EDMONTON – Controversial megaprojects are as old as Canada itself, but their long-term benefits to the nation’s growth are both undisputed and profound, the president of the proposed Northern Gateway pipeline told a review panel Tuesday.
In opening remarks to the panel, John Carruthers said his proposed $6-billion project to ship Alberta oilsands crude to Asia-bound tankers on B.C.’s west coast “is no different.”
“Canada has witnessed this (controversy) as far back as 1871, when the Canadian Pacific Railway was constructed in return for British Columbia agreeing to enter Confederation,” Carruthers said.
“Similarly, national projects such as the St. Lawrence Seaway and the TransCanada Pipeline have all attracted great attention and debate but, when constructed, laid the foundation for significant benefits for generations of Canadians.”
His comments came as the three-member panel entered the question-and-answer phase of hearings into the project.
Proponents say the 1,170-kilometre dual line, from Bruderheim near Edmonton to a marine terminal in Kitimat, B.C., is critical to the industry given the rapid growth of the oilsands and the soaring energy demand in Asia, particularly China.
In an updated report delivered at the hearing, Texas-based energy consultant Muse Stancil said that Asia’s appetite is so voracious, the net benefit of Northern Gateway to the oil industry would be $24 billion through 2035.
“There is ample market demand for Canadian crude in northeast Asia, with an estimated total potential demand that is over four times the design capacity of Northern Gateway,” said the report.
There is also potential demand in California, but Stancil said it’s hard to quantify given the state is implementing a new low-carbon fuel standard.
More importantly, said the researchers, Northern Gateway will change the game as far as market dynamics in North America.
“It can be expected to have a material effect on the distribution patterns and pricing dynamics for Western Canadian crude, as crude producers for the first time will have a high-volume alternative to their historical markets within North America,” said the report.
“Northern Gateway allows the Canadian crude producers to both stop selling to their least attractive refiner clients (from a pricing prospective) and reduces their need to ship heavy crude via comparatively expensive rail transport.”
China is the big buyer, it said. The Asian giant is already getting more and more crude from Russia and Kazakhstan. Even with those sources, it can’t get enough.
“Even if all the inland crude pipeline expansions (from Russia and Kazakhstan) are completed, China will need to further increase its water-borne imports by millions of barrels a day,” it said.
Tuesday’s hearing launched the stretch run in the hearings.
The panel, representing the National Energy Board and the Canadian Environmental Assessment Authority, has been travelling around British Columbia and Alberta throughout the year hearing evidence.
The pipeline has sharply divided public debate, particularly in B.C., and the hearings have been witness to protests and demonstrations.
Environmentalists and many First Nations leaders in B.C. say given that the line would traverse 1,000 streams and rivers along with delicate wildlife habitats, the risk of a spill makes the line too risky at any price.
The line has also become a political stare-down between the Alberta and B.C. governments.
British Columbia Premier Christy Clark has said without a better cut of the profits, B.C. won’t even consider signing on. Alberta Premier Alison Redford has said her government has no plans to share the oil royalties that would accrue if the line was built by 2017 as planned.
Enbridge (TSX:ENB), in documents already submitted to the panel, has said the line is big enough to boost everyone’s bottom line.
The Calgary-based company says that over the next 30 years the line will boost Canada’s GDP by $270 billion.
It estimates total revenues in direct and indirect benefits to the federal and provincial governments at $81 billion, with $48 billion in labour income.
It estimates 62,700 person years of employment over the three-year construction phase, split almost two-thirds to B.C. and one-third to Alberta.
Enbridge estimates $2.6 billion in direct tax revenue to governments over the three decades, almost half of that to B.C.
The hearings run until Saturday, then resume in the Alberta capital from Sept. 17 to 28.
Starting next month, they move Prince Rupert and Prince George in B.C. for question-and-answer hearings relating to the lines themselves and the environmental risks and contingency plans.
The panel is tasked with determining whether the pipeline is in the public interest on economic and environmental grounds.
It has to submit its report to the federal government by the end of 2013.
Prime Minister Stephen Harper’s government has said it supports the concept of getting oil to the Asian market, but has said the Northern Gateway decision will rest on science rather than politics.