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(Edmonton Journal; Sept. 4) - Enbridge will be grilled this week on its $6 billion Northern Gateway project as hearings enter the final phase where interveners can challenge the company's evidence. Enbridge will square off with unions and First Nations, as oilsands producers appear in a joint witness panel. Alberta's government will also appear for the "questioning" phase of the federal Joint Review Panel examining the economic benefits of the proposed pipeline to carry Alberta bitumen to Kitimat, B.C., for export to China.

Critics like the Alberta Federation of Labour will argue Canada's refining industry will shrink if the pipeline goes ahead and diverts bitumen feedstock to China. Opponents will also argue there is plenty of room in existing pipelines to handle growing bitumen exports. Enbridge, however, is "very confident" going into the hearings as it will finally have a chance to respond to critics, said spokesperson Ivan Giesbrecht.

"This is our first chance to speak; it's going to be a rigorous questioning and we welcome that," Giesbrecht said. "We really feel the project will benefit both provinces and Canada." Enbridge's project - twin pipelines, with one to carry 585,000 barrels of diluted bitumen west and another to carry the diluent east - faces growing resistance from First Nations, environmental groups, and the B.C. government that wants a larger slice of the economic benefits. The federal panel hearings will continue into November.

Oil and Gas News, Sept 6 2012

Compiled by: Larry Persily

Forecasts are too rosy; critics claim

Enbridge faced tough questions Wednesday on its predictions that more than $300 billion in economic benefits will flow from its proposed $6-billion pipeline to the West Coast to carry oilsands bitumen to Asia.

In its second day of questioning at the federal Joint Review Panel, the Alberta Federation of Labour challenged the company's forecasts of the economic benefits to Canada.

Federation lawyer Leanne Chahely asked economists why their forecasts say little about the impact of the pipeline on gasoline prices but tout major economic gains for oil producers and a net benefit for Canada.

Enbridge contends the proposed pipeline would allow oilsands producers to get higher prices - up to $20 more a barrel - for bitumen by opening up new markets in Asia.

The company also says other conventional oil producers in Western Canada would also get $2 to $3 more per barrel.

Enbridge panel economist Bob Mansell said the local price of gasoline will likely only increase by about 1.5 cents per litre as a result of the "price uplift" that comes from Gateway sending 585,000 barrels of bitumen a day to Asia. Mansell said it's "likely" Canadian refiners would absorb that small additional cost, because there's pressure to keep the price low to compete with gasoline imports.

Over a 35-year period, the higher prices for crude oil feedstock would cost refiners in Canada about $12 billion, Mansell said.

But that additional cost to the refining industry has been taken into account in the company's forecast, which says Canada will gain $312 billion net benefit over the 35-year forecast, said Mansell, a University of Calgary economics professor.

Even with the pipeline shipping out 585,000 barrels of bitumen a day, there will still be plenty of crude oil feedstock to supply Canadian refineries, the economists said.

AFL president Gil McGowan disputed the net benefit figures.

"They want Canadians to believe statements refiners will not pass the higher cost on to consumers .

"Does anyone really believe that? The net benefit to Canada is a house of cards. It is based on the assumption that all oil producers in Western Canada, not just those with bitumen in the pipeline, will get higher prices for their product."

There is also no guarantee that Chinese refiners will continue pay the "Asia premium" when bitumen starts flowing, he said. Saudi Arabia currently charges a higher price for crude it sells to China, called the Asian premium.

Edmonton Journal, Thursday, September 6, 2012

Byline: Sheila Pratt

Under fire from Alberta unions, Enbridge said Tuesday its proposed Northern Gateway pipeline will not cause job losses in the refining sector though it will be affected by higher prices for crude oil that will result if the pipeline goes ahead.

As the federal hearing on the project entered its final stages, the Alberta Federation of Labour questioned the company's panel of well known energy economists about the impact of exporting 585,000 barrels of bitumen a day to China rather than upgrading and refining it in Canada.

Calgary economist Bob Mansell, a consultant speaking for the company, said the proposed $6-billion pipeline could carry a range of refined petroleum products, along with diluted bitumen, if conditions changed to make refining and upgrading profitable here.

"But no shipper is asking for that," they want to move bitumen, Mansell said.

Refineries that turn the heavy oil or upgraded bitumen into gasoline, jet fuel and other products usually set up near major consumer markets, so "it is not realistic to think of Alberta as a base for large- scale refining.''

The federal joint review panel also heard that oil producers operating in Western Canada will benefit by $5 billion in 2019 if the pipeline goes ahead because they will get closer to world price for their bitumen. The current difference can be as much as $20 a barrel.

Edmonton Journal, Friday September 6 2012

Exactly how much will Enbridge Inc.'s Northern Gateway pipeline benefit Canada? In a report submitted to the National Energy Board, Enbridge says $38-billion.

