NEWS RELEASE · 14th May 2012
Enbridge Northern Gateway
I’m happy to be back in Toronto, particularly at this beautiful time of year. I lived here during my tenure as President of Enbridge Gas Distribution. I recognize more than a few faces in the audience and I’m grateful for the opportunity to address the Canadian Club today. Of course now I’m back in my hometown of Prince George, BC, where I’m heading up Enbridge’s Western Access program.
It is my pleasure to talk with you about what I believe is the most important energy infrastructure project for our nation in the 21st Century: Northern Gateway Pipelines.
In fact, let me remove a qualifier. Forget energy. I think Northern Gateway is Canada’s most important infrastructure project today, period.
120 years ago, when the Canadian Club was founded, Canada had just completed another project vital to the well-being of our country, the Canadian Pacific Railway.
Like Northern Gateway, the CPR looked west and created an important transportation corridor to connect markets and resources. In doing so it helped to build and strengthen a fledgling nation.
Had the Canadian Club had been founded just a few years earlier, I am confident that the leaders of the day would have stood at this podium and talked about the importance of that thin band of steel extending to the West Coast and helping to bind and protect confederation.
Likewise, I’m sure the creation of the St. Lawrence Seaway, a little more than 50 years ago, attracted the attention of the Canadian Club. The Seaway proved to be an economic engine for Canada in the mid-20th century. Since 1959 it has seen the transit of nearly $400 billion worth of cargo, connecting the interior of North America to the markets of the world.
Northern Gateway is as important to Canada as the CPR and the St. Lawrence Seaway. Its impact on our economy will be of similar magnitude and its benefits will reach down through several generations.
Today I’ll discuss why we need to move forward with this project as a nation. I’ll talk about why Torontonians should care about a pipeline whose closest point would lie nearly 3,000 km west of here. And I’ll talk about how we can build it safely, respectfully and sustainably.
Northern Gateway will fundamentally change the energy industry in Canada. It will catapult our world-class energy resources onto the global energy market and will immediately diversify our customer base, a critical step towards a stronger economy in uncertain times.
But this will only happen if, as a nation, we have the courage and conviction to step out on the world energy stage.
Canada has a choice to make. We can wistfully gaze across the Pacific at the growing Asian economies and wish there was some way for us to fuel their growth with our abundant energy resources.
Or we can act. We can create a Northern Gateway.
Let me provide a little background on Enbridge and on the project itself. Then I will give you the rationale for this ambitious undertaking.
First of all, Enbridge is a Canadian company. For example, we’ve been here in Toronto for more than 160 years and we employ about 2,100 people in the GTA region alone.
We operate the longest and most complex crude oil pipeline system in the world, safely and reliably delivering nearly 2.2 million barrels of oil every day to markets in Canada and the US. In fact, when you fill up your car here in Toronto, you are likely pumping fuel refined from crude oil Enbridge transported.
We are also the largest natural gas distributor in Canada, heating over 2 million homes. Our natural gas gathering, processing and transmission systems extend from Northern BC to the Gulf of Mexico and transport energy to consumers in nearly forty states and two provinces.
We own and operate a growing portfolio of renewable energy projects with a combined generating capacity of nearly 1,000 MW.
Every action we take adheres to our core values of Safety, Integrity and Respect and all of our relationships are based on that. Across North America, we deliver the energy people count on to live, work and prosper.
Northern Gateway is an extension of that commitment, built on the same core values that have made Enbridge a trusted company for decades.
It’s a dual pipeline extending about 1,200 km from northeast of Edmonton, AB to the established deep-water port at Kitimat, BC. The westbound pipeline will carry 525,000 bbl/day of petroleum from the Alberta oil sands to Canada’s west coast and the eastbound pipeline will carry 193,000 bbl/day of condensate back to Alberta where it will be used to dilute bitumen so that it can flow through the pipeline.
At Kitimat we will build a world-class marine terminal with two mooring berths for tankers and a total of 14 storage tanks.
I cannot overstate the importance of this maritime access. Today, Canada’s proven oil reserves – the third largest in the world – are landlocked. With Northern Gateway and the port of Kitimat, this resource can be sold virtually anywhere in the world.
The Case for Gateway
Canada is a trading nation. In fact, of all the G8 nations, Canada is the one whose economy is most dependent on trade.
And our energy trade is the cornerstone of Canada’s economy. In 2011 Canada’s single largest export was crude oil; we exported $67 billion worth of it.
However, nearly all of Canada’s crude oil exports, about 99 per cent, go to only one customer: the United States. US demand is dropping, in fact according to a TD Economics special report released earlier this month there has been a 30% net drop in their imports of oil and petroleum products since 2005 . Their domestic supply is growing and they do have a desire to be self-sufficient. Us finding another customer won’t hurt their feelings.
