The benefits to the oil industry of Enbridge Inc.'s proposed Northern Gateway pipeline may be exaggerated and its costs to the economy and environment underestimated, hearings into the project have been told.
The $6-billion pipeline project has been touted as a way to link burgeoning production from Alberta's oil sands to growing markets in Asia, which would allow Canadian producers to improve profits by reaping higher prices for crude overseas.
But a lawyer for the Haisla First Nation, which claims much of the land through which the pipeline would travel, said on Tuesday that projections of nearly $1.5-billion a year in increased revenue by 2018 are inflated.
Hana Boye said the estimate Enbridge is presenting at the National Energy Board hearings was developed with figures from the Canadian Association of Petroleum Producers that suggest oil supply in Western Canada will grow by 6.5 per cent per year between 2011 and 2020.
That's different than what Enbridge is telling its investors, Ms. Boye said. The company's own estimate is 4.4 per cent growth – a difference of 500,000 barrels a day by 2020 that would lead to a corresponding drop in revenues earned by producers.
"Have you given a different supply forecast to your shareholders than that provided to the panel?" Ms. Boye asked Enbridge's Gateway manager, John Carruthers, on Tuesday.
Mr. Carruthers acknowledged that different figures have been used at different times. Estimates can vary depending on assumptions of what the mix of varying crudes would be, he said.
"There would be times when we would see differences."
But the variances aren't big enough to change the project's economics, Mr. Carruthers said.
"The minor changes over time don't change the project need."
Ms. Boye added that the project could discourage the upgrading of oil sands bitumen in Alberta and that its cost to the environment hasn't been fully evaluated.
She pressed Enbridge over the use of diluent – lightweight solvents mixed with bitumen or other heavy crudes to make them flow through a pipe. Although the mix varies, about one-third of what would flow through the Gateway line would be diluent. The Gateway project includes a second pipeline that would bring diluent from the B.C. coast to Alberta. Ms. Boye suggested the cost of that diluent has not been factored into calculations of producer benefit.
Ignoring the cost of diluent exaggerates the case for shipping raw bitumen outside Alberta for upgrading or refining, said Robyn Allan, an analyst for the Alberta Federation of Labour who is advising the Haisla.
"There is no economic analysis … that's been supplied to the hearings [of the impact] to the Canadian economy when we import condensate instead of upgrading in Alberta," she said outside the hearing.
Ms. Boye also questioned environmental economist Mark Anielski about his dollar-value calculation of the project's environmental impact. She pointed out that his analysis included only the 50-metre pipeline right of way and ignored possible effects outside that corridor.
Mr. Anielski responded that those effects could exist, but there's no credible method of putting a monetary value on them. He also acknowledged his report didn't put a value on a wide array of ecological effects from forests that would be disturbed by the pipeline – everything from erosion control to genetic diversity to pollination.