By Dina O'Meara, Calgary Herald, August 24, 2011
Pipeline operator says agreements show feasibility of proposal
CALGARY — Space has been fully booked on the proposed Northern Gateway oil pipeline to the West Coast, potentially linking Alberta oilsands producers to energy-hungry Asian markets, says operator Enbridge Inc.
The outline of a traditional West Coast native’s headdress, from a member opposing the Northern Gateway pipeline, casts a shadow on Enbridge chief executive Pat Daniel’s presentation during a meeting earlier this year. (Photograph by: Stuart Gradon, Calgary Herald) |
The Calgary-based pipeline and energy giant said Wednesday the long-term shipper agreements on more than 80 per cent of the $5.5-billion pipeline’s capacity were a milestone for the controversial project, which faces bitter opposition from environmental and aboriginal groups.
“Commercial support for the project from both Canadian oil producers and Asian markets reinforces the international importance of the project to Canada — facilitating access to world markets and international pricing for one of Canada’s most valuable non-renewable resources,” spokeswoman Gina Jordan said in an e-mail.
Asian demand is seen as a major driver pulling up crude oil markets, along with other emerging economies.
Indeed, China’s national oil company Sinopec confirmed last year it was one of 10 partners shelling out a total of $250 million toward the pipeline’s development.
As then, Enbridge did not reveal Wednesday shippers’ names in its latest regulatory filing with the National Energy Board citing commercial sensitivity. Industry observers speculate shippers don’t want to be associated publicly with the controversial pipeline.
Aboriginal communities along the proposed 1,700-kilometre line, stretching from near Edmonton to a marine terminal in Kitimat, B.C., argue they have not signed on to a project which could threaten their way of life.
“It doesn’t matter who they get a deal with,” Chief Larry Nooski of Nedleh Whut’en First Nation, said in a statement. “They plan to come through our territories and we’ve already said no, and we’ll use every legal means we have to stop them.”
Nooski is part of the Yinka Dene Alliance of five First Nations in northern B.C. which have banned the pipeline from their territories over concerns about oil leaks on land, waterways and in the ocean.
The pipeline would ship 525,000 barrels per day of diluted bitumen to a marine terminal in British Columbia’s northwest coast, where supertankers would move the oil to offshore markets. A smaller line would pipe back up to 192,000 bpd of condensate used to thin heavy oil for transportation.
Analyst Steven Paget saw Enbridge’s announcement as an assurance to stakeholders, including joint review panel members, that the pipeline was commercially viable and supported. But the filing wasn’t enough to change the FirstEnergy Capital Corp. analyst’s view on the project.
“The pipeline remains contentious, and standard practice of automatically adding earnings to our future estimates, for me it doesn’t apply simply because the commercial agreements are signed,” Paget said. “The difficult part for this pipeline is getting regulatory approval.”
Political moves south of the border could also influence the project’s future, noted analyst Andrew Potter, with CIBC World Markets.
“If Keystone XL is built and U.S. rhetoric about not wanting oilsands crude doesn’t materialize, (Northern Gateway) is not an absolute necessity,” Potter said. “But as we’ve seen with all the rhetoric coming out of the U.S. it just makes sense to have more than one market for crude and not be subject to the whims of U.S. politics.”
TransCanada Corp.’s 530,000 bpd expansion to its existing Keystone oil pipeline faces heated from environmental and political groups in the United States arguing it could compromise water supplies and deter the development of alternative energy resources.
Enbridge said in the NEB filing it was convinced Northern Gateway would be economically feasible, used at a “reasonable level” over its lifetime, and that cost-covering tolls “likely” would be paid.
Enbridge Inc. shares settled up 47 cents at $31.99 on the Toronto Stock Exchange Wednesday.
domeara@calgaryherald.com
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