But in a federal review panel hearing on the proposed pipeline on Thursday in Edmonton, Leanne Chahley, a lawyer with the Alberta Federation of Labour, inquired about Enbridge's math skills. The actual net benefits, listed year by year between 2018 and 2035, add up to $45-billion (U.S.), she said.

Enbridge consultant Neil Earnest said he would have to pull up a spreadsheet to double-check – something he didn't have immediately handy.

But according to the Globe's calculator, Ms. Chahley is correct. The numbers add up to $45-billion, or $44.2-billion (Canadian).

Still, Ms. Chahley points out, that's down some 10 per cent, on an annual basis, from a previous Enbridge estimate – although the numbers aren't exactly comparable, since the first estimate uses 2009 dollars, while the second uses 2012.

Why? Mr. Earnest says the assumptions are different, and the assumed benefit for Gateway has eased with the likelihood that both trains and other pipelines – including Keystone XL – will take away Canadian oil, lessening the need for Gateway.

Still, the fact that Enbridge was conservative with its numbers – accidentally listing $38-billion (Canadian) in benefits to Canada instead of $45-billion (U.S.) – is unlikely to be held against the company. It does, however, illustrate the striking complexity of attempting to pin down the impact of a major project like Gateway.

The Globe and Mail, Thurs Sept 6 2012
Byline: Nathan VanderKlippe

Enbridge's proposed Northern Gateway oil pipeline to Canada's Pacific Coast could cost thousands of high-paying refining jobs in Alberta, a labour group warned in Edmonton on Tuesday as the company faced its first day of grilling at public hearings into the contentious project.

Alberta Federation of Labour contends the $6-billion line, which would ship 525,000 barrels a day of oil-sands- derived crude to tankers bound for Asia, would mean 5% less refinery throughput at home and the loss of 8,000 jobs.

Enbridge and the oil industry say it would open up lucrative new markets for growing volumes of Canadian crude in regions overseas where the producers can escape the deep price discounts their oil now sees in the North American market.

"China is in the midst of a building boom in terms of refineries and refining capacity, so our fear is that if our policymakers allow this pipeline to be built we'll end up in a situation where our own homegrown refineries are no longer economic and they'll close down," federation president Gil McGowan said during a break in the hearings.

"We'll end up in a situation where we're sending our raw bitumen oil to China and then buying back the refined product."...

Job Market Monitor, Wednesday September 5, 2012

EDMONTON - Under fire from Alberta unions, Enbridge said Tuesday its proposed Northern Gateway pipeline will not cause job losses in the refining sector though it will be affected by higher prices for crude oil that will result if the pipeline goes ahead.

As the federal hearing on the project entered its final stages, the Alberta Federation of Labour questioned the company's panel of well known energy economists about the impact of exporting 585,000 barrels of bitumen a day to China rather than upgrading and refining it in Canada.

Calgary economist Bob Mansell, a consultant speaking for the company, said the proposed $6-billion pipeline could carry a range of refined petroleum products, along with diluted bitumen, if conditions changed to make refining and upgrading profitable here.

"But no shipper is asking for that," they want to move bitumen, Mansell said.

Refineries that turn the heavy oil or upgraded bitumen into gasoline, jet fuel and other products usually set up near major consumer markets, so "it is not realistic to think of Alberta as a base for large- scale refining.''

The federal joint review panel also heard that oil producers operating in Western Canada will benefit by $5 billion in 2019 if the pipeline goes ahead because they will get closer to world price for their bitumen. The current difference can be as much as $20 a barrel.

"Higher crude prices increase the revenue of Canadian crude producers but they also increase the feedstock cost to Canadian refiners" that use western crude, says an Enbridge report to the joint review panel submitted by Muse Consultants. "The adjustment for the effect on Canadian refiners acts to reduce the benefits by about 25 per cent," says the report.

Without the pipeline, oil companies producing bitumen risk losing up to $40 million a day — $14 billion a year — if they can't find way to ship their product, said Mansell, a University of Calgary economics professor.

But AFL president Gil McGowan later dismissed that figure as fearmongering.

A report for the Conference Board of Canada, also tabled at the hearing, noted that Canada's refining industry has lost thousands in the last decades and faces a troubled future.

Oilsands will be an expanding industry for the next 20 years and pipeline has to be expanded, said the panel of economists speaking for Enbridge.

"I"m not saying we should give up on the refining industry," said Mansell.

But it's hard to justify investing millions in refining when the price of bitumen rises to par with crude oil, he added.

About three thousand to four thousands construction jobs will be created and 1,150 permanent jobs if the pipeline is approved from Bruderheim, northeast of Edmonton, to Kitimat on the British Columbia Coast, the company says.

The Edmonton-area Alexander First Nation and the B.C. government are next to cross-examine the company at the hearings this week.

