Northern Gateway

Enbridge overcame two major obstacles in the past year for their Northern Gateway pipeline proposal that hopes to bring tar sands through British Columbia to load onto tankers for Asian markets. First, the company received a positive recommendation from the National Energy Board’s Joint Review Panel (JRP). Secondly, it received approval from the federal government in June 2014.

However, Enbridge’s Northern Gateway pipeline project faces substantial obstacles ahead, making it unlikely to ever be built. After approval from the JRP, five court cases were launched by First Nations and environmental groups. Following the federal government’s approval, another nine court cases were brought forward. These followed the Supreme Court of Canada’s Tsilhqot’in decision that recognized aboriginal title. This court ruling strengthens First Nations authority over land-use decisions and clearly puts Northern Gateway at risk given strength of opposition and title evidence brought forward throughout the JRP process.

Enbridge also faces several political risks. The government of British Columbia has set out five conditions before approving any heavy oil pipeline through the province. None of these conditions have been met. A federal election is expected in 2015. Many analysts predict that Northern Gateway will be an election issue in British Columbia and could put some of the 21 Conservative seats there at risk. At the same time, the federal NDP, Liberal and Green parties have all committed to stopping Northern Gateway if elected.

Lastly, one of Enbridge’s 209 conditions set out by the National Energy Board, that the company needs to report on regularly, is that of shipping agreements. It is rare for a pipeline company not to have over fifty percent of its proposed project committed before formally applying. Enbridge had none. Perhaps due to the risks and uncertainties around the project, the company’s first report posted in July indicates that they still have no transportation service agreements (TSAs).

This briefing is an update to our 2012 report ”Enbridge Northern Gateway Pipelines: A dead-end investment” and will highlight the risks outlined above. In the end, investors should be asking Enbridge how much they are willing to continue investing and putting at risk for a project that will never be built.  

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One expert said it's likely this [Tsilhqo’tin] decision will be

used by First Nations fighting the Enbridge pipeline in court."The pipeline is going through many,

many First Nations who have already declared that they do not want the Enbridge pipeline going through their territories, and this

decision strengthens their rights to preserve their traditional territories,"

said Antonia Mills, a First Nations studies professor at the University of

Northern B.C.(http://www.cbc.ca/news/politics/tsilhqot-in-first-nation-granted-b-c-title-claim-in-

supreme-court-ruling-1.2688332 )

A pipeline that will never be built

2014 Investor Report

by Nikki Skuce

A Bloomberg-Nanos survey of 500 people in the province between May 27 and 31 showed 47 per cent of all respondents polled — regardless of

voting preference — said they would be less likely to support local

Conservative candidates if the Harper government approved the pipeline.

Only 11 per cent said they would be more likely to support local

Conservatives if the project is approved."I think privately in the

confines of Conservative circles they're quite worried about what's happening because those ridings

could be in play," said pollster Nik Nanos in an interview with CBC.

"There will be a very close election and every Conservative riding

counts." (http://www.cbc.ca/m/touch/news/story/1

.2672204).

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On June 26, 2014 the Supreme Court of Canada (SCC) ruling in the Tsilhqo’tin Nation v. British Columbia recognized that the First Nation has inherent title and authority over their territories. This decision has huge implications for Enbridge given that the majority of First Nations along the proposed Northern Gateway pipeline and tanker project in BC have never signed treaties, and those who participated asserted their rights and title throughout the Joint Review Panel process.

With nine court challenges, it is almost inevitable that one or more of the many opposed First Nations along the proposed tanker or pipeline routes will achieve court recognition of their Aboriginal title. In the Tsilhqot’in decision, Canada’s highest court highlights the implications of this for Enbridge and other project proponents:

Once title is established, it may be necessary for the Crown to reassess prior conduct in light of the new reality in order to faithfully discharge its fiduciary duty to the title-holding group going forward.  For example, if the Crown begins a project without consent prior to Aboriginal title being established, it may be required to cancel the project upon establishment of the title if continuation of the project would be unjustifiably infringing. (SCC decision at paragraph 92, emphasis added) 

Over 130 First Nations have signed the “Save the Fraser Declaration” that bans tar sands from being transported over the Fraser River watershed. Coastal First Nations have declared a tanker ban in their traditional territories. These declarations in indigenous laws are clear indicators that many First Nations have not given consent for Enbridge’s project.

