Canada’s Northern Gateway Pipeline

An article by Edward Welsch in the Wall Street Journal today today talks about upcoming

hearings regarding Enbridge’s Northern Gateway pipeline, which would bring oil from Alberta to Kitimat on the British Columbia coast. As I discussed in an earlier blog post, Canada views this pipeline as an alternative to the Keystone XL pipeline, which would move oil to refineries on the U.S. Gulf Coast. Legally, the Obama administration must make a decision on this Keystone XL pipeline by the end of February. Because production from the Oil Sands is increasing so rapidly, Canada badly needs to find an additional means to bring petroleum to market. From the perspective of the Canadian government, therefore, the Northern Gateway pipeline allows it to hedge its bets, by allowing to sell oil to the Asian market, in particular China. Even if President Obama’s administration approves the Keystone XL, the Canadian government badly wants this other pipeline to the Pacific to increase its market options.

There are multiple environmental issues with this project, not the least of which is that it will facilitate oil production in Northern Alberta, which not only is carbon intensive, but also creates vasts amounts of polluted water. Because no current technology exists to decontaminate the water, it is stored in vast holding pools, so deadly that it kills flocks of ducks that land upon it. Despite these storage efforts, there is also some evidence that contaminants are also entering the river and watershed. These issues are in addition to the risks of the industrial scale transport of oil through BC’s waterways.

Because the stakes are so high, it is important that these hearings be as meaningful and rigorous as possible. There are major economic interests at stake, and this development does have many positive aspects for the Canadian economy. But the environmental issues need to be addressed and weighed. Recent statements by the Harper administration, as described in a recent Globe and Mail article, give reason for concern: “Reflecting the high stakes, the Harper government prepared a new warning, to be made public on Monday, that regulatory reviews for major energy projects should be accelerated and protected from interference by ‘radical environmental groups financed from the United States.'”

As David Ebner notes in the Globe and Mail article, the fact that the Haisla nation, which opposes the pipeline, will be hosting the first of these hearings probably concerns the Harper administration. But Enbridge is making a major push to gain First Nations support for the pipeline, which will cross the lands of more than 40 separate bands. According to the Wall Street Journal article, the company is offering First Nations a 10% equity stake in the pipeline, and has currently signed agreements with more than 40% of the bands. The challenge for Enbridge is that some of the land on which they would need to operate was never ceded to Canada by treaty. The Globe and Mail article is a well-done piece, which reflects the Haisla attitude towards development and the pipeline.

At the time our textbook was published, there was a great deal of discussion of “Hubbert’s Peak,” the idea that there was a naturally occurring maximum point for petroleum production, and that the world may have reached it. With the development of unconventional oil sources -from shale oil and gas in the U.S. to the oil sands of Northern Alberta- this possibility is receding. But fracking brings issues of water pollution, and there are multiple environmental issues associated with the oil sands. As we said in the book, the issue may not be “When does the oil run out?” but rather “how dirty does oil have to get before we pay for alternatives?”

Shawn Smallman, Portland State University