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In the heart of the oil sands, a new fight over pipelines

An aerial view of an oil sands facility near Fort McMurray, Alta.


Canada's oil sands producers are facing a pipeline brouhaha in their own backyard that could threaten expansion plans by strangling their access to markets.

TransCanada Corp. and partner Phoenix Energy Holdings Ltd., are proposing to build the $3-billion Grand Rapids pipeline that would transport 900,000 barrels a day of blended bitumen from Fort McMurray to the Edmonton area. But the project, which is now being reviewed by provincial regulators, is under fire from landowners, environmentalists and the Athabasca Chipewyan First Nation (ACFN) who complain it is being fast-tracked without proper environmental assessment.

As regulatory hearings continued in Edmonton this week, the ACFN said the proposed Grand Rapids pipeline is essential to provide additional supply for TransCanada's higher-profile Keystone XL and Energy East projects, but will require more oil sands development in the area that would threaten its members ability to hunt, fish and trap, and would impair their aboriginal rights.

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"Our people's rights and our way of life are being threatened by out of control development in the region," ACFN chief Allan Adam said in a statement. "This project approval process is another example of how the government is trying to push us out."

The Grand Rapids project represents a key connection between rapidly growing oil sands developments around Fort McMurray and the pipeline and railway hub around Edmonton. The Canadian Association of Petroleum Producers forecasts that oil sands production will grow to three million barrels a day by 2020, from 1.9-million in 2013.

The industry is facing a multipronged battle to get that increased supply to markets, with First Nations launching court challenges to the federal approval of Enbridge Inc.'s Northern Gateway route through British Columbia; the Obama administration delaying a decision on the Keystone XL line to the U.S. Gulf Coast, and opposition gathering to TransCanada's 1.1-million-barrels-a-day Energy East pipeline to the refineries and export terminals in eastern Canada.

The spreading resistance to pipeline projects comes as First Nations groups increasingly assert their opposition to resource developments in areas where they're affected. A recent Supreme Court ruling on aboriginal land rights gave First Nations more power to control proposed projects.

The Grand Rapids project is the first major test of the Alberta Energy Regulator's new role to administer all environmental laws, including the Public Lands Act and the Environmental protection and Enforcement Act. The hearings are scheduled to last another 10 days.

Mr. Adam complained that the Alberta Consultation Office decided that TransCanada was not required to consult his band on the project, though the ACFN asserts it is within the band's traditional territory. However, the Alberta Energy Regulator did require the company to consult the ACFN, and TransCanada spokesman Davies Sheremata said that work began in late 2012.

Some landowners are also complaining that TransCanada's construction plan will take two years to complete, leaving the land scarred and vulnerable to erosion. The pipeline would cross 56 waterways, including the Athabasca and North Saskatchewan rivers.

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Mr. Sheremata rejected the criticism that the review process had been "fast tracked," but acknowledged the Grand Rapids pipeline is a "key project" and faces opposition.

"Every project has its unique challenges," he said.

The company is hoping to get regulatory approval for the twin pipeline by October and begin construction on the smaller line by the end of this year. Under that time schedule, full service would begin in 2017.

But TransCanada may face legal challenges, said Robert Janes, a Victoria lawyer who represents First Nations in the Northern Gateway fight.

"Aboriginal and treaty rights would certainly be at issue here," Mr. Janes said. "The ACFN is quite determined to protect its rights, and has taken things to court before and it wouldn't surprise me if this ended up in court."

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