NEWS RELEASE · 16th December 2010
A report released by the Pembina Institute today reveals gaping holes in Enbridge's application to build the Northern Gateway oilsands pipeline from Alberta to B.C.'s North Coast.
The report raises questions about the actual need for Northern Gateway given the uncertain demand for the pipeline and it shines a spotlight on oil pipeline overcapacity in North America. It also points out several significant information gaps in Enbridge's application to the federal government, which is currently being considered by a Joint Review Panel. Enbridge's application is the first of its kind to have no shipper commitments and no refinery-specific information.
"The lack of information creates considerable uncertainty over whether the Enbridge Northern Gateway pipeline is actually needed and whether in fact it is likely to be built — even if approved," said Nathan Lemphers, the report's author and a policy analyst for the Pembina Institute.
"If the Joint Review Panel proceeds with considering this project despite the uncertainties and lack of information provided by Enbridge, it will establish a new precedent that stands to erode the integrity and accountability of the regulatory review process," Lemphers added.
One of the report's key findings is that if both the Northern Gateway and TransCanada's Keystone XL pipelines are approved and in operation (a core assumption of the Northern Gateway application), by 2016 there would be 41% excess capacity — or two million barrels per day — in the export pipeline system.
"Enbridge's Northern Gateway pipeline would take 525,000 barrels per day of oilsands to the West Coast of British Columbia by 2016, adding additional capacity to an export pipeline system already awash in capacity," Lemphers said. "There will be significant excess export pipeline capacity for the next 15 years given current oilsands production estimates."
Compounding concerns about pipeline overcapacity is the fact Enbridge has yet to secure and disclose long-term shipper commitments. It is unprecedented for an export pipeline that intends to use shipper commitments to go through a regulatory review without any proven commercial support.
Enbridge's application also fails to provide a refinery-specific demand analysis, as conventionally provided in export pipeline applications. Potential refinery demand in various export markets has not been correlated with specific oilsands products (diluted bitumen and synthetic crude oil). Because refineries need to be specially equipped to handle bitumen, this lack of information undermines confidence in Enbridge's assertion that there is sufficient demand.
The report concludes with one recommendation: the Joint Review Panel should not convene public hearings until Enbridge has filled information gaps and addressed the uncertainties present in its current application.
"Enbridge is not respecting the time and resources of regulators and local communities with this application. The public and government decision-makers require enough information to make a reasoned and informed decision on the pipeline," Lemphers said. "The onus is on Enbridge to address these gaps, make a solid business case and prove that its project is needed and in the public interest of Canadians."