British Columbia wants more benefits from new pipelines

Mon Jul 23, 2012 7:09pm EDT
 
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By Nicole Mordant

Vancouver (Reuters) - The government of British Columbia said on Monday it cannot support construction of Enbridge Inc's (ENB.TO: Quote) C$6 billion ($5.90 billion) Northern Gateway oil pipeline project unless the province receives more fiscal benefits from the project.

In its first official comment on new oil export pipelines planned by Enbridge and Kinder Morgan Energy Partners LP KMP.N, the government of Liberal Premier Christy Clark said the province will demand a bigger slice of the about C$81 billion in overall tax revenue Northern Gateway that is expected to generate in its first 30 years of operation.

Under the current system, British Columbia would receive 8.2 percent of total tax revenue from the line, an amount it considers unacceptable.

"Given that B.C. would shoulder 100 percent of the marine risk and a significant portion of the land-based risk, we do not feel the current approach to sharing these benefits is appropriate," Terry Lake, the province's environment minister, told reporters. "A fair share of benefits will be the focus of negotiations should there be any interest in pursuing a new heavy oil pipeline in British Columbia."

Canada's government and its oil producers are backing construction of new export pipelines to British Columbia's Pacific Coast to take oil sands crude to high-paying markets in Asia and elsewhere. Rising output has resulted in a glut of oil and lower prices in the U.S. Midwest, which now takes nearly all of Canada's exports

Along with a larger share of revenue, the Clark government laid out four other conditions that must be met before it can back any new line. Any proposal must successfully complete an environmental review; it must have top-notch marine spill prevention and response systems; it needs industry-best measures to prevent and mitigate spills on land; and the province's First Nations aboriginal communities must be consulted and must benefit from any new pipeline.

Pipelines that cross provincial borders are federally regulated and approved, but Lake said the province would be a crucial player in the process of getting the pipeline built as there will be "scores of provincial permits that will be necessary".

"We will have to give due consideration to each one in terms of the criteria that are around those permits, the necessary commitments that are made around those permits and, of course, the issue of being able to supply the power necessary through B.C. Hydro," he said.   Continued...