In addition, the Supreme Court decision made it clear that consultation must occur prior to the Crown taking action that could adversely impact Aboriginal rights and title. The federal government’s approval of the project in June while recognizing that “there’s more work to do” on consultation, and reliance on Enbridge to undertake consultation on its behalf, have left both vulnerable legally.

It’s no wonder then that nine court challenges exist from First Nations. The Haisla, Gitga’at and Gitxaala launched judicial reviews of the NEB’s recommendation for approval in January 2014. After the federal government approval in June, the same three nations launched further challenges along with the Heiltsuk and Kitasoo, Haida Nation and Nadleh Whut’en. This latter First Nation did not participate in the JRP, arguing that the government needed to consult prior to a review process getting underway. Additional cases may still be launched.

Legal cases will likely tie up Enbridge Northern Gateway for years, and the recent Tsilhqo’tin ruling (that built upon past cases won by First Nations along the proposed route, such as Delgamuukw and Haida), almost guarantee that Northern Gateway will never be built.

"Not gonna happen," Nicole Robinson, a mother and member of the Gitga'at

Nation, said firmly. "For my children and future grandchildren, I'm prepared to

die to stop it. Ask anyone here." (http://www.vancouverobserver.com/news/h

artley-bay-sunken-bc-ferry-fuels-distrust-enbridge-northern-gateway-proposal)

Northern Gateway President John Carruthers announced early in

September that the pipeline was unlikely to start up by 2018.

Although despite committing to more talks to gain First Nations approval,

many along the proposed pipeline and tanker route vehemently oppose

the project. Lawsuits could tie the project up in court for years.

(Http://www.thestar.com/business/economy/2014/09/04/northern_gateway_pipeline_unlikely_to_start_up_by_2018.html)

First Nations Legal Risk

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Political Risks

Liberal Party of Canada Leader Justin Trudeau said if he wins the honour of

serving as Prime Minister, “the Northern Gateway Pipeline will not

happen.”“I am disappointed with the decision

of the Harper government,” said Trudeau. “The Northern Gateway

Pipeline threatens not only the British Columbia coastal economy but the

jobs of thousands of people who live on the ocean.”

(http://globalnews.ca/news/1400502/watch-justin-trudeau-says-if-he-becomes-pm-

northern-gateway-pipeline-will-not-happen/)

Federal oppositionA federally legislated tanker ban for British Columbia’s inside coastal waters would effectively put an end to Enbridge’s Northern Gateway pipeline proposal. No crude oil tankers ply these northern waters and polling consistently shows more than two-thirds of British Columbians support such a ban. NDP MP Nathan Cullen from the Skeena-Bulkley Valley (who represents most of the proposed tanker route and large amounts of the pipeline) recently tabled a Private Members’ Bill that would ban crude oil supertankers from BC’s north coast. This is similar legislation that would be introduced by the NDP under any minority government, and has support from the federal Liberals and Green Party.

The Federal Liberal Party, under Prime Minister Pierre Trudeau, instilled a moratorium on oil tankers for Dixon Entrance, Hecate Strait and Queen Charlotte Sound in the early 1970s. Unfortunately this moratorium was never legislated. However, Liberal leader Justin Trudeau has also promised to stop Northern Gateway if elected.

Should either the NDP or Liberals win minority or majority governments and kill Northern Gateway, Enbridge is not guaranteed any financial compensation. Aside from a legislated tanker ban, another way out for these political parties are successful legal challenges. If First Nations court cases are successful, the cabinet approval essentially becomes null. Another potential is for one of these political parties to agree that the federal government’s duty to consult aboriginal peoples has been inadequate, which essentially equates to wins in the federal court given that the defense would be conceding to the First Nations’ challenges.

