Imagine going into a bank to apply for pre-approval for a
mortgage. You don't have a steady income, so instead you present 10 cheques.
They're one-time-only payments from anonymous sources and they don't amount to much
of a down payment.
The bank would tell you to go home, get a steady job and
come back when you've got long-term employment. Until then, you're wasting
their time.
This is the way things work, right? Not in some cases. This
scenario is essentially what Enbridge has presented to a federal joint review
panel considering its application to build the Northern Gateway oilsands
pipeline from Alberta to Kitimat, on B.C.'s North Coast.
Only, in this case we're not just talking about wasting the
time of a mortgage officer — we're talking about all of the affected First
Nations and communities along the pipeline route.
You see, Enbridge is the first pipeline of its kind to be
considered by regulators before having long-term shipping agreements in place. Basically,
nobody has signed up to actually ship oil through the pipeline or receive it at
the other end.
What Enbridge does have is what it calls "funding participants" — 10 top-secret stakes in the pipeline for $10 million each. But according to a
new report released by the Pembina Institute on Thursday, that confidential
cash doesn't necessarily translate to oil in a pipeline.
The report exposes uncertain demand for the pipeline and
shines a spotlight on oil pipeline overcapacity in North America.
Not only is Enbridge lacking shipper commitments, but its
Northern Gateway application is also the first of its kind not to provide a
refinery-specific demand analysis. This is particularly peculiar given that
refineries need to be specially equipped to handle diluted bitumen, which
accounts for more than half of the oilsands products Enbridge says it will
transport in its pipeline.
Adding to doubt about whether there is sufficient demand for
the pipeline is Pembina's new analysis that shows that if both the Northern
Gateway and TransCanada Keystone XL pipelines were approved and in operation by
2016 (a core assumption of Enbridge's application), there would be 41 per cent
excess capacity — or two million extra barrels per day — in the export pipeline
system.
Even pipeline companies themselves consider 25 per cent
excess capacity optimal, which is why Enbridge has been taken to court previously
by Suncor and Imperial for building what they argue is too much pipeline
capacity to the United States.
In
the past two years, concerns about overcapacity contributed to decisions to
shelve plans for almost
1.5 million barrels per day in export pipelines. Meanwhile, Enbridge is
applying to load up 225 oil tankers each year, putting the pristine Great Bear
Rainforest at risk of a catastrophic oil spill — all while we have a North
American export pipeline system awash in excess capacity.
Not
making a lot of sense?
You're probably wondering why, considering all of this, Enbridge
is applying to build Northern Gateway and why the joint review panel, appointed
by the federal government, would even consider reviewing a project with such
unprecedented lack of proof of commercial demand.
Documents
we retrieved through Access to Information legislation help complete the
picture.
The correspondence reveals the Government of Canada is pursuing an
orchestrated strategy to undermine U.S. efforts to combat climate change by
doing things such as partnering with industry to fight U.S. efforts designed to
reduce greenhouse gas emissions from high-carbon fuels such
as oilsands — rather than ensuring Canadian oil companies improve their
performance to comply with the law. One diplomat was recorded describing their
job as ensuring the "oil keeps aflowing."
It just
so happens that another way to fight U.S. climate policy is to wield the threat
of exports to Asia. And that appears to be what the Northern Gateway pipeline
is all about — at the cost of British Columbians, 80 per cent of whom have
indicated they're opposed to opening B.C.'s northern waters to giant oil
tankers.
Enbridge
is not respecting the time and resources of regulators and British Columbians
with its incomplete application. If the panel continues to consider this
project despite the uncertainties and lack of information provided by Enbridge,
it will establish a new precedent that stands to erode the integrity of the
regulatory review process.
That
should not be allowed to happen. Instead, Enbridge should be sent back to the
drawing board.
Nathan Lemphers is a
policy analyst for the Pembina Institute, a national sustainable energy think
tank.
