Pipeline president says Northern Gateway project will benefit all
Published Tuesday, September 4, 2012 8:00AM EDT
Last Updated Tuesday, September 4, 2012 11:21PM EDT
The president of the proposed Northern Gateway pipeline defended the $6-billion project Tuesday, saying it is no different than other past mega-projects which ultimately benefit the nation.
John Carruthers, president of the Northern Gateway pipelines, addressed the panel reviewing the controversial project in Edmonton.
It was the first time representatives from Enbridge addressed the review panel.
In his opening remarks, Carruthers compared the proposed pipeline to other historic projects that were initially met with opposition but proved to be profoundly beneficial.
"Canada has witnessed this (controversy) as far back as 1871, when the Canadian Pacific Railway was constructed in return for British Columbia agreeing to enter Confederation," he said.
"Similarly, national projects such as the St. Lawrence Seaway and the TransCanada Pipeline have all attracted great attention and debate but, when constructed, laid the foundation for significant benefits for generations of Canadians."
If the pipeline is approved, oil company powerhouse Enbridge will run the 1,170-kilometre dual line from Alberta to the Pacific coast.
The pipeline will carry crude oil from Alberta to the port town of Kitimat, B.C., where it will be shipped to energy-hungry Asian markets.
Texas-based energy consultant Muse Stancil told the panel that an updated report showed that Asia’s demand for energy is so strong, that the net benefit of the pipeline to the oil industry would be around $24 billion through to 2035.
"There is ample market demand for Canadian crude in northeast Asia, with an estimated total potential demand that is over four times the design capacity of Northern Gateway," said the report.
Stancil also said there is potential for demand from California. However, it is harder to quantify the demand because the state has begun to implement low-carbon fuel standards.
The report concluded that the pipeline will prove to be a game changer in terms of the North American energy market dynamics.
"It can be expected to have a material effect on the distribution patterns and pricing dynamics for Western Canadian crude, as crude producers for the first time will have a high-volume alternative to their historical markets within North America," said the report.
"Northern Gateway allows the Canadian crude producers to both stop selling to their least attractive refiner clients (from a pricing prospective) and reduces their need to ship heavy crude via comparatively expensive rail transport."
The report said that China will remain the primary buyer. The country already buys crude from Russia and Kazakhstan but still seeks more supply.
"Even if all the inland crude pipeline expansions (from Russia and Kazakhstan) are completed, China will need to further increase its water-borne imports by millions of barrels a day," said the report.
Tuesday’s hearing comes on the tail end of a series of sessions launched by the panel.
Consisting of representatives from the National Energy Board and the Canadian Environmental assessment Authority, the panel has been travelling across British Columbia and Alberta throughout the year hearing from various stakeholders and collecting information.
The multi-billion dollar bottom line
The project has been the subject of a heated disputed between the provincial governments of British Columbia and Alberta.
B.C. Premier Christy Clark has vowed it won't go through unless the province gets a bigger share of royalties, while Alberta Premier Alison Redford has said her government has no plans to share any oil royalties if the line is built by 2017 as planned.
Meanwhile Enbridge has submitted documents to the review panel that attest the economic benefits stemming from the project are substantial enough to boost everyone’s bottom line.
The Calgary-based company says that over the next three decades, the line will bolster the country’s GDP by $270 billion.
It pegs total revenues in direct and indirect benefits to the federal and provincial governments at $81 billion, with $48 billion in labour income alone.
Enbridge estimates the project will generate 62,700 person years of employment over the three-year construction phase, with the jobs split almost two-thirds to B.C. and one-third to Alberta.
The company also estimates that the direct tax revenue to governments to be around $2.6 billion over the three decades. Enbridge says almost half of that will go to B.C.
Oil spills ignite pipeline protests
Several recent spills have put Enbridge in the environmental spotlight, prompting protests by environmental groups and aboriginal communities.
There have been protests and rallies and members of First Nations leadership even travelled from B.C. to the steps of the Alberta legislature in May to voice their concerns.
"The pipeline route that they have proposed is following the most major river system that we have and when the river is ruined, the people are ruined, the land is ruined," said Hereditary Chief John Ridsdale of the Wet'suwet'en First Nation.
Enbridge has been in the spotlight for recent oil spills on its lines in the U.S.
The U.S. National Transportation Safety Board recently released a report citing deficiencies leading to a 2010 spill in Michigan, when 20,000 barrels of crude spilled into the Kalamazoo River.
The report also slammed cleanup and communication efforts in the wake of the spill.
But the company says it's learned and made changes from the incidents.
"These were humbling incidents for our company and we've taken a lot of lessons from those incidents and we're applying them to our operations," Ivan Giesbrecht, a spokesperson for Enbridge, told CTV Edmonton.
The TransCanada pipeline company has also faced recent legal and public relations woes over its Keystone XL pipeline proposal, which would carry crude from Alberta south to Texas and refineries on the Gulf Coast.
Environmental groups forced changes to the proposed route which would have crossed the sensitive Nebraska Sand Hills. However, a final decision on the pipeline won't be made until after the 2012 presidential election.
The Northern Gateway pipeline hearings are scheduled to run until Saturday. They will then resume in Edmonton on Sept. 17 and run until the 28th.
In October the hearings will move to B.C. where question periods will focus on the lines themselves, as well as the environmental risks and contingency plans.
The panel is responsible for determining whether the pipeline is in the public interest on economic and environmental grounds. It must submit its report to the federal government by the end of 2013.
Stephen Harper's government has said it supports the push to deliver oil to Asian markets, but ultimately the Northern Gateway decision will rest on science, not politics.
With a report from CTV Edmonton and files from The Canadian Press