Our most valuable export commodity, and only one market. Does anyone want to defend that business model?
At the same time, the US has a wide range of oil suppliers to choose from – 65 countries in fact. The list includes such major petroleum exporters as Saudi Arabia, Venezuela, Mexico, Nigeria and Russia.
That’s a dangerous imbalance for Canada.
And we’re feeling the impact of our landlocked crude oil every day.
Every day that we’re not able to access tidewater is a day of lost opportunity on the world energy market.
When you hear that world oil is trading at a little over $100 per barrel, I want you to remember that’s not the price that Canada gets for its oil. Canada’s oil, because it is stuck in North America with no outlet to other markets, sells at a discount, up to $36 (as recently as March ). This discount is not only due to lack of market diversification but also as well as the bottlenecks in Oklahoma.
That’s tens of millions of dollars a day and billions of dollars a year in foregone revenue for all of Canada.
What Gateway Delivers
Northern Gateway will change that. At a single stroke, it will diversify Canada’s energy markets and significantly boost the power of our nation’s most important economic engine.
Here’s what Northern Gateway will deliver:
- Very conservatively, an immediate $2 to $3 uptick in the value of every barrel coming out of Western Canada. Some are suggesting now that number could be more like $8 to $10 for every barrel.
- A diversified market for our most valuable export, with access to the energy-hungry economies of the Pacific Rim.
- A $270 billion contribution to Canada’s GDP over 30 years. If we just do the straight arithmetic, this will be a $9 billion contribution per year for three decades. Just to give you a sense of scale, based on 2011 GDP numbers this is slightly more than the entire contribution of the Canada’s mining sector to our GDP ($8.6 billion in 2011) and nearly double what forestry and logging contribute. ($5.2 billion)
- Close to $1 billion in contracts, training, employment and equity for Aboriginal communities and businesses. (Including a 10 % equity stake in the project)
- $2.6 billion in local, provincial and federal government tax revenues.
- $4.3 billion in labour-related income.
- Approximately 1,150 long-term jobs throughout the Canadian economy and thousands of jobs during construction.
That’s a look at the impact across Canada. Now let’s look at the potential impact here in Ontario.
We’ll be buying our pipe in Canada, so there will be a tremendous impact on Ontario’s steel mills and manufacturing centres.
It’s a $5.5 billion project, so the Toronto–based financial and banking sector will be involved.
Northern Gateway, as I will mention later, has opposition due to its relationship with the oil sands. Here’s what the oil sands deliver to Ontario:
Over the next 25 years, the oil sands industry is expected to purchase $63 billion worth of goods and services from companies in Ontario.
Thousands of jobs. More than half of the employment related to the oil sands outside of Alberta is in Ontario and by 2035 seven per cent of all oil sands related jobs will be in this province.
According to the Canadian Energy Research Institute, Ontario has the most to gain of any province other than Alberta. In fact, CERI paints a remarkable picture of the impact Northern Gateway will have on the economy of Ontario:
- It will create more than 16,000 person years of employment in the province.
- It will generate more than $390 million in provincial tax receipts.
- It will generate $686 million in pay for Ontario workers
- And it will boost Ontario’s GDP by $1.2 billion.
And where are those jobs? From services to manufacturing, the oil sands bring benefits and jobs to Ontario.
Northern Gateway is good for Canada and it’s good for Ontario.
Despite all these local, provincial and national benefits, the Northern Gateway project is subject to considerable controversy. I know you have seen the headlines and concerns in print. (Protests just last week)
Much of the controversy arises from that fact that this energy megaproject will occur in a region where oil pipelines have not existed for decades, which naturally gives rise to concerns among local residents about local environment. We welcome the opportunity to engage in the community.
We also know that the project is a lightning rod for opposition because of its connection to Canada’s oil sands. Opponents in Canada and primarily abroad see stopping the pipeline as a way to stop oil sands development. The majority of opponents to the oil sands are not Canadian. And we have seen different types of opposition including, as media reports have suggested, millions and millions of dollars crossing the border to stop major Canadian development. As a country, we need to give serious thought to what is an appropriate balance – how do we increase transparency and fairness around processes that impact our country’s future?
But in all of this, we are eager to listen and engage on those with a direct interest in the Project. There are concerns from First Nations and Métis communities – some near the proposed right-of-way and others from different regions in Canada.
For Enbridge, the controversy may be a challenge, but it is certainly no surprise. As one of the world’s leading energy delivery companies, we know from long experience that it is not easy to build consensus around energy projects. When I was here in Toronto I experienced firsthand the controversial power generation project in Oakville.