Northern Gateway is expected to be an election issue in British Columbia during the federal election in 2015. The majority of British Columbians across the political spectrum oppose the project. It’s no wonder that the Harper government waited until the deadline to issue a short press release at the end of the day to announce its approval of Enbridge’s controversial project and provided no one to publically defend the decision. The political fallout is uncertain, but British Columbian voters could decide whether or not the Conservatives get a majority or minority government, or lose entirely.

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BC Conditions B.C. is not even close to abandoning its official opposition to the project.“Our

position remains unchanged: It is no,” Environment Minister Ms. Polak said.

(http://www.theglobeandmail.com/news/british-columbia/bc-to-northern-gateway-

no/article19213866/)

The government of British Columbia rejected Enbridge’s proposal in their final arguments of the Joint Review Panel process. Given so many gaps in responses (from oil spill clean-up to geo-hazard studies), the province concluded that: “’trust me’ isn’t good enough”. Many of these gaps turned into the 209 conditions set out by the JRP, however, the province also set out its own five conditions before approving heavy oil pipelines. The first one, successfully completing the environmental review process, is yet to be met given the five legal challenges against the process and outcome that may re-open and potentially alter the decision.  

The province also demands world-leading marine and land oil spill response, both of which remain distant from being met. The province admits to being under-resourced and the federal government has cut various coast guards and safety measures on the coast. Past clean-up records for marine-based oil spills show 7 to 15 per cent success rates. Introduce over 225 oil supertankers per year to the Great Bear Rainforest, which has frequent 120-km/h winds, six-metre tides, severe storms and steep, rocky shorelines, and you have a recipe for disaster. British Columbians will never believe that an oil spill can be effectively cleaned up on our north coast, because it can’t.  

BC also requires that aboriginal and treaty rights are addressed. Most First Nations in BC are not under treaty and have recognized rights and title. Given the nine First Nations legal cases launched against the NEB and federal government to date, as mentioned earlier, it is unlikely that this condition will ever be met to allow for approval.

Lastly, BC has demanded a fair share of economic benefits. They admit that BC is taking the brunt of the risk while receiving little in return. No deal has yet been made with either the company, or Alberta or federal governments.

On top of these five hurdles, Enbridge has failed to secure social licence. Municipalities across the proposed route have passed resolutions against the project, including the industrial town of Kitimat at the proposed tanker terminal after a plebiscite was held in April 2014.

The NEB imposed 209 conditions for Enbridge to be able to build and operate their proposed pipelines. Conditions 20 and 21 relate to Transportation Service Agreements (TSAs) for both the oil and condensate pipelines. Enbridge must report to the NEB until it has “long-term, firm TSAs executed with shippers to demonstrate that it has secured sufficient commercial support for the project”. The company filed its first progress report on July 1, 2014 stating that: “Northern Gateway is not in a position to provide a date upon which it anticipates TSAs”.

Northern Gateway President John Carruthers announced in September 2014 that the pipeline would not likely start up until after 2018 under the guise of doing more First Nations consultation. If Northern Gateway had committed shippers and financing, it is hard to believe that they would be holding back.

Perhaps this also has to do with last year’s $270-billion oil deal signed between Russia and China. Given on-going hurdles for Northern Gateway and diversified energy supplies coming from Russia and Pakistan and elsewhere, Canada’s tar sands oil may no longer be a priority for China.

Canada’s opportunity to be a key and pivotal supplier to Asian markets has probably slipped away. And this opportunity grows ever more elusive as not only other producing countries sign onto long-term supply contracts but also, more importantly, dedicated pipelines, pump stations and storage facilities are built, thereby cementing alternative trade routes and transfer points.(http://www.albertaoilmagazine.com/2014/08/closing-gateway-asia/)

No Commitments

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Enbridge faces formidable odds to getting its twin pipelines built across British Columbia. First Nations strongly oppose Northern Gateway and have launched several legal challenges. On top of the recent Tsilhqo’tin Supreme Court decision, there is also a history of successful resistance against resource development projects in northwestern British Columbia, particularly to projects that threaten wild salmon and fail to adequately accommodate First Nations rights and title. Over the past few years, First Nations and communities have rallied together and stopped fish farms on the Skeena River, stopped coalbed methane development in Telkwa, and kicked Royal Dutch Shell out of the Sacred Headwaters. Mining companies have been denied permits or had projects put on hold because they failed to gain consent and accommodate First Nations. Many British Columbians have also promised to do whatever it takes to stop Northern Gateway.

