Update: The decision has been revealed.
A joint review panel will release a long-anticipated report late Thursday afternoon regarding the fate of Enbridge Inc.’s proposed Northern Gateway oil pipeline – a pivotal initial decision on the project that will inform Ottawa’s final call in 2014.
The question is first whether the contentious $6.5-billion pipeline will be approved by the panel, and if it’s approved, what list of conditions will be attached. Already, the National Energy Board has laid out 199 conditions Enbridge Inc. must meet if it builds Northern Gateway, including $100-million in “ready cash” that can be accessed within days of a large spill to help with the cleanup, $950-million in liability coverage, and financing a heavy oil spill research program.
The proposed pipeline would carry up to 525,000 barrels of diluted bitumen per day from Alberta to British Columbia’s West Coast, which will then travel by tanker through the Douglas Channel and onward to Asian markets. The eastbound part of the pipeline project will carry condensate, a product used to thin heavy oil for pipeline transport, back to Alberta. Eighteen months of hearings on the project wrapped up in June.
What proponents say
Proponents of the project say the pipeline is “a once in a generation opportunity,” and the oil industry – and federal and Alberta governments – argue the need for a West Coast pipeline is clear. As production from the oil sands ramps up year over year, Western Canadian producers need access to access new markets with new pipelines. Diversifying away from the United States, the current destination for almost all of Canada’s oil exports, is seen as key. Increasing U.S. light oil production and a lack of certainty about whether the Keystone XL pipeline project will be given the green light means Canadian crude producers are increasingly looking to Asian buyers.
However, First Nations and environmentalists say the 1,177 kilometre pipeline to the deep-water port of Kitimat B.C. is fraught with environmental dangers, on land and at sea. They say a spill in the waters off B.C. would be disastrous for the coastal environment, and would cost billions to clean up.
The three-person joint review panel is an independent body mandated by the federal environment minister and the National Energy Board to assess the project’s effect on the environment, and its economic value to Canada. Its decision will inform the federal cabinet, which has until July to issue a final decision on the project.
But even then the fate of the project is unlikely to be clear. On Wednesday, RBC Dominion Securities Inc. analyst Robert Kwan wrote while the panel’s decision is a major step in the process, “we continue to believe that opposition to the project (most importantly from certain First Nations) as being a major hurdle that could result in future legal challenges that could ultimately be a lengthy process.”
Northern Gateway pipeline route
The following map shows the route of the proposed Northern Gateway pipeline, stretching from north of Edmonton, Alta., to the coastal city of Kitimat, B.C., which is blocked from the open ocean by many islands.