And, of course, Gateway has attracted its fair share of celebrity opposition. We’ve got everyone from Robert Redford to Kevin Bacon. It’s amazing that people seem to believe that celebrities have more knowledge about the issue than the general public.
It is not easy whether we’re talking about a new gas-fired electricity generating station, a 2 km upgrade to an existing natural gas pipeline in a populated area, or a new 1,200 km oil pipeline that will stretch across provinces. That is simply the reality of today’s world and the reality of our operating environment.
Given the importance of energy infrastructure to Canada’s current and future prosperity, we believe that citizens across the country should get involved in the discussion on Northern Gateway. They need to weigh the pros and cons, and assess Enbridge’s approach to doing business, creating shared value in the community and being a good neighbour.
The key, of course, is that the discussion needs to be based in fact.
And the facts about the project appear to be capturing the public’s attention. Support is growing. But those in favour of the project need to speak up.
An Ipsos poll of 1000 BC residents released earlier this year shows that nearly 50 per cent of British Columbians are in favour of the project, about 32 per cent are opposed and about 20 per cent are still undecided.
The percentage of those in favour jumps to 55 per cent in Northern BC, where pipeline is proposed to run.
This is a far cry from the majority opposition that activists claim in BC. It shows that most British Columbians are open-minded and willing to listen.
Most importantly, the poll demonstrates the validity of a time-honoured rule known as the “ABC” of communications: awareness leads to buy-in, and buy-in leads to commitment.
The poll shows that the more people know the facts around Northern Gateway, the more likely they are to support it.
We’re also seeing that the public’s understanding of the importance of energy infrastructure development in Canada is growing. Earlier this month the Canadian Chamber of Commerce released the results of a poll conducted by Ipsos.
The results showed that, contrary to how the issue may be represented by opponents of energy projects, the Canadian public has a high level of support for energy infrastructure development.
For example, two-thirds of Canadians think it’s possible to protect the environment while increasing oil and gas production.
Nearly twice as many Canadians (57 % agree to 29 % disagree) that the benefits of oil sands developments outweigh the negatives.
And most importantly for Northern Gateway, 75 per cent of Canadians think it’s important that Canada does what is required to diversify our oil and gas markets away from our reliance on the United States.
Clearly, support for the project and for diversifying our oil markets is gaining traction across Canada.
There are two reasons why support is growing. One is that the business case for the project is compelling. As the global economy continues to struggle, diversifying our crude oil market with Northern Gateway helps Canada insulate itself from the worst of the economic headwinds.
The second reason behind growing support is Enbridge’s approach to the project and to its stakeholders, whether they are in favour or opposed. I am convinced this will be a decisive factor in the ultimate success of the initiative.
We work hard to be a good neighbour and to prove the quality of our character as a company each and every day.
We have been consulting with stakeholders, communities and First Nations along the proposed right of way for the past 10 years. We’ve held 2,500 public meetings, 123 open houses, 150 presentation and we’ve met with more than 17,000 people over that time frame. We have taken consultation to a whole new level.
Our approach is transparent and inclusive. We will talk to any stakeholder and respond to every concern. It’s not enough for us to answer the regulator’s questions. We must work to gain support in the community halls and schools, meeting rooms and kitchen tables all along the proposed route.
And we’re working to do just that. We know we need to earn the trust and confidence of our stakeholders and we will do that the same way we have for more than 60 years, by being approachable, open and responsive, the way a good neighbour should be.
We’re also going to great lengths to keep the pipeline and marine operations safe.
Here are a few examples among many:
- Only pre-screened, double-hulled tankers will be allowed in the Douglas Channel, and they will be tethered to custom super-tugboats and navigated by certified, experienced BC pilots.
- We will be adding navigational aids, radar and first response capacity to enhance the safety of the entire northwest coast.
- We continue to review and test new technology as it relates to pipeline integrity, earlier detection of pipeline faults, and for emergency response.
- We have also adjusted the proposed routing and waterway crossings along the pipeline right-of-way in response to community and stakeholder input.
The more people learn about Gateway and Enbridge, the more trust they will have in our commitment and ability to build and operate this vital link in Canada’s energy supply chain in a safe, reliable and sustainable way.
And don’t forget that pipelines have been shown to be the safest, most efficient way to transport oil, and oil tankers currently safely travel the Great Lakes and Canada’s east and west coasts.
The regulatory process
Currently we are in the midst of a regulatory review by the Joint Review Panel, which operates under the auspices of the National Energy Board and the Canadian Environmental Assessment Agency.
We submitted our regulatory application two years ago.
We’re now into our fifth month of community hearings, which are expected to continue until the end of the summer.
Formal hearings should begin in September and be completed by year-end. We hope to have a decision on Northern Gateway by the end of 2013.
As you can tell, this is a long process.
