Oilpatch Dismayed By Liberal Move To Ban Crude Oil Tankers In Northern B.C.

The Douglas Channel, the proposed shipping route for oil tanker ships in the Enbridge Northern Gateway Project, just south of Kitmat, B.C.

The Douglas Channel, the proposed shipping route for oil tanker ships in the Enbridge Northern Gateway Project, just south of Kitmat, B.C.

By Geoffrey Morgan | November 16, 2015

CALGARY – Executives in the Canadian oilpatch are dismayed the federal government is poised to ban crude oil tanker traffic on the North Coast of B.C., which would hurt the Northern Gateway pipeline’s chances of being built.

Prime Minister Justin Trudeau followed through on one of his election promises when he asked Transportation Minister Marc Garneau to “formalize a moratorium on crude oil tanker traffic on British Columbia’s North Coast” in a mandate letter published Friday.

“All of the natural resources that we, as a natural resources country, sell, we sell at the world price except for one,” Questerre Energy Corp. president and CEO Michael Binnion said, referring to oil.

He added that Canadian oil producers are forced to accept a steep discount for the crude they produce, which they can only sell to American refineries because of the lack of export pipelines. Binnion said the discount is a direct benefit to the U.S., where President Barack Obama rejected the Keystone XL pipeline earlier this month.

“Forcing Western Canada to sell its oil and gas at a lot less than the world price to the benefit of Americans really seems ridiculous and counter to our strategic interests, so how could we possibly justify blocking the trade routes that would fix that problem?” Binnion said.

Enbridge Inc., which has been working to gain additional First Nations support for its $7.9-billion Northern Gateway pipeline across northern B.C., issued a response to the oil tanker traffic ban with a reminder that any moratorium would require First Nations and Métis support.

Environmental groups immediately called the moratorium a death-blow to the pipeline’s prospects.

“We are confident the Government of Canada will be embarking on the required consultations with First Nations and Métis in the region, given the potential economic impact a crude oil tanker ban would have on those communities and Western Canada as a whole,” Northern Gateway spokesperson Ivan Giesbrecht said in a statement.

Enbridge has said that it also needs more First Nations and Métis support before sanctioning its 1,100 kilometre pipeline between the Edmonton area and a proposed marine terminal at Kitimat, B.C.. which would be directly affected by a crude oil tanker traffic ban off British Columbia’s North Coast.

The marine terminal would allow tankers to export crude oil from Canada to markets in Asia.

The Calgary-based pipeline company received regulatory approvals, subject to 209 conditions, for the Northern Gateway project in 2014 but has yet to proceed with the project amid First Nations opposition.

Giesbrecht said the company and its aboriginal equity partners remain committed to building the pipeline and added, “We are looking forward to an opportunity to sit down with the new Prime Minister and his Cabinet to provide an update on the progress of our project and our partnerships with First Nations and Métis people in Alberta and B.C.”

“We share the vision of the Trudeau government that energy projects must incorporate world-leading environmental standards and First Nations and Métis ownership,” he said.

Eagle Spirit Energy Holdings has also proposed an oilsands pipeline across northern B.C. and recently announced that it had the support of every First Nations group along its proposed route, a claim other aboriginal groups denied.

Eagle Spirit, which would also build a refinery as part of its pipeline project, declined a request for comment on the proposed moratorium.

It is unclear whether or not the federal government’s moratorium would include tankers carrying refined oil off the coast of northern B.C., but it would not affect Kinder Morgan Canada’s plans to expand its Trans Mountain pipeline system across southern B.C.

Kinder Morgan Canada president Ian Anderson said at a conference Friday that his company has operated “out of Port Metro Vancouver and tankers have been going through there for 60 years.” He added that he’s confident the project will go forward.

Canadian Association of Petroleum Producers president and CEO Tim McMillan said he opposed a tanker ban and added “any barrier to get products to market is a problem for Canada.

With files from the Calgary Herald

Source: Financial Post

 

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