Most Gateway shipments to go to Asia, Enbridge now says (RTGAM)

NATHAN VANDERKLIPPE

Calgary — An official with Enbridge Inc. now says the company expects virtually all of the oil flowing through its controversial Northern Gateway pipeline project to be delivered to Asia.

Regulatory documents filed with the National Energy Board state that, on average, only one-third of the ocean tankers serving the $5.5-billion crude pipeline will travel to Asia. The remainder, the documents say, will sail to west coast ports - which would mean a substantial volume of Gateway crude would be destined for U.S. refiners. A Globe and Mail report on the contents of those documents sparked an outcry from critics, who said it undermines the rationale for the new pipeline, which is designed to diversify Canada’s energy export options by providing an Asian outlet.

But in an interview Tuesday morning, Vern Yu, Enbridge vice-president of business development, called the regulatory documents “overly cautious and conservative.”

“The U.S. west coast refinery market is an attractive market for Canadian crude exports. But based on our current consortium of partners and the commercial discussions we are having with them, we do not forecast any Northern Gateway crude at this time moving to the U.S. west coast,” he said.

“It’s the current expectation of our partners that the crude will be shipped via Northern Gateway to Asia.”

Of 10 partners that have signed up to provide $100-million to fund Gateway’s development, none are U.S. refiners, he said. Enbridge plans to announce initial agreements with oil shippers for “virtually 100 per cent” of Gateway’s capacity in the first or second quarter of this year, although they won’t be named, he said.

But Mr. Yu admitted the apparent discrepancy between Enbridge documents and its current statements will likely prompt questions as the company seeks regulatory approval for Northern Gateway. The project has been met with fierce opposition by British Columbia environmental and first nations group concerned about the risk of spills in waters important for salmon and traditional harvesting.

Northern Gateway will bring Alberta crude to tidewater at Kitimat, B.C. The Enbridge documents say tankers will then follow one of three routes through the network of channels and passages that connect Kitimat with the open Pacific. One northern route will carry the Asian tankers. Two southern routes will take west coast-bound ships. The regulatory documents say “approximately 33% of the tankers will take the [n]orthern [a]pproach.”

But Mr. Yu said the southern route is “technically more challenging than the northern route,” so planners erred on the side of caution and predicted greater traffic for that approach.

He says the company now expects close to 100 per cent of the tankers to take the northern route, although he acknowledged that “a lot can change between now and 2018 or 2019,” and said California could be a lucrative market.

“I know it looks inconsistent at this time,” he said. But Enbridge believes “it’s actually not inconsistent. ... I’m sure this will probably come up in the hearing and we’ll probably have to explain that.”

Yet to critics, the seeming discrepancy is cause for concern. Gerald Graham is a marine policy consultant who has combed thousands of pages in Enbridge regulatory documents for B.C. environmental and first nations interests. He came away unimpressed.

“For the amount of money and time and the number of people involved in producing that application, it’s pretty rinky-dink -- there’s so many holes, and there are contradictions,” he said.

“This is a document with legal significance. It’s before a semi-judicial panel that will look into it. And if [Enbridge] can’t get it to right to this phase, it does put into question their whole commitment to the project.”