Enbridge also faces uncertainty due to BC’s five conditions and a federal election next year. Both levels of government have tools to delay and effectively stop Northern Gateway from being constructed.

Enbridge also needs to address the 209 conditions from the National Energy Board and find financing for a project that surely exceeds the initial $6.5 billion projection. Northern Gateway has yet to secure any supply contracts, and the shifting landscape in Asia might mean that it never will.

Investors in Enbridge should question the determination of the company to continue throwing funds into a project that will never be built.

Conclusion

Roughly one-quarter of the proposed route goes through the traditional

territories of the Carrier Sekani. Tribal Chief Terry Teegee said Enbridge won’t

be allowed to do preliminary work there.

“If they ever come into our territories, our people will be there and they will be escorted out. … It is a decision by

our people.” (http://www.theglobeandmail.com/news/brit

ish-columbia/bc-to-northern-gateway-no/article19213866/)

Citations

1 Northern Gateway pipeline: First Nations outline constitutional challenges. By Mike Laanela, CBC News Posted: Jul 14, 2014 http://www.cbc.ca/news/canada/british-columbia/northern-

gateway-pipeline-first-nations-outline-constitutional-challenges-1.2706376

2 http://www.cbc.ca/news/politics/tsilhqot-in-first-nation-granted-b-c-title-claim-in-supreme-court-ruling-1.2688332

3 Northern Gateway Opponents Vow to Fight Pipeline’s Approval. Jason Fekete. June 17, 2014. Http://ottawacitizen.com/news/national/federal-government-approves-northern-gateway-

pipeline

4 Enbridge Northern Gateway Pipelines: A Dead-End Investment. Oct 2, 2012.http://forestethics.org/news/enbridge-investors-report-2012

5 Supreme Court of Canada decision: http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/14246/index.do

6 Tsilhqot’in Nation v. British Columbia: Implications for the Enbridge Tankers and Pipelines Project. 27 June, 2014 http://wcel.org/resources/environmental-law-alert/tsilhqotin-nation-v-

british-columbia-implications-enbridge-tankers

7 savethefraser.ca

8 Tsilhqot’in Nation v. British Columbia: Implications for the Enbridge Tankers and Pipelines Project. 27 June, 2014 http://wcel.org/resources/environmental-law-alert/tsilhqotin-nation-v-

british-columbia-implications-enbridge-tankers

9 http://www.cbc.ca/news/canada/british-columbia/northern-gateway-pipeline-first-nations-outline-constitutional-challenges-1.2706376

Http://www.thestar.com/business/economy/2014/09/04/northern_gateway_pipeline_unlikely_to_start_up_by_2018.html

10 NDP Bill Would Ban Tankers off North Coast. Sept 24, 2014. By Jeremy Nutall. Http://thetyee.ca/News/2014/09/24/NDP-Bill-North-Coast-Tankers/

11 Northern Gateway Opponents Vow to Fight Pipeline’s Approval. Jason Fekete. June 17, 2014. Http://ottawacitizen.com/news/national/federal-government-approves-northern-gateway-

pipeline

12 Liberals, NDP vow to kill Northern Gateway project venture into uncharted legal territory. June 18, 2014. By Peter O’Neill.

Http://www.vancouversun.com/Liberals+kill+Northern+Gateway+project+venture+into+uncharted+legal+territory/9951867/story.html

13 Ibid

14 Considerations: Report of the Joint Review Panel for the Enbridge Northern Gateway project. National Energy Board. Page 369.

15 Northern Gateway submission. Https://docs.neb-one.gc.ca/ll-eng/llisapi.dll/fetch/2000/customview.html?func=ll&objtype=141&objaction=browse

16 China, Russia and the waning demand for Canadian oil: After closing gigantic supply deals with Russia, does China still need Canadian production?By Michal C. Moore. August 6, 2014.

http://www.albertaoilmagazine.com/2014/08/closing-gateway-asia/

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