CALGARY - Enbridge Inc. is proposing to spend up to $500 million to change the design of its Northern Gateway pipeline in a bid to address safety concerns of aboriginal groups and others.
The project, which had a $5.5-billion pricetag before Friday's announcement, has been the focus of intense debate among local communities, environmental groups and politicians.
Enbridge made its announcement on the same day the Alberta government — a staunch supporter of Northern Gateway — announced an independent pipeline safety review following three leaks in the province this year.
Critics of Northern Gateway, a paired system of pipelines between the oilsands in northern Alberta and a terminal near Kitimat, B.C., have said they're worried about the potential environmental risks it poses within the B.C. Interior and in coastal waters.
The Calgary-based company (TSX:ENB) said Friday it had listened to the feedback from public hearings and was prepared to address concerns with a combination of improved technology and monitoring.
"We had already planned to build a state-of-the-art project using the most advanced technology, safety measures and procedures in the industry," said Janet Holder, executive vice-president for western access.
"These initiatives announced today make what we believe is a very safe project even safer."
Among other things, Enbridge says its new design would increase the thickness of pipe walls at river crossings. Enbridge says it would also increase the number of inspections it does by at least 50 per cent and staff pumping stations in remote locations around the clock.
"And after years of consultation with stakeholders and after personally attending many of the regulatory hearings for Northern Gateway, it has become clear to me that we have to do everything we can to ensure confidence in the project," Holder told reporters on a conference call.
The executive director of B.C. Coastal First Nations, a group that represents aboriginals on the province's central and northern coasts, said the announcement does nothing to alleviate its major concern — oil tankers.
"These tankers are still going to be going through the fourth most dangerous body of water in the world, and they still have the potential to wipe out everything on the cost of British Columbia with absolutely no benefits going to anybody in B.C.," Art Sterritt said.
Holder indicated Enbridge's plans for the marine terminal and tankers will remain unchanged.
"We have already raised the bar, I would say, in that our standards for the terminal site and the safety of the tankers off the West Coast of British Columbia far exceeds any standards in Canada and actually exceeds any standards within the world," she said.
In Calgary, meanwhile, Alberta Energy Minister Ken Hughes announced the province would tap an independent third party to work with the Energy Resources Conservation Board in reviewing pipeline integrity, the safety of pipe that crosses waterways and response to spills.
"The scrutiny is at a level we have never seen before. I welcome that scrutiny and I believe our pipeline companies do so as well," Hughes told a news conference.
There have been three pipeline leaks in Alberta this year, including the leak of up to 475,000 litres of oil into the Red Deer River, a major drinking water source in central Alberta.
The company that owns that pipeline, Plains Midstream Canada, was responsible for a bigger spill in Northern Alberta more than a year ago.
Greenpeace released the pictures Friday of a pond adjacent to the Rainbow pipeline leak that was detected April 29, 2011 and spilled 4.5 million litres of oil onto the landscape.
The photos, which Greenpeace says were taken last week, appear to show large globs of oil fouling vegetation and an oily sheen on the water. Deer and wolf tracks were spotted around the bank of the fouled pond.
Samples of oil and water said to be from the site smelled sharply of oil and burned rubber. Greenpeace has yet to test the samples to determine what they contain.
Hughes held meetings with three industry groups — the Canadian Energy Pipeline Association, the Canadian Association of Petroleum Producers and the Small Explorers and Producers Association of Canada — before announcing the review.
Environmental groups and others outside of industry did not take part.
"I specifically wanted to meet with the regulator and with the industry — the people who are closest to the file who actually understand this in most intimate detail," said Hughes.
The scope of the review has not yet been determined. Hughes said it will likely take months, not years, to complete.
Sierra Club Prairie Director Chelsea Flook said it's good the Alberta government has acknowledged the problem, even if it was under "tremendous" pressure.
"Unfortunately it's not yet a review that will provide answers that Albertan communities can trust," she said in a release.
"The ERCB is part of Alberta's pipeline problem and should not be a partner leading the safety review process. Alberta’s communities and environment need answers from a completely independent review process."
Brenda Kenny, head of the pipeline association, told reporters incidents such as the ones in Alberta raise important questions.
"And our job is to do two things — firstly, be safe every day and secondly, ensure the public is confident that we are among the best in the world," she said.
