China diplomat sees ‘mountain of difficulties’ around Northern Gateway
Enbridge Inc.’s push to the Pacific has a new doubter: China.
A top Chinese diplomat said the Calgary-based company’s proposed $7.9-billion Northern Gateway pipeline from Alberta to the west coast faces a “mountain of difficulties” and that he is not hopeful the contentious project will see the light of day.
“I want to be optimistic, but it is really hard,” Wang Xinping, the Chinese consul general in Calgary, told the Globe and Mail in an interview last week.
The comment is a rare expression of doubt in Gateway’s future from one of the project’s key supporters, as the energy industry seeks alternative ways to ship booming oil sands production to growth markets.
Chinese-controlled Nexen Energy ULC and Sinopec Corp. have already coughed up $10-million apiece to cover a portion of the project’s regulatory expenses. But years of delays have driven up costs and stoked uncertainty about the pipeline, designed to ship up to 525,000 barrels of oil sands crude a day to a new tanker port at Kitimat, B.C.
Enbridge chief executive officer Al Monaco this month declined to discuss the magnitude of the expected cost increase with analysts. He said the company was reviewing the revised estimate with oil-company shippers and that the new price tag would be “significantly higher” than earlier projections, due in part to a more detailed engineering analysis of the route.
The controversial project is touted by supporters as critical to boosting the price of Canadian oil. It was conditionally approved by the federal government last December, but Enbridge last month acknowledged the 1,178-kilometre pipeline is unlikely to start-up in 2018 as initially planned.
Meanwhile, the Enbridge executive in charge of the project is retiring. Janet Holder, executive vice-president of Western access, plans to retire from the company by year-end. Ms. Holder was featured in television commercials and served as a prominent voice in the company’s efforts to build support for Gateway in B.C., where opposition to the pipeline is fiercest.
A spokesman for Northern Gateway said Chinese customers view Canada as a stable source of energy supply and important trading partner.
“Northern Gateway’s funding partners recognize the importance of this project to Canada and to developing new markets in Asia,” Ivan Giesbrecht said in an email. “They continue to show solid support for the project.”
For his part, Mr. Wang credited Alberta’s new leadership for re-engaging the government of British Columbia on the file, singling out efforts by Alberta premier Jim Prentice as a positive step.
“But when you are considering those other parts, you cannot be really that optimistic,” he added, citing the “complexity” of consultations with aboriginals, legal challenges, and widespread opposition from environmental and local groups as significant stumbling blocks.
A Nexen spokeswoman declined comment on Gateway. Representatives with Sinopec in Calgary did not respond Monday to a request for comment.