Canada’s government on Tuesday approved a controversial proposed pipeline to the Pacific Coast that would allow oil to be shipped to Asia, which would be a major step in the country’s efforts to diversify its oil exports.
Enbridge’s Northern Gateway Project, along with the controversial Keystone XL pipeline, is critical to Canada, which needs infrastructure in place to export its growing oil-sands production. The northern Alberta region has the world’s third-largest oil reserves, with 170 billion barrels of proven reserves.
The approval was expected, but whether the Northern Gateway pipeline ever gets built remains in question, as there is fierce aboriginal and environmental opposition in British Columbia and court challenges are expected.
Conservative Prime Minister Stephen Harper has called Canada an emerging energy superpower, and he has been a staunch supporter of the pipeline after the U.S. delayed a decision on TransCanada’s Keystone XL pipeline that would take oil from Alberta to the U.S. Gulf Coast.
Enbridge’s pipeline would transport 525,000 barrels of oil a day from Alberta’s oil sands to the Pacific to deliver oil to Asia, mainly energy-hungry China. About 220 large oil tankers a year would visit the Pacific coast town of Kitimat, and opponents fear pipeline leaks and a potential tanker spill on the pristine Pacific coast.
Harper has said Canada’s national interest makes the pipelines essential.
He was “profoundly disappointed” that U.S. President Barack Obama delayed a decision on the Texas Keystone XL option, and spoke of the need to diversify Canada’s oil industry. Ninety-seven percent of Canadian oil exports now go to the U.S.
Meanwhile, China’s growing economy is hungry for Canadian oil. Chinese state-owned companies have invested more than $40 billion in Canadian energy in the past few years.
“They are watching this very, very closely,” said Wenran Jiang, an energy expert and special adviser to Alberta’s Department of Energy.
“They told us as recently as a couple of weeks ago that further investment will depend on whether there will be at least opportunities to ship some of this crude to China. Currently, all of their investment and production goes into the U.S. They are currently living with that.”
Jiang said Canada ships all its oil to the U.S., so it’s vital that Canada diversify its energy exports. Canadian oil is sold at a discount compared to the prices elsewhere.
Natural Resources Minister Greg Rickford said in a statement that Enbridge must meet the 209 conditions Canada’s regulator imposed on the pipeline. The company has previously said it would. “The proponent clearly has more work to do in order to fulfill the public commitment it has made to engage with Aboriginal groups and local communities along the route,” he said in a statement.
The fear of oil spills is especially acute in the pristine corner of northwest British Columbia, with its snowcapped mountains and deep ocean inlets. Canadians living there still remember the Exxon Valdez oil spill of 1989. British Columbia has said it is not yet in a situation to support the pipeline, because its own conditions need to be met.
Environmentalists and Canada’s native tribes could delay approval all the way to the Supreme Court, and the tribes still hold title to some of the land the pipeline would cross. That means the government will have to move with extreme sensitivity. Harper will have to win support in British Columbia, where he’ll want to preserve the 21 seats he has there. The British Columbia government can deny permits. Aboriginals could also get in the way of construction trucks.
A statement issued by a broad coalition of British Columbia aboriginal groups vowed that they would “defend our territories whatever the costs may be.”
Environmental groups said Ottawa’s approval is no guarantee that the controversial project will be built.
“We are deeply disappointed, but you need to look no further than the spate of legal challenges filed against this project to know that Cabinet’s approval is by no means a guarantee that this project will ever be built,” said Barry Robinson, a lawyer for Ecojustice who represented ForestEthics Advocacy, Living Oceans Society and Raincoast Conservation Foundation.