The federal government has recently announced that it is working to streamline the regulatory process. We welcome all initiatives that provide certainty to the review process of projects like Northern Gateway.
But the bottom line for us is our commitment for consultation for those with an interest in the Project.
First Nations along the proposed right-of-way have a profound interest in the project and are a key focus of the consultation process.
Just as I am proud of the technological and engineering expertise that we bring to the project I am also proud of the innovative and collaborative approach that we are bringing to our interactions with these First Nations.
Working closely with Aboriginal communities along the right-of-way, sharing the benefits of pipeline construction and finding opportunities for them to participate in the project over the long term is not only responsible and respectful, it just makes sense.
The relationships that we are forging with these communities are critical to our success. We know that First Nations are more than stakeholders. We work hard to engage with them, understand their interests and concerns and find out where we can work together for mutual benefit.
Our 10 per cent equity offering in the project to Aboriginal communities along the proposed route is just one example of this approach. We are also assisting with the financing of these equity stakes so that these communities can reap the long-term benefits from Northern Gateway.
That’s over and above the training and labour opportunities and the sourcing of goods and services before, during and after construction.
Before I wrap up today, let me leave you with a few thoughts.
First, the case for Northern Gateway is very strong. It’s hard to argue against the logic – the necessity – of diversifying the market for Canada’s most important export. Gateway is the link between the world’s third-largest petroleum reserves and the world’s fastest-growing markets for energy. It will have a transformative impact on Canada’s economy. Northern Gateway will bring thousands of jobs to Alberta, BC and the rest of Canada and help secure our future as an energy superpower.
Second, Enbridge is uniquely positioned to deliver on the promise of Northern Gateway. Our long-term success is based not only on our ability to safely build and operate energy infrastructure, but also on our ability to build respectful, stable and strong relationships with landowners, stakeholders and First Nations.
Third, the project faces significant opposition, but frankly the level of that opposition is often overstated by activists who use old public opinion data that is not even about the project. The number of people who support Northern Gateway is growing. The voices arguing against it will get louder over the next several months, but we will stay the course and invite Canadians to join in a civil and fact-based discussion of the pros and cons of the project.
Finally, Canada is well-equipped to make a prudent, thoughtful and balanced decision about Northern Gateway and about all our energy infrastructure development. Gateway is just one example of the smart, sustainable and strategic projects Canada can and should undertake to ensure that we get the best value for our natural resources in a competitive world market.
I hope my comments here today have helped build support for this game-changing project. At the very least, I hope I’ve encouraged you to join the conversation. And you’ll find a lively discussion on our website at www.northerngateway.ca
Canada is ready to enter the global energy market, and Northern Gateway is the key that unlocks the door. But it is all Canadians – and that includes everyone in this room today – who hold the key in their hands.
Thank you very much for your time today.
Comment by Anna-Marie Carstens on 18th May 2012
It is so sad that a "developed" country such as Canada has to rely on exporting its dirty, raw, unrefined and unprocessed resources to keep its economy ticking - at the expense of Kitimat and its
abundant, but vulnerable wildlife and sea life. Governments and big business will do what they will do, but those of us who love Kitimat have the responsibility to vehemently oppose this project. The damage that any accident, however small, will cause, is incomprehensible.
Ms Holder and the company she represents may honestly have the best intentions and all the knowledge in the world, but in the big scheme of things, they are powerless. If an earthquake or disastrous weather event hits this part of the world or if the experienced pilots and captains fail, they will call it "human error" or an "act of God" and withdraw into their mansions. Kitimatians will be left with a sick environment and worthless homes, mourning the beautiful place that was.
I wonder if even Ms. Holder deeply believes what she says. If she and the other Enbridge executives truly believe what they say, why don't they put their money where their mouths are and build some Douglas Channel seafront summer mansions to marvel at their wonderful project that will deliver Canada from its economic woes? I think we all know the answer to that.
The qualifications, feats and intelligence of engineers do not impress me. There is no way they can factor all the possible hazards into their calculations. (They can make some calculated guesses and decide that in the event of a disaster, it is OK to sacrifice Kitimat "for the greater good of Canadian economic posperity". That's all. Not very scientific, is it?)
Many of us saw footage of the Japanese engineer who expressed his sincere shame and embarrassment after the Fukushima nuclear disaster, standing in a wasteland of human misery and environmental disaster. He had to admit that they really knew nothing. Too little, too late, I would say. I do NOT believe that the Enbridge project can ever be 100% safe, despite all their so called safeguards. I think they will agree. That is why this pipeline should NOT be built. It will bring NO benefits to the people of Kitimat, only disadvantages.
I am sure this town can attract numerous projects that will actually create jobs for Kitimatians without posing immeasurable risk to this beautiful place we call home.