Oil Sands Truth: Shut Down the Tar Sands

Potential Enbridge Gateway Investors Grow

UPDATE 1-Enbridge pipe has 2nd China-related backer -report

Fri Sep 2, 2011 1:01pm EDT

CALGARY, Alberta, Sept 2 (Reuters) - MEG Energy Corp (MEG.TO), a small oil sands developer partly owned by China's CNOOC Ltd (0883.HK), is among financial backers of a planned pipeline to Canada's West Coast from Alberta, a newspaper reported on Friday.

The company would join Sinopec Corp (600028.SS), another Chinese state-owned company on a list of those putting money behind the C$5.5 billion ($5.6 billion) project, aimed at opening up new markets for crude derived from the vast oil sands reserves in the Western Canadian province of Alberta.

The Globe and Mail newspaper, quoting unnamed sources, said MEG is among those that put up C$100 million to help push the controversial development through the regulatory stage.

MEG spokesman Brad Bellows declined to comment on whether the company had put money behind Northern Gateway, saying only that it supports expanding markets for Canadian crude.

Companies across the industry are working to broaden destinations for the supply, which is currently priced against heavily discounted U.S. oil in the Midwest and Midcontinent regions.

Northern Gateway would take 525,000 barrels a of crude a day 1,177 km (731 miles) to the port of Kitimat, British Columbia, where it would be loaded onto tankers and shipped to China and other Asian countries. There, it is expected the supply would fetch a higher price along with other seaborne crudes.

"As far as increasing market access for product goes, any industry is going to be interested in that and we're no exception," Bellows said. "If there are opportunities to extend the reach of where our oil sands product goes, we think it's a good thing."

CNOOC owns 14.2 percent of MEG, which produced 27,826 barrels of tar-like bitumen in the second quarter.

Enbridge declined to disclose any of the Northern Gateway partners. However, Gina Jordan, spokeswoman for the pipeline company, said they include a mix of oil sands producers and Asian refiners.

Several Chinese companies have invested in the oil sands over the past decade to tap what is currently ranked as the world's third-largest crude deposit as a way to help fuel their booming economy at home.

Northern Gateway, and TransCanada Corp's (TRP.TO) Keystone XL pipeline to Texas, are the furthest advanced of several proposals to send the crude to richer markets. However, both face growing opposition from environmental groups as well as from some politicians and native leaders.

Last week, Enbridge said it and would-be shippers had agreed on terms for moving oil on Northern Gateway, a big commercial step before regulatory hearings scheduled to start in January.

Enbridge did not name the companies that have agreed to long-term shipping deals, but it said they included producers as well as players in Asian markets.

($1=$0.98 Canadian) (Reporting by Jeffrey Jones; Editing by Frank McGurty and Peter Galloway)


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