It Ain't Over 'Til It's Over: Enbridge Presses on with Proposed Northern Gateway Pipeline Despite Obstacles

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Researched by Industrial Info Resources (Sugar Land, Texas)--All things considered, Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta) Chief Executive Officer Al Monaco seemed remarkably chipper last week regarding the proposed Northern Gateway pipeline. The project, which would move up to 525,000 barrels per day (BBL/day) of crude oil from Alberta to British Columbia's North Coast, continues to face substantial hurdles, including opposition by indigenous tribes and a potential ban on oil tanker traffic along the North Coast.

Click the image at right for a graph showing all Enbridge projects by province or state.

Industrial Info is tracking 15 Northern Gateway-related projects worth more than $6 billion, roughly a third of the value of all the Enbridge capital projects being followed. The 731-mile pipeline would transport oil sands crude oil from Alberta to Kitimat, British Columbia, where it would be put on tanker ships for transport to Asian markets. The timing for the project has been pushed back several times, and is presently set for construction kickoff in mid 2017 with completion by the end of 2019.

The project has come with a fair share of headaches. Canadian Prime Minister Justin Trudeau instructed his transport minister last year to formalize a moratorium on crude oil tanker traffic on British Columbia's North Coast, citing the environmental concerns of indigenous people in the region. At the time, many of the pipeline's opponents said the ban would kill the project. For more information, see December 9, 2015, article - Crude Tanker Moratorium Sparks Questions Over Fate of Northern Gateway Pipeline.

However, recent news reports indicate the government may give the project a new lease on life. Bloomberg reported in April the Canadian government was wavering on the planned tanker moratorium as it considered what types of petroleum products may be exempt from the moratorium. On top of that, the Calgary Herald reported that Alberta Premier Rachel Notley, who has not backed the pipeline, was rethinking her position.

Enbridge has applied for a three-year extension to begin construction of the Northern Gateway pipeline. The current permit requires the company to start construction in 2016.

"I have to say recent progress on Northern Gateway has been positive," Monaco said during the company's earnings conference call. He noted the project has gotten the support of 31 First Nations tribes. As part of that support, the tribes would own a third of the project, he said, which is more than before. Still, he said, the project still needs additional support from those tribes on the coast for the project to move forward. Enbridge executives said they are still focusing on Kitimat as the site of the proposed pipeline terminal.

However, the First Nations of the Yinka Dene Alliance in British Columbia said last week it was still against the project. "With the clock ticking on its expiry clause, Northern Gateway is making last-minute promises to First Nations, but our support is not for sale. We will not accept the environmental risks posed by Northern Gateway," Chief Larry Nooski of Nadleh Whut'en First Nation said in a press release.

Windfarms Ahoy
Monaco also noted Enbridge's pending C$282 million ($218 million) acquisition of a 50% interest in EMF, a French offshore wind power development company, which plans to build windfarms off the coast of France totaling 1,400 megawatts of installed capacity. Enbridge could eventually invest C$4.5 million ($3.5 million) in the windfarms. EMF will be co-owned with EDF Energies Nouvelles (EDF EN), a subsidiary of Électricité de France S.A. (EDF) (Paris) dedicated to renewable energy. The acquisition is expected to close on May 19.

Enbridge already has 16 windfarms and four solar projects with about 2,000 MW of net generating capacity, Monaco said, and has a 25% interest in the 400-MW Rampion offshore windfarm, to be located off the southern coast of England. For more information, see May 21, 2015, article - E.ON to Build Rampion Offshore Windfarm in U.K.

Wildfire Recovery
Enbridge continues restart operations in Alberta in the aftermath of the wildfire that impacted oil sands production. The company had shut down its regional oil sands pipes on May 4 and evacuated its Cheecham terminal, affecting about 900,000 BBL/d of crude oil volume. Operations resumed last week at Cheecham and the company was continuing to restore pipeline operations, Monaco said. For related information, see May 12, 2016, article - Outlook North of Fort McMurray Positive, Oil Sands Production Sites Resume.

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