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Canada: Pipeline projects still clogged

Northern Gateway and Keystone remain contentious issues into 2012 Read more:

Source:  Copyright 2011, Province
Date:  December 26, 2011
Byline:  Rebecca Penty
Original URL: Status DEAD

When U.S. policy analyst Michael Levi sat down last January to sketch out the top five issues to watch in 2011, the Keystone XL pipeline didn't make the cut.

"Shale gas was on my list, all sorts of other things were on my list," said Levi, director of energy security and climate change with the New York-based Council on Foreign Relations.

Levi called the widespread public interest in the 2,700-kilometre pipeline, which ended up dominating North American energy debate in 2011, "a surprising development."

Much is at stake for industry, environmental groups and political leaders in the discussion about whether it's in the U.S. national interest to allow construction of Keystone XL.

The $7-billion Alberta to Texas oil pipeline proposed by TransCanada Corp. is currently held up by a much delayed regulatory process and a political battle in Washington, D.C. Republicans and Democrats are at odds over whether to speed a decision on the pipeline, which has become a proxy for the polarizing debate about whether bitumen production from Canada's oilsands should continue on its path of more than doubling by 2020, to 3.5 million barrels per day.

So, too, has the $5.5-billion Northern Gateway pipeline envisioned by Enbridge Inc. to link growing oil out-put in Alberta to a marine terminal off the coast of B.C for export. Northern Gateway is also up against local disdain for any increase in oil tankers frequenting coastal waters.

Both infrastructure projects are seen as crucial to business development by the oilpatch and key to economic growth by federal and provincial governments. They are also viewed by environmentalists as contributors to climate change, by linking the oil-sands to new export markets.

Public focus on Keystone XL and Northern Gateway this year is largely thanks to environmentalists bent on curbing global fossil-fuel consumption.

"This has become a symbolic battleground for the fight over what to do about climate change and what to do about oil production," Levi said.

In August, the U.S. State Department reviewing the project issued an environmental-impact statement that said Keystone XL would pose little risk.

Still, prominent Democrats started signing up to the anti-Keystone XL cause, including former U.S. vice-president Al Gore, who won a Nobel Peace Prize for his documentary An Inconvenient Truth about climate change.

A sister campaign was getting underway in Canada: eco-groups were recruiting people to speak at regulatory hearings starting in January for the 1,700-kilometre Northern Gateway. By mid-October, more than 4,000 had registered - including people as far away as Europe and Australia.

Many first nation communities in B.C. have vowed to block construction.

To stop either pipeline is seen as a tangible challenge for environmental groups frustrated by the failure by Ottawa and Washington to progress on commitments to address climate change.

In November, the U.S. State Department said it wanted a study of alter-native routes for Keystone through Nebraska and said it would extend its assessment on the project until the first quarter of 2013.

For environmental groups, it was a victory. For TransCanada, Alberta and oilpatch politicians the delay of more than a year represented a huge setback.

Northern Gateway faces a similar challenge: earlier this month, the regulatory panel reviewing the pipeline extended its assessment more than a year to accommodate the public interest, until late 2013. That raises questions about whether Enbridge can get the pipeline operating as previously planned, in 2017.

With respect to Keystone XL, TransCanada committed to work with Nebraska officials and government departments.

After the company got to work in Nebraska, Republicans in Washing-ton seized on Keystone XL as a job creator and vowed they wouldn't sup-port an extension of payroll tax cuts favoured by Obama, unless it included a provision to make a quick decision on Keystone XL, within 60 days.

Last Friday, the stalemate between Republicans and Democrats was broken when the U.S. House of Representatives and the Senate reached an 11th hour deal on the payroll tax bill that preserved the requirement Obama revisit the pipeline project within two months.

Obama could deny a permit for the project if he determines Keystone XL does not serve the national interest.

The fate of Keystone XL is important for producers in Alberta, who by some estimates will face a pinch as early as 2014 or as late as 2017, when existing oil export pipelines will be full.

Former Alberta energy minister Ron Liepert has insisted that without new oil pipelines, Alberta will be "land-locked in bitumen" by 2020.

As for Northern Gateway, Alberta Energy Minister Ted Morton is reassured by "wholehearted" support in Ottawa from Prime Minister Stephen Harper's government.

B.C. Premier Christy Clark is reserving her take on Northern Gateway until after the review, but Alberta Premier Alison Redford said the Enbridge project should take on importance akin to the Canadian Pacific Railway.

"These are nation-building projects," Redford said.

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