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Enbridge plans next steps in wake of pipeline approval

Janet Holder, Executive Vice President for Western Access for the Northern Gateway project, addresses the Surrey Board of Trade in Surrey, British Columbia, Tuesday, February 4, 2014.

Rafal Gerszak/The Globe and Mail

Enbridge Inc. is hoping to win over Coastal First Nations who adamantly oppose its Northern Gateway pipeline with a claim that the controversial project would actually improve marine safety in the treacherous waters off the British Columbia coast despite the increase in supertanker traffic.

While acknowledging the need to build support among local communities in B.C., the company sees the federal approval announced Tuesday as providing a clear pathway to project completion by 2018, Enbridge executive vice-president Janet Holder said in an interview.

In Ottawa on Wednesday, Prime Minister Stephen Harper stressed that his government's approval is conditional on Enbridge meeting the 209 conditions laid down by a federal review panel, which cover issues ranging from environmental protection to construction standards to consultations with First Nations on marine safety.

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But neither Enbridge nor its opponents have characterized those conditions as presenting serious obstacles to the project's completion.

More critical is the response of the British Columbia government, the courts and the Coastal First Nations who vow to block construction of the pipeline and marine export terminal. The 1,177-kilometre pipeline from Alberta would terminate in Kitimat, B.C., where the diluted bitumen would be loaded onto supertankers for export via the Douglas Channel to Asia-Pacific markets.

Leaders from coastal aboriginal communities remain fiercely opposed to the project. They plan to challenge the federal decision in court and say they would participate in direct action to block it if necessary.

Ms. Holder – who leads the Northern Gateway project in B.C. – said the provincial government clearly will be more amenable to the project if the company can ease the concerns of aboriginal communities and other British Columbians about the threat of crude-laden supertankers plying the coastal waters.

"We will continue the dialogue [with individual First Nations communities] and help them truly understand what the project is about, and us understand what their concerns are," she said in a telephone interview from Vancouver. The threatened lawsuits represent a "parallel track" that won't prevent the company from continuing its consultations, she added.

Ms. Holder played down the risk entailed by increased tanker traffic. The number of vessels plying the northern coastal waters would increase by only 3 per cent, she said. Still, the supertankers create special problems given their size and the risk to the environment posed by spills of thick, heavy, diluted bitumen. To address that challenge, Enbridge and the federal government are spending hundreds of millions of dollar on improved navigational aides and weather stations, while the company must use two tugs to escort the tankers up the channel.

"What we are actually doing with the project is improving safety of current traffic as well as putting standards on our own project that well exceed what exists today as standards for Canada," she said.

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The Enbridge executive also expressed optimism that the company will satisfy the review panel's condition that it must have firm commitments to transport crude on the pipeline. The company already has 10 equity partners who would ship on the pipeline, including giants such as China's Sinopec, Suncor Energy Inc. and Cenovus Energy Inc.

The company will be re-evaluating the cost of the pipeline project in light of the commitments it has made and the review panel's 209 conditions, but Ms. Holder said it will remain a viable project for getting crude from landlocked Alberta to world markets.

While Enbridge will have to await the outcome of court challenges, it is not clear the courts will rule against the government, said Thomas Isaac, a partner with Osler Hoskin & Harcourt LLP. He said the courts are unwilling to intervene unless there has been a clear breach of process in the government's duty to consult and accommodate First Nations.

Analysts reacted to the federal decision with considerable skepticism about the future of the project. The looming lawsuits will at least delay construction, said Steve Paget, analyst with Calgary-based FirstEnergy Capital. Divya Ready, an analyst at New York-based Eurasia Group, questioned whether it will ever get built. "Despite the cabinet approval, strong provincial and aboriginal opposition make the pipeline's construction unlikely," she said in a note Wednesday.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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