Canadian province rejects plan for Enbridge Northern Gateway, saying company failed to demonstrate adequate clean-up plan
Efforts to expand production from the Alberta tar sands suffered a significant setback on Friday when the provincial government of British Columbia rejected a pipeline project because of environmental shortcomings.
In a strongly worded statement, the government of the province said it was not satisfied with the pipeline company’s oil spill response plans.
The rejection of the pipeline – which was to have given Alberta an outlet to Pacific coast ports and markets in China – further raises the stakes on another controversial tar sands pipeline, Keystone XL.
Barack Obama is still weighing a decision on that pipeline, intended to pump tar sands crude to the Texas gulf coast.
British Columbia, in its official submission to a pipeline review panel, said the company had failed to demonstrate an adequate clean-up plan for the Enbridge Northern Gateway project. It set five new conditions for the project’s approval.
“Northern Gateway has presented little evidence about how it will respond in the event of a spill,” Christopher Jones, a lawyer representing the province, said in a statement to the federal government panel reviewing the project.
“It is not clear from the evidence that Northern Gateway will in fact be able to respond effectively to spills either from the pipeline itself, or from tankers transporting diluted bitumen,” Jones added.
Jones said the pipeline would cross over remote and extremely difficult terrain, with pristine rivers that could be devastated in the event of a spill. He said those considerations compelled the province to hold the pipeline company to a higher standard. “Trust me is not good enough in this case.”
Officials in British Columbia said Friday’s decision would not necessarily kill off the project for good. But the demand for more stringent protections poses additional challenges to Enbridge’s plans of building the pipeline.
The Canadian government has lobbied extensively in support of both projects and to prevent restricts on exports from the tar sands. In recent months, the government of Stephen Harper has deployed teams of lobbyists, and dispatched cabinet officials to US and European cities to make the case for tar sands development.
Prices for tar sands crude have been dropping in the absence of a reliable export route.
The Enbridge project, though not as ambitious as Keystone XL had been an important part of Harper’s contingent plan. Canadian government officials had argued that if Obama turned down Keystone XL, Canada would simply ship crude to China.
As currently envisaged, the $6bn (£4bn) Northern Gateway project would extend about 700 miles from the Alberta tar sands to a tanker port on the northern coast of British Columbia. It would have the capacity to ship more than 525,000 barrels of oil per day.
guardian.co.uk © Guardian News and Media 2013
State-owned PetroChina said it has agreed to take a 20 percent stake in a Canadian shale gas project owned by Royal Dutch Shell, China’s latest acquisition of North American natural resources.
PetroChina, the listed unit of China’s largest oil producer, has signed a deal to buy a share of land and assets in Groundbirch, British Columbia, according to a company statement provided to AFP on Friday.
Energy-hungry China has been investing heavily in Canadian and US reserves of the hard-to-reach gas trapped in sedimentary rock, as it seeks to reduce its reliance on dirty coal and oil imports.
The agreement comes ahead of an official visit to China by Canada’s Prime Minister Stephen Harper next week, which is expected to include discussions on potential Chinese oil purchases.
PetroChina declined to give the value of the shale gas deal but said it hoped to achieve “reasonable” returns.
“PetroChina hopes to gain experience in management and production in the exploration and development of unconventional gas through its cooperation with Shell,” the statement said.
PetroChina and the Anglo-Dutch company are already cooperating in shale gas exploration in southwest China. In 2010 the companies also took over Australia’s Arrow Energy, allowing them to develop methane gas resources.
Chinese companies are trying to gather much-needed knowledge and experience which can be used to develop the embryonic shale gas market in China, which has large reserves of the commodity.
Oil and gas giant Sinopec will invest $2.2 billion in Devon Energy, giving the firm a stake in exploring five US shale fields, Devon said last month.
Less than a year ago, Canadian energy giant Encana ended talks with PetroChina on a joint venture to develop another shale gas project.
Encana, North America’s top gas producer, said the two were unable to agree terms. PetroChina had proposed to invest $5.5 billion for a half stake in the project in Canada’s Cutbank Ridge fields of British Columbia and Alberta.
Beijing is investing billions of dollars to develop clean energy as it seeks to meet a target of generating 10 percent of its energy needs from natural gas and 15 percent from renewable sources by 2020.
But experts warn its lack of technical expertise in shale gas extraction and scarce water supplies pose challenges to developing the industry.
Shale gas extraction, developed in the United States and Canada, is more complicated and expensive than tapping conventional gas, and experts say it could take years before commercial production starts in China.
Shares of Hong Kong-listed PetroChina were down 1.38 pct to HK$11.46 on Friday morning.