News Articles Featured | Marketwatch | July 21, 2011
By Bill Mann, MarketWatch
VANCOUVER, B.C. (MarketWatch) ‚Äî It's hard enough building a new oil pipeline today. But when you want to build what a major magazine headlines as a "Pipeline Through Paradise?" That's as sticky as the Alberta tar sands, where most of Canada's oil is located.
But Calgary-based Enbridge Energy Partners' EEP -0.83% proposed C$5.8 billion Northern Gateway pipeline from Alberta to the British Columbia coast is, as a new National Geographic article notes, Canada's big bid to become a global player in the petroleum market.
When the August issue of the Geographic hit the stands (or mailboxes) this week, Enbridge execs must have reeled from its 1-2-3 editorial punch: The piece on the rain forest in B.C. where the pipeline is supposed to end at a proposed huge oil-tanker facility in Kitimat, B.C., begins by recounting a major ferry sinking in the same hazardous narrow passage only five years ago. Read the National Geographic story here .
The Geographic's online version of the story also features a picture of workers cleaning up after the 1990 Exxon Valdez spill. Plus, it has a companion piece on the surrounding Great Bear Rainforest in B.C. that highlights the so-called "Spirit Bears" found in the area ‚Äî rare, paradoxically white-colored black bears.
As if the bad press weren't bad enough news for Enbridge, which is also facing opposition from 60 First Nations tribes, the Edmonton Journal reported this week that Kinder Morgan Energy Partners, which operates the only existing Alberta oil-fields pipeline to the West Coast, is thinking about doubling ("twinning'") its existing smaller pipeline into the port of Vancouver.
A quarter of the shipments on Kinder Morgan's Trans Mountain line (completed in 2008) now go to the company's Westridge Dock facility in Vancouver, which can only accommodate Aframax-class tankers with a capacity of 650,000 barrels. Kinder Morgan plans to expand the facility, adding a second berth that will accommodate Suezmax tankers with a capacity of one million barrels.
Tankers using the bear-country Kitimat, B.C.port (just south of the Alaska panhandle) under the Gateway proposal would have about twice that capacity. Then they'll have to navigate narrow channels through the heart of the Great Bear Rainforest.
By twinning its line to Vancouver, Kinder Morgan will be able to ship lighter and refined products in one line, heavy crude in the other. Currently, both are sent as batch loads in the same line.
While the 525,000-bpd Gateway line has attracted criticism from environmental and First Nations groups, Kinder Morgan's twinned Trans Mountain line could be completed by 2015 ‚Äî years ahead of Enbridge's ‚Äî and eventually move 700,000 bpd of petroleum products. It now moves 300,000 bpd. Plus, the Kinder Morgan expansion wouldn't require nearly as much permitting.
Quick geography lesson: According to a story in last Saturday's Vancouver Sun, a ship leaving the booming port of Vancouver can get to China two days faster than one leaving from Los Angeles/Long Beach. That's why the Chinese, thirsting for all that Canadian crude, are following these western-Canada pipeline battles closely.
China's state-owned oil company, Sinopec, is among the Asian refiners and Canadian oil companies that have invested over $100 million so far in moving the Enbridge pipeline through the planning/permitting process.
As we noted here in a recent story, most exported Canadian oil now is shipped into the U.S. Midwest, and TransCanada Corp's TRP +1.17% proposed C$7 billion Keystone XL pipeline extension that will bring that heavy crude to Texas refineries and ports is facing sharp political opposition from U.S. environmentalists and intensified scrutiny by the EPA (even as it has support from Congressional Republicans). It may not get approved at all later this year.
Despite the big Geographic shipweck/oilspill spread and Kinder Morgan's expansion plans, it hasn't been all bad news for Enbridge this week.
Energy ministers from Canada's provinces wrapped up four days of meetings in Calgary this week, and, according to the Calgary Herald, the ministers "vowed to make the country a global superpower by growing Asian and American markets in the face of heightened political pressure to clean up energy supply."
The ministers said the proposed Enbridge and Keystone XL pipelines are the keys to expanding markets for growing oilsands output.
Joe Oliver, the federal Natural Resources minister, said opening up a new supply route to Asian markets, which Northern Gateway would serve, will cut Canada's reliance on the United States, virtually the only buyer of its crude, and bring benefits for the economy as a whole.
So, the Canadian government is behind the pipeline companies. That's some comfort. That and the fact that Enbridge may prevail when/if it has to go to court to get access across tribal lands in B.C.: That's because aborginal rights in that western province are not well-established in law.
The Geographic story also notes that the sunken B,C. Ferry, the "Queen of the North," is leaking oil daily from its tanks, which still hold tens of thousands of gallons of diesel.
The timber wars up in B.C. have wound down ‚Äî environmentalists succeeded in having much of the Great Bear Wilderness made off-limits to logging. Now, they're girding for another fight ‚Äî this one over the Enbridge pipeline.
The industrialized world and China still have oil-based economies, and Alberta oil-sands crude is not only messy but land-locked. I can certainly understand the Canadian government's eagerness to get its oil riches to seaports for export.
Enbridge's pipeline to tankers in Kitimat, analysts have said, would allow Canada to focus oil exports on higher-priced global markets, increasing returns and adding billions in federal and provincial tax revenues.
All this oil is both Canada's blessing and its curse. And bringing it through B.C. and into its coastal rain forests is a gamble with one of the most staggeringly beautiful environments in the world.
Then again, how many people have actually been up there to see and appreciate it?
Bottom line: The National Geographic articles and stunning photos won't stop the Enbridge pipeline. Maybe just slow it down a bit by encouraging environmental opponents.
But most of those who read the pipeline article will just flip to the next article ‚Äî called "A Multitasking Monkey."
Bill Mann is a MarketWatch columnist, based in Port Townsend, Wash.