TERRACE, B.C. – There is a growing imbalance between oil supply and delivery in Canada and doing nothing is not an option, the lawyer for the Canadian Association of Petroleum Producers told a federal panel weighing the Northern Gateway project.
Keith Bergner told the review panel Tuesday that current pipeline capacity is not sufficient, and producers are finding themselves with product on their hands and no way to ship it to buyers — “shut-in” as it’s known in the industry.
“Doing nothing in this current situation is simply not an option,” Bergner told the panel in Terrace, B.C., where the final set of hearings is underway.
“Similarly, contrary to what others have suggested, waiting for some other option to arise, some other pipeline to proceed, some other means to connect supply and markets, is similarly not an option.”
The shut-in problem affects price, and it will only get worse, Bergner suggested.
“There’s a great need for this project. The project can proceed in an environmentally responsible manner, with due regard for the interests of aboriginal groups and other public interest concerns,” he said.
“The economic consequences of shut-in are simply unacceptable.”
The association that represents 90 per cent of the country’s natural gas and oil producers said it has watched with increasing concern as even projects that have received regulatory approval have been delayed.
“The time lost and the failure to proceed with this application would create huge economic costs to Canada, not to producers alone, not to producers in isolation, to Canada,” he said.
The project proposed by Calgary-based Enbridge (TSX:ENB) would see a 1,200-kilometre pipeline carrying 550,000 barrels of heavy oil a day from Bruderheim, near Edmonton, to a tanker port in Kitimat, on the north coast of B.C., for shipment to the lucrative markets of Asia. A twin line would carry condensate, for diluting heavy bitumen, east to Alberta.
The $6-billion development would allow land-locked Alberta to expand its customer base beyond the United States, where the industry argues it is forced to sell oil for up to $8 less per barrel because it has no competing buyers.
Bernette Ho, the lawyer for Enbridge’s funding partners Nexen, Cenovus Energy (TSX:CVE), Inpex Canada, Suncor Energy and Total E&P Canada, dismissed the assertion from opponents such as ForestEthics and the Alberta Federation of Labour that commercial support for the pipeline is questionable.
“It is clear that the funding participants are not taking their commitment to the project lightly,” she said.
“The funding participants consider both their time and financial commitment to date to be significant evidence of their commercial support for the Northern Gateway project, all of which is at risk if regulatory approval of the project is not granted or the project is not built.”
Five years ago, Ho said, Total E&P Canada considered the project “a long shot, but critical.”
Each company has plans to increase oil sands production, and expects to sign agreements with Northern Gateway, she said.
The petroleum producers told the panel in its written submission that it predicts Canadian production will more than double by 2030, exceeding six million barrels a day. That will result in a $312 billion gain in Canadian gross domestic product, and a $98 billion increase in revenue for various governments.
But the financial gains have not swayed opponents like the Haida Nation, which appealed to the panel to reject the project.
A lawyer for the First Nations communities that live on the archipelago off the north coast of B.C. called Northern Gateway’s risk analysis for oil spills “ludicrous.”
Peter Lantin, president of the Council of Haida Nations, told the panel that not a single aboriginal band that lives along the B.C. coast supports the project.
“Obviously the waters that will be impacted by all this tanker traffic and in the event of an oil spill, the communities affected by that are not in support, so it’s mind boggling to think how this thing could proceed,” Lantin said after addressing the panel one last time.
If the panel does give the pipeline the green light, it will likely end up before a court, he said.
“I think everybody’s been pretty clear that they’re going to do everything they can to stop this project. So if it’s not through this (joint review process), then we’ll look at legal options,” Lantin said.