Chinese ownership in Gateway pipeline questioned at hearing
Sep 10, 2012, Edmonton Journal (Read article on originating site site)
EDMONTON – Chinese ownership in the proposed Northern Gateway pipeline is a “red herring” and should not be discussed at federal review panel hearings, argues Enbridge, the company proposing the $6-billion pipeline to take Alberta bitumen to the West Coast for shipment to China.
But Calgary lawyer Barry Robinson, acting for three environmental groups from British Columbia, pushed Enbridge at Saturday hearings in Edmonton on the extent of Chinese ownership — not known at this time — and whether it was possible that China might try to take controlling interest in the proposed pipeline.
Robinson noted that China already has purchased a stake in Alberta’s oilsands deposits. Also, Chinese state-owned companies own the refineries in China that would handle the Alberta bitumen.
“Have you ever considered the scenario that China might want to close the loop and take a run at commercial control of the pipeline?” said Robinson, in questions directed to Enbridge officials at the federal Joint Review Panel hearings.
Enbridge vice-president Paul Fisher replied emphatically: “Absolutely not.”
Fisher also stressed that the nationality of any of the companies involved is not relevant to the regulatory hearing. He said it is more appropriately a policy consideration for the federal or provincial governments.
The proposed pipeline would be built by a new company, Northern Gateway Pipelines, to be jointly owned by oilpatch giant Enbridge Inc. and 10 other partners, including Sinopec, a Chinese state-owned company. Other “funding partners” in the new company are French oil giant Total, Suncor, MEG, Cenovus and Nexen which is currently under purchase bid by CNOOC, a Chinese national oil company. Four other partners have not been publicly identified.
Enbridge aims to hold 50 per cent of the new company, said John Carruthers, president of Northern Gateway, though that share could drop below 50 per cent depending on the level of aboriginal ownership in the company. Enbridge will operate the pipeline, he added.
Robinson pressed the company with the contention that stated-owned companies do not always act “like rational free-market companies.” Rather they could act to pursue Chinese national policy and thereby distorting the market, said Robinson, who is acting for Forest Ethics Advocacy, Living Oceans Society and Raincoast Conservation Foundation.
But Roland Priddle, an economist for Enbridge, argued that the Chinese presence in the oilsands “is extremely small” even if CNOOC’s $15-billion Nexen acquisition goes ahead. The purchase would be China’s largest overseas acquisition if it is approved by the federal government and comes with reserves of 14.5 billion barrels.
Outside the hearing, Enbridge spokesman Paul Stanway dismissed questions about China as “fearmongering” and “a red herring.”
“Whoever owns this pipeline, it has to run it under Canadian regulations,” said Stanway.
In an interview later, Robinson said the public concern is that state-owned companies might not play by free market rules. If that happens, there might be downward pressure on the prices Chinese companies would pay for Alberta bitumen.
“State owned companies don’t always act as pure free-market players … If that happens, the economic benefits to Canada might change. Would that influence the price, for instance?”
Almost all of the estimated $312 billion in economic benefits from the proposed pipeline comes from the higher price for Alberta bitumen that Enbridge says will result from opening new markets in Asia.
Robinson also challenged Enbridge’s estimates of the cost of carbon reduction, suggesting the company significantly underestimates the cost of greenhouse gases in the project.
Enbridge studies peg the cost of reducing carbon emissions at $20 a tonne. The last national study put that cost at $50 a tonne. Alberta charges a levy of $15 a tonne on excess greenhouse gas emissions.
Enbridge said it is confident of its figures. The company also noted it has promised to conserve an acre of land for every acre disturbed along the pipeline route and is committed to plant a new tree for every one removed during construction.
Robinsons also asked the company why it did not include costs such as the additional cost of maintaining clean air and water, and the range of services such as new roads needed to meet demands of expanding oilsands production in Alberta.
Enbridge economist Bob Mansell from Calgary said those costs would apply to any economic expansion project and therefore are not directly tied to the proposed pipeline.
The only differences are the greenhouse gas emissions in construction and operation of the pipeline, he added.
The hearings, the final phase of the pipeline review, will resume in Edmonton Sept. 17 and continue until Sept. 28. After that they will move to Prince George, B.C. to deal with pipeline design and spill response and to Prince Rupert, B.C. to deal with marine environmental issues.
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