Enbridge Inc. is promising nearly $1-billion for first nations affected by its controversial Northern Gateway pipeline, its strongest attempt yet to win favour with both energy producers and aboriginal groups in British Columbia.
In addition to a 10-per-cent equity stake in the $5.5-billion project, which it has offered to first nations along the route, Enbridge pledged on Wednesday to invest 1 per cent of pretax earnings into a community trust that is expected to receive $100-million over 30 years.
Earning trust - and wooing support - has proven a key obstacle for Enbridge as its seeks approval for Northern Gateway, a project designed to bring Alberta crude to Kitimat, B.C., where it can be loaded onto tankers and exported to Asian refineries. The twin-pipe project, the largest in Enbridge's history, has been billed as a vital link that will allow Canada to lessen its dependence on the United States as its sole major energy export market.
But though industry and government have largely supported it - Enbridge says it expects energy companies formally express interest in 90 per cent of its capacity - the company has struggled to convince native and environmental groups of Northern Gateway's merits.
Over the past few months, company officials have presented a benefits package to roughly two-thirds of the 40 native communities along the pipeline's proposed route. However, in a sign of critics' resolve, some have refused to meet with Enbridge, which plans to spend the next 10 days attempting to sit down with the remainder.
The company forecasts that native workers will form 15 per cent of the pipeline's construction force and 20 per cent of its full-time regional operations staff.
"I think that's pretty substantial, when you consider the huge size and scope of this project," Enbridge chief executive officer Pat Daniel said in an interview Wednesday. He acknowledged that winning over aboriginal groups is important, with the company currently seeking regulatory approval for Northern Gateway.
"We would like to show that there are a lot of first nations that are supportive of this project when we get to the hearings," he said.
Enbridge estimates that first nations along the pipeline route will receive employment and business opportunities worth $400-million. A further $200-million will go to native towns and businesses on the West Coast, where the Alberta oil that flows through Northern Gateway will be loaded onto tankers bound for Asian refineries.
The biggest incentive, however, remains the 10-per-cent equity stake, which Enbridge is offering to finance in full, leaving aboriginal groups with no up-front costs. Instead, financing costs will be deducted from revenue that will flow from the ownership stake, which is expected to amount to $230,000 per first nation a year, or a total of $280-million in net income over 30 years.
But some first nations, who worry about the impact of a spill on salmon-rich rivers and Pacific waters, have said they won't support Northern Gateway, no matter the financial benefits. Some believe they can achieve greater prosperity - and fewer environmental risks - by investing in green energy. For example, members of the Carrier Sekani Tribal Council, which claims half the 1,172-kilometre Gateway route, have said they won't support Gateway. They have instead begun assessing the potential for investment in a new bioenergy project.
With Northern Gateway, "we had to weigh those [proposed]benefits compared to what's the potential risk of a pipeline [spill]" said Terry Teegee, vice-tribal chief of the Carrier Sekani Tribal Council. "And clearly, our people said no, it's not worth it."
Enbridge, however, said it sees signs of progress. Eight of 40 native communities have signed commercial memorandums of understanding with Enbridge, which spell out local construction benefits.
Mr. Daniel also claimed significant headway in finding companies to commit to shipping on the line.
Enbridge is currently asking shippers to sign "precedent agreements," which do not make a firm promise of oil for the pipe but demonstrate significant interest in the project. It expects to have those signed "in a number of weeks," Mr. Daniel said.
"Generally speaking, we look for precedent agreements and commitments to cover about 90 per cent of the rated capacity of the pipe," he said. "And I would think it would be about the same here."Report Typo/Error