Enbridge Gateway pipeline back on track in B.C.
Customers demanding new facilities despite sliding oil price
Scott Simpson, Vancouver Sun
Published: Thursday, November 13, 2008
Enbridge Inc. is shrugging off the effects of a sagging world economy to restart its dormant Northern Gateway pipelines project in British Columbia and Alberta.
Northern Gateway Pipelines communications director Neil Sweeney said in an interview that the project, which bore a $4.5-billion price tag when it was suspended in 2006, is likely to be submitted to the National Energy Board in 2009.
The Northern Gateway project includes a 1,170-km pipeline for moving petroleum from Edmonton to the deepsea port of Kitimat on the central B.C. coast, and a smaller companion pipeline moving condensate along the same route.
The company put the project on hold in December 2006, citing a desire by its North American customers to first see an expansion of Enbridge's existing petroleum and liquids pipeline network across the interior of the continent.
The project also includes development of marine facilities for oil and liquids tankers at the port of Kitimat.
"Going back to 2006, what we were being told by our customers was to focus on our other projects, specifically Southern Lights," Sweeney said. "So we turned our attention to our Alberta projects. Now our customers are telling us they'd like us to go full-steam on Northern Gateway, so that's what we are doing."
A 90-cm diameter pipeline will carry a daily average of 525,000 barrels of petroleum from Alberta to tankers in Kitimat, which will deliver it to buyers in Asia and the Pacific United States.
A companion 50-cm pipeline will carry a daily 193,000 barrels of condensate used in the production of petroleum from tankers arriving at Kitimat east to Alberta refineries.
The capacity of the pipelines is more or less fully subscribed by Asian and U.S. customers.
Steven Paget, energy infrastructure analyst with Calgary-based FirstEnergy Capital, said the recent crash in the global price of oil -- to $60 from $140 earlier this year -- is not a liability for the project.
"Right now we have over $10 billion in oil pipelines under construction coming out of Western Canada. Certainly much of that construction was started with [the price of] oil 'round about where it is right now. So it's not really a short-term thing," Paget said in a telephone interview.
Paget noted that obtaining the investment capital necessary to move the project along is not onerous, despite declining global financial liquidity.
"Enbridge is receiving some funding from shippers to build this pipeline. It usually costs quite a bit to take a pipeline through to getting a permit and it looks like the shippers are interested in seeing if Enbridge can obtain these permits."
Enbridge began a fresh round of open-house meetings in communities along the line, beginning in Alberta, two weeks ago, Sweeney said.
Gateway representatives have also been conferring with civic governments, chambers of commerce, service clubs and first nations in B.C. and Alberta.
The open-house series resumes Monday in Burns Lake.
"Our series of open houses really is an invitation for the general public to learn more about our project. If they have questions we have staff available to answer them . . . engineering, environmental, regulatory, marine, you name it, we have people available to speak with them.
"The communities of the north, aboriginal and non-aboriginal, are critical to the success of Northern Gateway and we are treating them as such."
Enbridge also believes the project -- which will generate more than 4,000 direct construction jobs and thousands of indirect support jobs -- will boost economies in towns along the route.
"There is no question that northern British Columbia is facing some pretty tough economic times and they are looking for ways to pick up where the forest industry has left off. We have good support among our community leaders and as we continue to talk, we hope to grow that."
Sweeney expected the final cost of the project to exceed the $4.5 billion estimated in 2006.
"The numbers haven't yet been updated. I think it's safe to say the number will increase; I don't think the cost of construction or materials has gone down. As we go further through the process the numbers will be updated."
Earlier discussions had raised concerns about risks to the marine environment from tankers moving along the Kitimat Channel/Douglas Arm route to the open ocean.
"We believe that we can do this safely, and if we didn't we wouldn't be proposing the project," Sweeney said. "We will be discussing that with people in Kitimat and people along the line."
NORTHERN GATEWAY PIPELINE PROJECT AT A GLANCE
- KITIMAT MARINE TERMINAL
Will include two ship berths, 11 petroleum storage tanks and three condensate storage tanks.
Will have a radar monitoring station and emergency response capabilities.
New jobs will be created to operate the marine terminal and super-tugboats, and to monitor the surrounding marine environment
- EASTBOUND LINE
Will transport condensate from Kitimat to near Edmonton. (Condensate is used to thin heavier petroleum products so they can flow through pipelines.)
1,170 km long
20 inches (50 cm) in diameter
Will carry an average of 193,000 barrels of condensate per day.
- WESTBOUND LINE
Will transport petroleum from near Edmonton to Kitimat for export.
1,170 km long
36 inches (90 cm) in diameter
Will carry an average of 525,000 barrels of petroleum per day.
Source: Enbridge Inc.
© The Vancouver Sun 2008
