Northern Gateway's 2018 startup date unlikely, project president says
Snowcapped mountains are reflected in the waters of Kitimat, B.C. Tuesday, June, 17, 2014. (Jonathan Hayward / THE CANADIAN PRESS)
Lauren Krugel, The Canadian Press
Published Thursday, September 4, 2014 11:38AM EDT
Last Updated Thursday, September 4, 2014 5:13PM EDT
CALGARY -- The president of the Northern Gateway pipeline says it's unlikely the project will start up in 2018 as the company seeks to win over B.C. First Nations groups, many of which remain adamantly opposed to the $7.9-billion project.
"We have stated that the earliest in-service date was 2018. That's quickly evaporating because we need to have this time to meet with people," John Carruthers told a Calgary business audience on Thursday.
"I'm not as fussed on what that date is. I'm more fussed on can we have the support we need to go ahead, so it's positive for all people of Canada, including Aboriginal people?"
"That's going to take time and it's going to take the time it takes."
So far, 26 First Nations groups along the route have signed agreements with Enbridge to take a share of a 10 per cent equity stake in the pipeline that the company had offered. Enbridge is now in talks with other groups about other ways to participate in the project, such as employment and procurement contracts.
"There's a lot of dialogue with both equity owners and non-equity at this point," Carruthers told reporters
But many First Nations along the route are vehemently opposed to the pipeline and have said they wouldn't accept it under any circumstances. Lawsuits could tie the project up in court for years.
If built, Northern Gateway would ship 525,000 barrels per day of diluted oilsands crude from the Edmonton area to Kitimat, B.C., where the oil would be loaded on tankers and shipped to Asia. A smaller parallel line would ship condensate, an oilsands thinning agent, in the opposite direction.
Northern Gateway received regulatory approval in June but the company proposing to build it, Enbridge Inc. (TSX:ENB), has said it's not in a rush to put shovels in the ground.
Carruthers said despite the delays, support from customers remains strong.
The Canadian Association of Petroleum Producers foresees oilsands production growing by about two and half times by 2030 to 4.8 million barrels a day.
The projected growth means there will likely still be strong demand for pipeline space if Northern Gateway starts up later than envisaged, said Warren Mabee, an energy policy expert at Queen's University.
"Pushing back by a couple of years on this project is not something that I think would kill it, but pushing it back for a couple of years does allow the forces that are aligning against it to solidify," he said.
The ability to access Asian markets is an enticing proposition for oilsands producers as it would mean better prices for their crude. But most producers have signed on to a variety of pipeline proposals to the west, east and south rather than bet that any one project gets built.
Analysts have said other proposals, such as TransCanada Corp.'s (TSX:TRP) proposed Energy East pipeline to New Brunswick, are likely to be built before Northern Gateway.
TransCanada is planning to file a regulatory application this month to the National Energy Board for the $12-billion Energy East proposal, most of which would make use of underused natural gas pipe that's already in the ground. Startup for that line is currently targeted for 2018.
In addition to discussions with First Nations, Enbridge is also in the process of pinning down a new cost estimate and working through 209 conditions imposed along with the regulatory approval.