Canada's B.C. bans transport of oil in pipelines built for LNG

Tue Jan 6, 2015 5:03pm EST
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VANCOUVER Jan 6 (Reuters) - British Columbia has banned the transport of oil on pipelines built specifically for proposed liquefied natural gas terminals, in an effort to quell fears that those lines could eventually be converted to carry oil sands crude to coastal markets.

The regulation covers six proposed pipelines, which would all carry natural gas destined for LNG export terminals planned for the Pacific Coast province. The government said the legislation could also be applied to future gas pipelines.

The ban is in response to concerns raised by Aboriginal leaders and environmental groups that pipelines built to serve British Columbia's nascent LNG industry could ultimately be used to transport crude oil or diluted bitumen.

The worries are not without basis. As part of its Energy East project, TransCanada Corp plans to convert hundreds of miles of existing gas pipeline between southeastern Alberta and Cornwall, Ontario to carry crude to refineries and export facilities in Quebec and New Brunswick.

"A regulation prohibiting the automatic conversion of natural gas pipelines for these purposes goes a long way to address the concerns we have heard," said John Rustad, British Columbia's Minister of Aboriginal Relations, in a statement.

The ban follows a pledge by the provincial government last year to ensure LNG pipelines would never be converted to carry oil. British Columbia is banking on an LNG boom to create thousands of new jobs and help bolster government coffers.

While Aboriginal groups in the province have so far been relatively supportive of the fledgling LNG industry, many remain fiercely opposed to the transport of crude oil and diluted bitumen through their traditional territories.

Numerous aboriginal communities have filed lawsuits in an effort to stop Enbridge Inc's Northern Gateway project in the province's north, while others are strategizing on legal options to stop a proposed expansion of Kinder Morgan Inc's Trans Mountain pipeline to a port near Vancouver. (Reporting by Julie Gordon; Editing by James Dalgleish)