Bottling up Canada’s oil exports

By Eric Watkins

LOS ANGELES, April 5 – Canada’s government, frustrated by the US decision to delay construction of Transcanada’s proposed Keystone XL pipeline, has been stepping up efforts to find alternative routes and markets for its oil. But even these redoubled efforts are facing domestic opposition.

One proposal is Enbridge’s Northern Gateway Project, which involves a twin pipeline system running between Edmonton, Alberta, and a marine terminal at Kitimat in British Columbia. One of the lines would export 525,000 b/d of Alberta oil sands crude to Asia-Pacific, while the other would import 193,000 b/d of condensate.

Another proposal comes from Kinder Morgan, which is considering plans to double the capacity of its Trans Mountain pipeline which currently delivers 300,000 b/d of crude oil and products 1,500 kilometers from Edmonton to the Burnaby terminal on Canada’s Pacific coast.

BOOST TO EXPORT POTENTIAL

These two pipelines would boost Canada’s export potential, and ease concerns in Asia-Pacific over scarce supplies. Shipping additional supplies across the Pacific would also create supply chain diversity and reduce tensions along the main energy supply route through the Indian Ocean to markets in South and East Asia.

The Northern Gateway project has met with considerable opposition from the public, especially since Canada’s government said it would retroactively shorten the regulatory review to 24 months from 42 months in an effort to start exports as soon as possible.

However, Grand Chief Stewart Phillip, president of the Union of British Columbia Indian Chiefs, said that Ottawa’s shortening the review process was an “incredibly stupid” move which serves only “to expedite the battle in the courts and on the land itself.”

VOLATILE MOOD

Phillip said the mood between the Canadian and British Columbia governments and the First Nations was “volatile” and he asserted that “our communities will do everything they can to stop this project.”

The First Nations made good on their word on April 1 when they surrounded a vehicle carrying officials for a public hearing on the project, and lined the road from the airport to the village of Bella Bella, 240 km south of the pipeline’s planned tanker terminal at Kitimat.

The vehicle was carrying the three members of the National Energy Board and Canadian Environmental Assessment Agency who later canceled the April 2 hearing, the first of four planned for the remote region.

SURVEY SHOWS PUBLIC SPLIT

Meanwhile, according to a survey conducted by the Mustel Group, opinions concerning increased tanker traffic transiting Vancouver Harbor were split down the middle: 44% supported traffic of up to 300 additional oil tankers, 44% were opposed, and 12% were undecided,

“Without having much information, people are split about 50-50,” said MP Kennedy Stewart. “It will be a real battle for Kinder Morgan and opponents like First Nations to win over public opinion,” he said.

“We want to see a line on a map,” said Stewart, who serves as natural resources critic for the NDP, which is waiting to see Kinder Morgan’s application before it decides to support the project or not.

“If the expansion goes ahead, land would have to be expropriated. The route crosses 15 First Nations,” Stewart said. “The company’s right-of-way would have to be expanded to the width of a four-lane highway,” he said.

Canada’s government clearly has a considerable amount of pipeline diplomacy ahead if it is to get the public on board with the nation’s energy policy. Meanwhile, much to the chagrin of Ottawa, Canada’s oil exports will simply languish.

© Glamma Productions 2012

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About Eric Watkins

Eric Watkins is a consultant specializing in oil diplomacy. A former journalist, Mr. Watkins's work has appeared in numerous leading publications including The Wall Street Journal, The Economist, The Financial Times, and specialist media such as Oil & Gas Journal, Middle East Economic Survey (MEES), and Lloyd's List.
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2 Responses to Bottling up Canada’s oil exports

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