Touted gains from Gateway oil pipeline questioned

Tue Sep 18, 2012 5:15pm EDT
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - The financial gains Enbridge Inc (ENB.TO: Quote) forecasts will flow from its proposed Northern Gateway pipeline to Canada's West Coast are based on rosier oil production predictions than the company shares with its own investors and analysts, a lawyer for a native group opposed to the project said on Tuesday.

Hana Boye, attorney for the Haisla First Nation, whose lands encompass the end-point of the C$6 billion ($6.2 billion)pipeline's route, told a public hearing that Enbridge's calculation of benefits to the oil industry are based on the Canadian Association of Petroleum Producers' (CAPP) output forecast.

That study, prepared for Enbridge by Dallas-based Muse Stancil, projected a C$3.36 billion benefit to the Canadian oil sector in 2020, a year and a half after the planned startup.

However, Enbridge's in-house outlook lags that by about 500,000 barrels a day by 2020, Boye said, citing a company executive's presentation to investors in 2011. She asked Northern Gateway President John Carruthers to provide all of the assumptions used in that forecast.

"That creates a material difference in terms of the benefits affected by the supply," Boye said during a sometimes testy exchange at the proceedings before a federal Joint Review Panel in Edmonton, Alberta.

The current phase of the hearings into the contentious 1,177-km (731-mile) Northern Gateway pipeline across the Rockies are delving into financial aspects and economic benefits.

The Haisla are among several British Columbia native groups that oppose the 525,000 barrel a day project, which the industry hopes will open up new supply lines to Asia for oil sands-derived crude from Alberta.

A big part of the projected benefit is a higher price for all Western Canadian crude as a result of Northern Gateway volumes being priced against higher-value oil in Asian markets and not just discounted to North American supply, as is the case today.   Continued...