December 2, 2011 / 10:00 PM / in 6 years

Enbridge sees native support for Gateway pipeline

TORONTO (Reuters) - Enbridge Inc expects to win support for its C$5.5 billion ($5.4 billion) Northern Gateway oil pipeline from a majority of native communities along the proposed route based on current negotiations, an executive said on Friday.

The company has signed deals with some aboriginal groups for an overall 10 percent equity stake in the project, which would carry oil sands-derived crude to the West Coast from Alberta, Enbridge Vice-President Janet Holder said during a conference call to discuss one agreement.

But she declined to say how many deals it has in hand, citing confidentiality agreements.

“Based upon current negotiations, we believe we have majority support from First Nations along the right-of-way,” Holder said during a conference call with media to discuss one chief’s decision to support the project, aimed at opening up Asian markets for Canadian oil producers.

The developments came one day after more than 60 aboriginal communities said they were uniting to oppose oil pipelines across the Pacific province of British Columbia as well as increased tanker traffic in coastal waters, citing fears of oil spills.

Also on Friday, Natural Resources Minister Joe Oliver told Reuters he believed deals could be reached with native Canadians that would allow a pipeline to the coast, but conceded it would not be easy.

The industry is banking on a new pipeline to the coast to move crude produced in the vast Alberta tar sands markets in Asia as a way to lessen its dependence on the United States, which is now virtually its only export customer.

Regulatory hearings into Northern Gateway are slated to start in January.

Elmer Derrick, a hereditary chief of the Gitxsan First Nation, broke ranks by making his support public on Friday. However, the proposed route does not cross Gitxsan territory. In addition, elected officials had not been party to the decision, he said.

The community, which has suffered deteriorating social conditions as its timber industry dried up, is looking forward to C$7 million that it will get from returns from its equity stake over the next several years, Derrick said.

“Over time, we have established a relationship of trust with Enbridge, we have examined and assessed this project, and we believe it can be built and operated safely,” he said.

Derrick said that Thursday’s announcement by the pipeline’s opposition did not play a role in his decision to go public.

The pipeline would carry 525,000 barrels of crude a day to the port of Kitimat, British Columbia, where it would be loaded onto supertankers and shipped to Pacific Rim markets.

Ottawa and the oil industry intensified efforts to open up a route to Asia after Washington delayed its go-ahead decision for the Keystone XL pipeline from Alberta to Texas.

Editing by Peter Galloway and Rob Wilson

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