"So this kind of review will bring that to light. I'm very proud of our members' track record overall. I think when you look at the statistics you can see we are very safe but we are continuously improving and anything we can learn from this is fantastic."
David Pryce, vice-president of operations at the Canadian Association of Petroleum Producers, said the review will be important for those inside Alberta and outside.
"Our markets are offshore or south of the border," he said.
"There's a lot of attention to the growth of our industry as a supplier of energy and I think those marketplaces are looking for assurances around the quality of our regulatory expertise."
The calls for the review grew louder earlier this month when the U.S. National Transportation Safety Board lambasted Enbridge for its handling of an oil spill in Michigan two years ago.
A report concluded Enbridge bungled its response when millions of litres of oil began to pour in and around the Kalamazoo River in July 2010, comparing the company's handling of the spill to the "Keystone Kops."
Enbridge has promised to apply the lessons from the Michigan spill to its other projects, including Northern Gateway.
The Michigan spill affected more than 50 kilometres of waterways and wetlands and about 320 people reported symptoms from crude oil exposure.
The cleanup has cost Enbridge about $800 million.
— with files from Keven Drews in Vancouver and Bob Weber in Edmonton
10. Oil And Gas Accounts For 4.8 Per Cent Of GDP
The oil and gas industries accounted for around $65 billion of economic activity in Canada annually in recent years, or slightly less than 5 per cent of GDP. Source: <a href="http://www.ceri.ca/docs/2010-10-05CERIOilandGasReport.pdf" target="_hplink">Canada Energy Research Institute</a>
9. Oil Exports Have Grown Tenfold Since 1980
Canada exported some 12,000 cubic metres of oil per day in 1980. By 2010, that number had grown to 112,000 cubic metres daily. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=9&SheetID=224" target="_hplink">Canadian Association of Petroleum Producers</a>
8. Refining Didn't Grow At All As Exports Boomed
Canada refined 300,000 cubic metres daily in 1980; in 2010, that number was slightly down, to 291,000, even though exports of oil had grown tenfold in that time. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=7&SheetID=104" target="_hplink">Canadian Association of Petroleum Producers</a>
7. 97 Per Cent Of Oil Exports Go To The U.S.
Despite talk by the federal government that it wants to open Asian markets to Canadian oil, the vast majority of exports still go to the United States -- 97 per cent as of 2009. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>
6. Canada Has World's 2nd-Largest Proven Oil Reserves
Canada's proven reserves of 175 billion barrels of oil -- the vast majority of it trapped in the oil sands -- is the second-largest oil stash in the world, after Saudi Arabia's 267 billion. Source: <a href="http://www.ogj.com/index.html" target="_hplink">Oil & Gas Journal</a>
5. Two-Thirds Of Oil Sands Bitumen Goes To U.S.
One-third of Canada's oil sands bitumen stays in the country, and is refined into gasoline, heating oil and diesel. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>
4. Alberta Is Two-Thirds Of The Industry
Despite its reputation as the undisputed centre of Canada's oil industry, Alberta accounts for only two-thirds of energy production. British Columbia and Saskatchewan are the second and third-largest producers. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>
3. Alberta Will Reap $1.2 Trillion From Oil Sands
Alberta' government <a href="http://www.huffingtonpost.ca/2012/03/27/alberta-oil-sands-royalties-ceri_n_1382640.html" target="_hplink">will reap $1.2 trillion in royalties from the oil sands over the next 35 years</a>, according to the Canadian Energy Research Institute.
2. Canadian Oil Consumption Has Stayed Flat
Thanks to improvements in energy efficiency, and a weakening of the country's manufacturing base, oil consumption in Canada has had virtually no net change in 30 years. Consumption went from 287,000 cubic metres daily in 1980 to 260,000 cubic metres daily in 2010. Source: Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=6&SheetID=99" target="_hplink">Canadian Association of Petroleum Producers</a>
1. 250,000 Jobs.. Plus Many More?
The National Energy Board says oil and gas employs 257,000 people in Canada, not including gas station employees. And the Canadian Association of Petroleum Producers says the oil sands alone <a href="http://www.capp.ca/aboutUs/mediaCentre/NewsReleases/Pages/OilsandsaCanadianjobcreator.aspx" target="_hplink">will grow from 75,000 jobs to 905,000 jobs by 2035</a> -- assuming, of course, the price of oil holds up.