Oil Sands Truth: Shut Down the Tar Sands

Factbox: Enbridge pipeline to the Pacific: facts and issues

Factbox: Enbridge pipeline to the Pacific: facts and issues
Mon Jan 30, 2012

(Reuters) - Enbridge Inc's Northern Gateway pipeline is aimed at opening up lucrative overseas markets for surging Canadian oil sands production, but it has become highly contentious as Ottawa and the oil companies that support the project seek to fend off opposition from environmental and aboriginal groups.

For its supporters, Northern Gateway took on more urgency with Washington's rejection this month of TransCanada Corp's Keystone XL pipeline, which was designed to carry oil sands crude to Texas from Alberta.

Here are the facts and figures and the major issues surrounding Northern Gateway.


Proponent: Enbridge, the top transporter of Canadian crude through its network of pipelines, the world's longest. The network extends from the Northwest Territories, through Western Canada to the U.S. Midwest and Midcontinent and into southern Ontario. The current capacity is about 2.5 million barrels a day. Enbridge also owns gas pipelines in Canada and the United States, a renewable energy portfolio and a gas distribution utility. Current market value is $29 billion. The chief executive is Patrick Daniel.

Industry backers that have provided funding or shipping commitments to Northern Gateway include Suncor Energy Inc, Cenovus Energy Inc, Nexen Inc, Total SA, MEG Energy and China's Sinopec Corp.

Estimated cost: C$5.5 billion.

Capacity: 525,000 barrels a day of oil sands-derived crude. An adjacent pipeline would carry 193,000 bpd of condensate in the opposite direction. The light hydrocarbon is used as diluent that allows heavy oil sands bitumen to flow in pipelines.

Scope: Northern Gateway would move crude 1,177 km (731 miles) across the Rocky Mountains to Kitimat on British Columbia's Pacific Coast, from Bruderheim, Alberta, near Edmonton. At Kitimat, the oil would be loaded on to supertankers and shipped through the Douglas Channel to the Pacific and on to Asia, or along the West Coast to California. Start-up is currently estimated in 2017.

State of play: Public hearings began on January 10 before a Joint Review Panel made up of representatives from Canada's National Energy Board, which regulates the energy industry, and the Canadian Environmental Assessment Agency. The proceedings, to be held in 22 Alberta and British Columbia communities, are expected to run until final arguments in April 2013. The panel could issue its final go-ahead decision by the end of 2013. The schedule was extended by about a year to accommodate more than 4,000 people who have registered to comment. Once the panel issues its final report, providing it recommends proceeding, the federal cabinet must approve or reject the decision.


In the United States, Keystone XL's supporters often warn that Washington's refusal to allow that pipeline to supply U.S. Gulf Coast refineries will lead Canada to retaliate by selling the oil to China. In reality, plans have been in place to do just that for years as the country seeks to diversify markets. The United States will always be the main market for Canadian crude; it gets more than 2 million barrels of it a day. But the southern neighbor currently accounts for more than 97 percent of Canada's exports, a situation that producers complain leaves them captive to price discounts due to a glut of supply in the Midwest refining region and the Cushing, Oklahoma, storage hub.

Ocean access for large volumes of oil sands-derived crude would, they say, will allow it to be priced against higher-value international benchmarks, raising returns for producers that are developing the tar sands, the world's third-largest crude deposit. Enbridge has said its project could add up to $3 to the price of a barrel of crude.

Northern Gateway, and another West Coast expansion proposed by Kinder Morgan Energy Partners for its Trans Mountain Pipeline, would also benefit China and other Asian countries looking to be less reliant on Middle Eastern oil supplies. Companies from those countries have invested billions of dollars in the past decade in oil sands development projects in Alberta.


