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UPDATE 1-Canada regulator urges approval of Northern Gateway pipeline

Thursday, 19 Dec 2013 | 4:56 PM ET

(Adds details on conditions, background)

CALGARY, Alberta, Dec 19 (Reuters) - Canadian regulators recommended on Thursday that the federal government approve Enbridge Inc's C$7.9 billion ($7.4 billion) Northern Gateway oil pipeline, provided the company meets a series of environmental, technical and socioeconomic conditions.

The controversial pipeline would have the capacity to ship 525,000 barrels of oil sands crude per day from Edmonton, Alberta, to a deepwater port at Kitimat, British Columbia, on the Pacific Coast. A second line would return 193,000 barrels per day of condensate, which is used to blend into tar-like oil sands bitumen so it can flow on pipelines.

"Based on a scientific and precautionary approach to this complex review, the panel found that the project, if built and operated in compliance with the conditions set out in its report, would be in the public interest," the panel said in a statement.

Canada's federal government now has 180 days to decide whether to accept the joint review panel's recommendations on the proposed 1,170-kilometer (725-mile) pipeline.

Should the Conservative government's cabinet approve the project, Northern Gateway will give the country its first major conduit for overseas oil sales.

With oil sands output expanding rapidly, Northern Gateway will enable producers to reach high-paying markets in Asia and California, sidestepping the over-supplied U.S. Midwest, where Canadian crudes sell at a steep discount to benchmark prices.

Environmental activists, the government of British Columbia and aboriginal communities along the line's proposed route have opposed the project and may launch court challenges.

Critics have raised concerns that land or marine oil spills would damage British Columbia's pristine landscapes and disrupt subsistence hunting and fishing.

The recommendation comes two years after the joint review panel of environmental and energy regulators began a series of hearings on the project throughout Alberta and British Columbia.

Though the panel approved the project, there are 209 conditions attached, including requirements that Enbridge develop a plan to protect marine mammals, and to prepare for, and model, potential oil spills.

($1=$1.07 Canadian)

(Reporting by Scott Haggett; Editing by Peter Galloway)

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