Ottawa gave Enbridge Inc. (TSX:ENB) the green light June 17 to build a 1,177 kilometre twin pipeline between Bruderheim Alberta and Kitimat, B.C. But the B.C. government may have a different colour in mind.
“In December 2013, the Joint Review Panel found that construction and operation of the Northern Gateway Pipelines project is in the public interest, subject to 209 conditions being met by the proponent," Natural Resources Minister Greg Rickford said in a statement.
"After carefully reviewing the report, the government accepts the independent panel’s recommendation to impose 209 conditions on Northern Gateway Pipelines’ proposal."
But B.C. has its own five conditions, and so far only one has been met – passing an environmental review.
B.C. Environment Minister Mary Polak said her government will not issue some of the permits Enbridge will need until the company has met all five conditions, which include having world-class oil spill prevention and response for land and sea.
Polak said Enbridge has to demonstrate there will be no adverse environmental impacts.
“If they are not meeting the five conditions, then they won’t be able to show in a permit application that they don’t have adverse environmental effects, therefore those permits wouldn’t be granted,” Polak said.
One of the five conditions is that B.C. receive “a fair share of the fiscal and economic benefits.”
Asked how that condition can be met, when her government has never put a dollar amount to its demands, Polak said it was up to industry to come up with a reasonable compensation package.
Greg D’Avignon, president and CEO of the Business Council of British Columbia, said there has been a huge shift in energy demand coming from Asia. Without the approval of Northern Gateway pipeline, he said Canada risks being left behind in the global economy.
“We’re one of the biggest players in the world, and (Northern Gateway's approval) has huge economic benefits for us in Canada both in terms of individuals' retirements and today’s jobs and tomorrow’s opportunity to transition to new energy and new fuels that are cleaner,” he told Business In Vancouver.
Beedie Development Group president Ryan Beedie told Business In Vancouver the cost of not approving the pipeline would have been “staggering.”
“We’re not getting the price for our oil that we should be getting so this is one way to get that. This is a lot of money that pays for education, health care and social programs,” he said.
“The bottom line is that the oil is coming. So do we want it to come by rail or by pipeline, because it’s coming. There’s a much greater risk by rail than anything else.”
The pipeline will carry 525,000 barrels of bitumen per day from the Alberta oilsands to Kitimat, and 193,000 barrels per day of condensate from Kitimat to the oilsands.
But before Enbridge can put any shovels in the ground, it will need to satisfy more than 100 of the 209 conditions required by the joint review panel.
Perhaps the most challenging hurdle is addressing the legal and treaty rights of B.C. First Nations.
Enbridge has claimed that 60% of First Nations within a 180-kilometre swath have signed equity agreements that will see them owning 10% of the pipeline. But if the pipeline enjoys support among B.C. First Nations, they are keeping quiet about it.
Even those First Nations leaders who support the natural gas industry are opposed to oil pipelines and several have made it clear they will fight Enbridge in court.
The Gitga'at First Nation in Hartley Bay, right where tankers would pass leaving Kitimat, announced it’s “vowing to do whatever is necessary to protect their territory” following what it said was the federal government’s failure to properly consult aboriginal bands.
"Today's cabinet decision comes as no great surprise, but we are disappointed nonetheless," Arnold Clifton, Chief Councillor of the Gitga'at First Nation, said in a statement.
The Gitga'at has applied for judicial review of the Joint Review Panel report.
Enbridge also faces opposition from non-aboriginal groups, including the community that stands to benefit most: Kitimat. In April, 58% of Kitimat’s citizenry voted against the pipeline terminating in their community.
According to the most recent public opinion poll – a Bloomberg-Nanos phone survey of 500 British Columbians – 29% are in favour of Northern Gateway going forward, 34% are opposed and 33 % want it delayed for further review.
A second part of that poll suggests there could be significant political fallout for the Harper government in B.C., should the project be approved.
According to that poll, 47% of respondents said they would be less likely to support Conservative candidates in B.C., if the Harper government approved the pipeline. Only 11% said they would be more likely to vote Conservative.
Environmental concerns
The oil mined in the oil sands of Alberta is too thick to flow through a pipeline, so it is mixed with natural gas condensate to create dilute bitumen (dilbit).
The problem, from an environmental perspective, is that it may be harder to clean up, in the event of an oil spill at sea or on land – a concern underscored when an Enbridge pipeline spilled diluted bitumen into the Kalamazoo River in Michigan in 2010.
Enbridge’s bill for the cleanup costs on that spill are now said to exceed $1 billion, which is how much the NEB recommended Enbridge be required to set aside for a clean-up fund.
When the lighter hydrocarbons in dilbit evaporate, the heavier bitumen can sink and solidify. So unlike a crude oil spill, which floats on water, some bitumen could sink, while some of it might form a hard oil cake on western shorelines.
Although there are concerns about an oil spill occurring in B.C. rivers, as well as the impact of a pipeline on caribou habitat, the biggest concern is a spill at sea or within the narrow sheltered waters of Douglas Channel.
Up to 220 oil tankers per year would be needed to move 525,000 barrels per day through Douglas Channel.
With files from Jen St. Denis, Glen Korstrom and Tyler Orton
