26469Yedlin: Panel expected to approve Northern Gateway, but questions linger
- Dec 18, 2013Yedlin: Panel expected to approve Northern Gateway, but questions linger
BY DEBORAH YEDLIN, CALGARY HERALDDECEMBER 18, 2013 7:04 AM
The Joint Review Panel's release of its report on the Northern Gateway pipeline project Thursday will begin the next phase in the quest for West Coast access for Canada's energy sector.
It will also be "amongst the most important regulatory decisions that the country has seen," in the words of Jim Prentice, who appointed the federal panel when he was still in government.
No one can deny it wasn't a fulsome process.
The report, to be released in Calgary at 2:30 p.m. MT Thursday, is the culmination of 180 days of hearings in 21 locations in British Columbia and Alberta, not to mention the inclusion of 200 interveners.
That said, it will likely mark a pyrrhic victory of sorts for Enbridge, as it's expected the $6.5-billion project will be approved, with conditions.
The mandate of the National Energy Board panel is centred on determining whether the project, which would facilitate access for Alberta's oil production to overseas markets, is in the public interest of this country.
On that basis alone, it's tough to conclude its decision will be anything but an approval of the pipeline.
It will then be up to the federal government, which has a sixmonth window, to decide what it's prepared to do.
Not only will Ottawa be mindful that access to growing markets in Asia is important for Canada's economic future, it will also consider the fact reforms in Mexico aimed at rejuvenating that country's oil industry will result in more competition for Canadian barrels in the United States.
The trick remains in addressing local interests and balancing those against what's best for the country.
As but one reference point from an economic perspective, the government will look to the country's history involving the U.S. and softwood lumber, which has seen Canada's lumber exports challenged as a result of countervailing duties and the variability in housing starts.
The solution to difficulties faced by that industry has been to diversify softwood lumber exports to Asia, which has been of significant benefit. China is now Canada's second largest market for softwood lumber.
The same argument will be made for moving forward on the Enbridge project.
Without access to new markets, Canada will continue to subsidize the U.S. economy, because of the discounted price per barrel that is resulting in gasoline prices being three and four cents cheaper per gallon south of the border.
There is a fair bit of angst in the Canadian oilpatch these days given the lack of progress on gaining access to new markets; the time when Canada's pipeline infrastructure will hit the proverbial wall now measured in months, not years. Furthermore, data released Monday by the U.S. Energy Information Agency is yet another reason the need for tidewater access is even more pressing.
The EIA said the United States is on track to reach production of 9.5 million barrels a day by 2016, just under its record levels of 9.6 MMbbls/d reached in 1970. The low point for U.S. oil production was 5 MMbbls/d in 2008.
There are also rumblings the U.S will lift its ban - in place since the 1970s - on exporting oil, which will also have an impact on prices and markets.
Despite all these facts - the U.S. will soon become Canada's competitor in global oil markets - an NEB approval of Northern Gateway, with conditions, would only mark a new phase of the project first announced in 2002.
Judging from reports released in the past two weeks - on tanker safety and First Nations' positions - it's not unreasonable to conclude the obstacles that have been highlighted can be addressed. Certainly, there is a perception the federal government has moved the yardsticks in the context of enhancing regulatory and marine safety. Whether it's enough is one aspect to be up for debate.
Indeed, the bigger question remains as to whether the project can proceed, even with NEB and government approval, or whether, as Canada West Foundation president Dylan Jones points out, aboriginal resistance will make it politically difficult to move ahead.
"They really have to find the perfect seam in terms of some kind of a finite process that can lead to an opportunity to create some closure around the expectations of aboriginal communities which is reasonable for the company to actually meet," said Jones.
One would think that if we put a man on the moon, it should be possible to establish the appropriate environmental safeguards and spill response protocols, with the help of First Nations, and be able to engage other groups living along the route that have yet to officially step up and support the project.
The question is whether there is a willingness to engage in good faith.
Enbridge has made it clear that, as a proponent, it is interested not just in meeting the regulatory hurdles, but to ensure it incorporates input from all stakeholders to enhance the project, which is federally regulated but also affected by provincial needs and concerns.
What's clear, given some of the commentary from the report released last month by Doug Eyford, is that Enbridge has been holding the bag of federal neglect when it comes to addressing outstanding First Nations issues.
One hopes, nay, expects, the federal government to fulfil its constitutional duty to consult with First Nations and ensure the Northern Gateway project - through facilitating a higher level of collaboration - will, unlike the Mackenzie Valley pipeline, have a chance to move ahead.
The reality is, as Jones and others point out, there is no value to a resource that remains in the ground.
Deborah Yedlin is a Calgary Herald columnist dy edlin@...
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