January 12, 2012 / 7:08 PM / 6 years ago

Analysis: Ottawa courts local anger with pipeline jibes

KITAMAAT VILLAGE, British Columbia (Reuters) -

Until Enbridge Inc proposed its Northern Gateway oil sands pipeline that would terminate near this picturesque coastal aboriginal community, the top topic of conversation was always basketball.

Teams compete against other native nations in the region and success on the court is a source of pride for the Haisla people in Kitamaat Village. In the community hall where hearings into the C$5.5 billion ($5.4 billion) project are taking place, trophies and banners trumpet numerous championship wins, most recently for the women's squad in 2011.

But that has changed with the pipeline and comments over the past week by Canadian Prime Minister Stephen Harper and his senior ministers blasting some opponents as foreign-funded radicals. It's become as emotional a subject in the community of 1,500 as hoops, said Leah Robinson, 34-year-old granddaughter of a hereditary chief and master carver.

"Basketball is, and always will be, just as important to our community as this whole Enbridge situation," Robinson said during a break in the proceedings.

"Everybody eats it, breathes it, sleeps it. We've grown up with it ... so when this (pipeline proposal) popped up, that's how important it has become to our community because of our environment and what we live off of."

The first two days of hearings on the pipeline heard testimony from Haisla elders, Metis and non-natives who live nearby. Most believe the project presents too many risks to traditional life, or fret that oil spills could damage wildlife and lands in the mountainous coastal area.

Several witnesses, recalling the 1989 Exxon Valdez oil spill disaster, said they don't want more than 200 oil tankers a year passing through the Douglas Channel to an export facility that would be built at Kitimat, about 150 miles south of the southern tip of Alaska.

Remarks by Harper and others demonizing some opponents and talking about the need for shorter review periods for energy projects, have only crystallized anger, Robinson said.

The result was a full-court press of locals, sometimes applauding anti-pipeline comments in shows of emotion that panel chairwoman Sheila Leggett quietly shushed down.

"Most definitely, it encouraged them to get more information so they can be more prepared to voice their strong opinion against it and not doing it in a hostile manner," Robinson said.

Janet Holder, the Enbridge vice-president in charge of the project, declined to comment on whether Ottawa's more aggressive stance helped or hurt her efforts. Enbridge runs Canada's biggest network of oil export pipelines.

"I can say we are here to listen, we have been listening and we will continue to listen," she said.

ASIAN MARKETS

The 730 mile pipeline would carry 525,000 barrels a day of crude from the oil sands to the British Columbia coast, where it would be loaded onto tankers and shipped to Asia. An adjacent line would carry condensate, a blending agent for the thick bitumen from the tar sands, back to Alberta.

More than 4,000 people have registered to speak during the proceedings. The process was extended late last year by about 12 months to the end of 2013 to accommodate everyone.

The quasijudicial joint review panel will hear submissions in several towns and cities, write a report on the environmental, socioeconomic and industrial impacts, submit it to the government for review, then issue its decision.

Canadian Natural Resources Minister Joe Oliver said in an open letter on Monday that "radical" environmental groups funded by foreign special interests were seeking to block an important trade initiative. He wants to streamline what he describes as a cumbersome review process for energy projects.

The government needs to show the importance of the project to the Canadian economy, but risks being seen as too much on the side of the backers, said Warren Mabee, director of the Institute for Energy and Environmental Policy at Queen's University in Kingston, Ontario.

"Anybody who has concerns or issues with it immediately feels like the government is not a neutral observer to this process," he said, noting that the review process should be a stage to debate oil sands development and pipelines, and show how environmental problems are being dealt with.

"The message that I've been sending out all along is it absolutely has to go forward in the way that it's supposed to. It needs to be transparent."

For Ottawa, the oil industry and the province of Alberta, the stakes of opening up new markets are huge, especially after Washington suspended a go-ahead decision on the $7 billion Keystone XL pipeline to Texas last November.

Canada's oil industry aims to double output from the oil sands, the world's third-largest crude deposit after Saudi Arabia's and Venezuela's, by 2020. It already fears that current pipeline capacity could be filled by 2015 or 2016.

HIGHER RETURNS

The major attraction of the pipeline is the prospect of higher returns than producers can get now in the glutted U.S. Midwest, the main export market, as the oil would be priced against costlier Brent-based international crudes.

"It's rhetoric, perhaps and a lot of people say it, but it will help out a lot of Canadians," said Tim Markle, spokesman for Alberta's energy department. "If we're able to get a better price for our oil that translates into more dollars and tax dollars or whatever, and that can be used for improving infrastructure, education and so on."

Alberta, Canada's main oil-producing province, has calculated losses to its economy of C$72 billion between 2017 and 2025 if the Northern Gateway pipeline does not proceed.

Meanwhile, Harper plans to visit China next month in a visit that is bound to push for new markets for Canadian crude [ID:nL1E8CBH80].

POLLUTION FEARS

But these initial hearings are not in oil-rich Alberta, where the government hits back at critics who decry the carbon intensity of oil sands development and its impact on land and water. They are in a part of British Columbia that has dealt with the effects of polluting industrial practices before.

Federal government charges that opponents are puppets of rich, anti-trade foreigners seeking to curb development irked opponents like Cheryl Brown, a nurse who testified on Wednesday as a member of a group called Douglas Channel Watch.

Brown said the allegations show that the Ottawa does not have confidence in the review process it ultimately oversees and raises questions over whether an approval might be a slam dunk.

"They're telling us that we don't have the right to speak, virtually. I'm annoyed, and dismayed," she told Reuters. "We were just discussing prior to this how disorganized we are and how we have to become more organized."

Peter King, a steamfitter who has lived in the area for 53 years, was heavily outnumbered in the Kitamaat Village recreation center as the lone supporter of the project to testify in the first two days of proceedings.

He said the oil will be transported from the West Coast, partly because of the billions of dollars in oil sands investment being made by Chinese and other Asian countries.

If safety measures are in place, it is better to ship it from the Kitimat area than to put even more stress on the highly populated Vancouver area to the south, he said.

($1=$1.02 Canadian)

Editing by Janet Guttsman and Frank McGurty

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