Environment: Many of the nongovernmental organizations that oppose Keystone XL, including the Natural Resources Defence Council, Greenpeace and Sierra Club, are also lined up against Northern Gateway. They say the route of the pipeline is too dangerous, owing to seismic activity, frequent landslides and other natural hazards that could lead to oil spills. They also say the chemical makeup of the diluted bitumen that would flow through the pipeline is more corrosive than conventional oil, a contention that has not been proven by independent study. They point to a highly damaging Enbridge pipeline rupture in Michigan in 2010 as an example of the risks for British Columbia.

Enbridge has said the pipeline would use the newest technology, vastly reducing Northern Gateway's risks of rupture, and that it chose the route for its safety. For instance, the company considered running the line to an existing port at Prince Rupert, British Columbia, but ruled it out because of the steep and rugged terrain.

Environmentalists also decry the increased tanker traffic, more than 200 ships per year, that would sail in the Douglas Channel en route to Kitimat, and warn of catastrophic oil spills such as the Exxon Valdez disaster in 1989. The company points out that since that incident, the development of double-hulled ships and vastly superior navigation technology have improved safety.

As with Keystone XL and other projects aimed at expanding markets for crude from the oil sands, environmentalists say Northern Gateway will foster more damaging development. Oil sands projects are more energy and carbon intensive than conventional crude production, and have a greater impact on land and water and on local communities.

The oil industry and governments in Alberta and Ottawa say the resource is being developed responsibly and that hundreds of millions of dollars are being dedicated to developing technology to improve operations. Monitoring is also being stepped up. Green groups say the cumulative impact of rapid development in northern Alberta means many of the environmental gains are overtaken.

Aboriginal relations: As part of the regulatory process, Enbridge is obligated to consult with dozens of native communities along the proposed route. For generations, Canada's aboriginal people have felt disregarded in the development of natural resources as their communities have missed out on wealth, jobs and other economic activity derived from their lands and waterways. Meanwhile, traditional ways of life have been threatened.

Enbridge has offered native groups an opportunity to share in a 10 percent ownership interest in the project and C$1 billion of community development money in exchange for support. It is also promising employment, training and contracting opportunities for aboriginal people. Joe Oliver, Canada's minister of natural resources, has said the project has the potential to transform communities that are often impoverished.

The company has said it has the support of 40 percent of aboriginal bands. But, some groupings, including the Coastal First Nations and Yinka Dene Alliance, each made up of several bands, have said they will not support the project under any circumstances, saying they fear environmental damage. Some are preparing legal cases should it get approved against their wishes.

Shawn Atleo, national chief of the Assembly of First Nations, the country's largest aboriginal organization, has said he believes Enbridge requires the consent of natives for the project to proceed. There are communities that have yet to decide on support for the project.

Politics: Prime Minister Stephen Harper and his senior ministers support Northern Gateway strongly. Oliver speaks frequently about economic opportunities that will come with new markets for oil sands-derived crude, citing a University of Calgary study showing a C$17 billion increase in Canada's GDP between 2016 and 2030 due to the oil price differential alone.

Harper is due to travel to China in February, partly to drum up more interest in Canadian crude supplies. As Keystone XL stalled, he and the Alberta government pledged to redouble efforts to get crude to Asia.

The Harper government, which has been a major ally of the oil industry, has gone on the offensive against environmental groups, with Oliver blasting many of them as "foreign-funded radicals" bent on "hijacking" the regulatory process. In fact, the government is now looking for ways to streamline reviews after the unprecedented number of participants in the Northern Gateway hearings led to a longer schedule.

This has angered opponents, from large organizations that do have some foreign funding to grass roots groups and individuals, who have said they believe the state seeks to demonize them for legitimately held concerns about a major industrial project. They have charged that the government trying to influence the arm's-length review panel.

At the provincial level, Alberta Premier Alison Redford is, unsurprisingly, a major supporter of the pipeline. Christy Clark, the premier of British Columbia, has yet to take a stance for or against.


Oilsandstruth.org is not associated with any other web site or organization. Please contact us regarding the use of any materials on this site.

Tar Sands Photo Albums by Project

Discussion Points on a Moratorium

User login


Syndicate content