May 26, 2010 / 9:35 PM / 7 years ago

Gulf spill a new factor in Canada pipeline fight

VANCOUVER (Reuters) - The oil spill fouling the Gulf of Mexico has handed a public relations weapon, and possibly some legal ammunition, to opponents of a plan to export crude oil by tanker from a port on Canada's rugged Pacific Coast.

Enbridge Inc is expected to ask regulators in the next few weeks to approve its Northern Gateway pipeline, which could move up to 525,000 barrels a day of oil produced from Canada's vast oil sands in northern Alberta to the port of Kitimat, British Columbia, by 2016.

Opponents of the C$5.5 billion ($5.1 billion) project aimed at exporting oil sands crude to world markets, especially Asia, say it creates the risk of a major spill in a sensitive coastal region that attracts tourists from around the world and is often referred to as the Great Bear Rainforest.

The accident off the Louisiana coast involved a drilling rig, not a tanker, but opponents have been quick to cite the BP Plc spill in their campaign.

"It just reinforces what we have been saying all along," said Art Sterritt of the Coastal First Nations, a coalition of aboriginal nations fighting Enbridge.

Opponents released a survey on Wednesday that they said showed that 80 percent of British Columbians oppose tanker traffic on the coast in the wake of the Gulf of Mexico incident.

Sterritt says the Gulf spill also gives Canadian aboriginal groups a new legal card to play in the court fight that is likely to erupt if regulators eventually approve Enbridge's plan.

Canada's courts have ruled that government and industry have a legal duty to consult aboriginal communities whose territorial rights might be infringed by developments such as a pipeline.

While the aboriginal groups do not have blanket veto power over projects they oppose, regulators and developers can be required to make changes or provide compensation to address their concerns.

The amount of consultation and accommodation that might be required depends, in part, on how much those territorial rights might be infringed, said Doug Harris, an expert on aboriginal law at the University of British Columbia in Vancouver.

"What the Gulf spill did was demonstrate that oil and gas development has the potential to catastrophically effect a claim right," Harris said. "Any judge is going to have the Gulf incident in the back of their mind."

Oil from the pipeline would be loaded onto ships at Kitimat, a small industrial community at the tip of the Douglas Channel, about 640 km (400 miles) northwest of Vancouver.

Enbridge says that fears of a disaster are unfounded, because Kitimat has been visited safely by more than 1,500 ships carrying petrochemical products over the past 25 years..

Modern tankers are built to withstand accidents such as the grounding of the Exxon Valdez, which helped prompt restrictions on offshore energy development on Canada's West Coast, the company and supporters say.

Enbridge said while the Gulf incident is of "tremendous concern" to the entire industry, it would have no impact on its pipeline project.

"The incident is not affecting our preparations to file our Northern Gateway regulatory application, which is in the process of being finalized," spokesman Alan Roth said in an email statement.

Enbridge hopes to win regulatory approval for the project by 2012, but a report this week by the Eurasia Group, a risk assessment think tank, warned that the Gulf of Mexico accident would lead to increased scrutiny by Canadian authorities.

"The review process could easily exceed three years, although industry pressure, supported in all likelihood by the Alberta government, on federal regulators to approve the pipeline will be intense," the Eurasia Group wrote.

Indeed, Kinder Morgan Energy Partners, which has proposed a competing pipeline project to ship Canadian crude from the oil sands to a Pacific Coast tanker terminal, said the BP incident could complicate efforts.

"It could have an impact. It could increase opposition to the project, but that's just something that will have to be dealt with," Kinder Morgan President Park Shaper told Reuters on Tuesday.

($1=$1.07 Canadian)

With additional reporting by Jeffrey Jones; editing by Peter Galloway and Rob Wilson

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