conference December 19, environment minister Mary Polak stressed the need for Enbridge to satisfy those criteria if the company wants Victoria's support.
"B.C.'s five conditions for heavy oil pipeline need to be met, and that will not change. Our government understands the economic benefits the proposed NGP project may bring, but it will not be at the cost of our environment," said Polak.
"Meeting all five will be a challenge, but we set the bar high for a reason. That was to ensure B.C.'s concerns around the environment, First Nations participation, and overall economic benefit are taken seriously. There was no evidence presented by Enbridge that they would be able to respond effectively and in a timely way to any kind of a spill."
Polak added that if Enbridge doesn't conform to B.C.'s expectations it "will not manage to push this project to completion."
Environmental groups have long opposed the project. Ben West, tar sands campaign director with ForestEthics Advocacy, said Northern Gateway does not enjoy the support of British Columbians, regardless of any well-intentioned requirements or conditions.
"The idea of social license is people need to be comfortable with a project but the people have not given permission for this to be built."
Caitlyn Vernon, campaign director of the Sierra Club BC, echoed West's sentiments.
"Today's announcement does not mean that the Enbridge pipeline or more tankers have been approved. The federal cabinet needs First Nations approval and social license from British Columbians," said Vernon.
"They have neither."
In an interview with Business in Vancouver last summer, Janet Holder, executive vice-president of Western Access for Enbridge, insisted 60% of First Nations along the pipeline corridor have signed equity agreements giving them a 10% stake in the pipeline. But the agreements are confidential, she said, and Enbridge refuses to state which First Nations in B.C. have signed the agreements.
How Enbridge plans to sway any remaining First Nation resistance remains to be seen. Groups such as the Yinka Dene Alliance and the Carrier Sekani Tribal Council, both of which represent numerous First Nations communities in B.C., have opposed the pipeline recently.
John Ridsdale, resources referral coordinator with the Wet'suwet'en First Nation, a small community located in central B.C. and member of the Carrier Sekani council, said any development on his nation's land will only be decided the Wet'suwet'en.
"We still have control of our territories. They've never, ever built a pipeline through our territory. Right now we're in blizzard conditions, say we had a spill – how would they get there? This is very isolated territory that we have," said Ridsdale.
"Consultation must be part of any discussion, because we have the right to say what can and cannot happen on our lands."
- With BIV files
The Canadian oil and gas industry, by the numbers
- According to a commodity price report released by Scotiabank on December 19, the Canadian oil and gas industry accounted for nearly 25% the country's merchandise trade exports in 2012 – $105.9 billion of a total $417.3 billion.
- Exports of crude oil and refined products alone totaled $95.3 billion.
- Oil and gas accounts for 6.9% of real GDP in Canada.
SOURCE: Scotiabank Commodity Price Index, December 19, 2013
Looming changes on the horizon for Canadian oil and gas exports
- Currently, 98% of Canada's petroleum products and 100% of Canada's natural gas exports are sold to the United States. But the U.S. is expected to become a net exporter of natural gas by 2020 and, over the next 30 years, will experience zero growth in crude oil imports.
- A 2012 Canadian Energy Research Institute report found that failing to build proposed pipelines could cause Canada to forgo $1.3 trillion in GDP and $276 billion in taxes between 2011 and 2035.
- A 2013 Canada West Foundation report argued that each stalled pipeline project that could provide access to world markets costs Canada between $30 million and $70 million "in forgone economic benefits every day."
SOURCE: BIV archives