Calgary Herald, Wednesday September 5 2012

Byline: Sheila Spratt, Edmonton Journal

Reality Check: Few permanent jobs with the Northern Gateway pipeline

Alberta will see only 24 permanent jobs from the pipeline should it be approved, despite billions of dollars of bitumen exported from our province, according to evidence submitted by Enbridge today at the Northern Gateway Pipeline hearings.  

The evidence – which can be viewed here – was submitted by Enbridge after questioning by the Alberta Federation of Labour.

These are real, actual jobs associated with pipeline operations, not projected spinoffs from increased corporate revenues.

Enbridge forecasts that the pipeline will bring only 228 permanent jobs across the entire pipeline, with the vast majority of them – 183 jobs – in Kitimat, BC. Alberta will get a mere 24 permanent jobs from pipeline operations.

This is down from 26 permanent jobs for Alberta the company originally promised when they first submitted their regulatory filings for the proposed pipeline.

About the AFL Northern Gateway Reality Check Series

The Alberta Federation of Labour is a full intervener in the Northern Gateway pipeline.

The debate around the Northern Gateway pipeline is heated, and we hear governments and industry saying all kinds of things to justify locking Canada in to being a raw resource producer, but never move up the value chain with our natural resource wealth.

“The Northern Gateway pipeline hollows out our value-added industries, imposes higher oil prices on consumers, and rewrites the rules of Canada’s oil industry by reducing the amount of oil refined in Canada and shipping those jobs to China.”

- Gil McGowan, President, Alberta Federation of Labour

EDMONTON, Alberta (Reuters) - Enbridge Inc's proposed Northern Gateway oil pipeline to Canada's Pacific Coast could cost thousands of high-paying refining jobs in Alberta, a labor group warned on Tuesday as the company faced its first day of grilling at public hearings into the contentious project.

Alberta Federation of Labour contends the C$6 billion ($6.1 billion) line, which would ship 525,000 barrels a day of oil sands-derived crude to tankers bound for Asia, would mean 5 percent less refinery throughput at home and the loss of 8,000 jobs.

Enbridge and the oil industry say it would open up lucrative new markets for growing volumes of Canadian crude in regions overseas where the producers can escape the deep price discounts their oil now sees in the North American market.

"China is in the midst of a building boom in terms of refineries and refining capacity, so our fear is that if our policymakers allow this pipeline to be built we'll end up in a situation where our own homegrown refineries are no longer economic and they'll close down," federation President Gil McGowan said during a break in the hearings.

"We'll end up in a situation where we're sending our raw bitumen oil to China and then buying back the refined product."

Enbridge's evidence shows the project creating 907,067 direct and indirect jobs across the country through 2048.

The current phase of the hearing into the 1,177 km (731 mile) pipeline across the Rockies is examining its financial need and economic benefits to the industry and Canada. Enbridge's numbers show a benefit to the industry of at least C$24 billion through 2035.

It is the first time since proceedings began in January before a federal review panel that Enbridge has had the chance to make its own case for the development, a key part of a strategy to diversify oil markets and forge greater energy trade ties with China and other Asian countries.

The other portion is inviting more Asian investment into the country, as shown by CNOOC Ltd's $15.1 billion bid for Calgary-based Nexen Inc, an oil sands producer.

Until now, the company has watched as many aboriginal communities and environmental groups harshly criticized the proposal, saying it would bring unnecessary risks of oil spills, both along the rugged route and in coastal waters.

Enbridge's case has been undermined by oil spills on other parts of its system and a highly critical report by U.S. regulators into a 20,500 barrel leak in Michigan in 2010.

Enbridge Northern Gateway President John Carruthers acknowledged the opposition in his opening statement, saying that the company has taken note of public concerns.

He compared Northern Gateway pipeline to others major infrastructure projects that have brought large economic rewards to Canada, including the Canadian Pacific Railway, St. Lawrence Seaway and TransCanada pipeline.

He said it was possible to highlight its major economic benefits while noting Embridge was taking its environmental responsibilities seriously.

"It involves assessing, in the same objective fashion, and according to the same standards, the information or evidence that has been presented by those who are opposed to the development of our project," he told the panel. "And it culminates in approving the project under a framework of conditions that will promote reconciliation over division, and fact over rhetoric."

Alberta Federation of Labour was first to grill Enbridge's witness panel, made up of authors if its financial and economic reports, and its lawyer took most of the opening afternoon questioning them on the reliability of long-term forecasting.

The federation has been front and center calling for more plants to extract and refine bitumen oil from Alberta's vast oil sands in order to create jobs, rather than shipping raw materials overseas. The industry has said the market should decide if processing plants are required and that there is enough oil to go around. ($1= $0.99 Canadian)

Rueters Canada, Tuesday September 4, 2012

Byline: Jeffrey Jones