EDMONTON - Both sides in the Northern Gateway pipeline debate claimed support from former Alberta premier Peter Lougheed during some testy moments at hearings into the proposed 525,000-barrel-a-day pipeline that would take oilsands bitumen to the west coast of British Columbia.
On Monday, Rick Neufeld, lawyer for pipeline proponent Enbridge Inc., challenged the Alberta Federation of Labour position that shipping raw bitumen to Asia will hurt the Canadian refining industry and send value-added jobs down the pipeline.
AFL President Gil McGowan told the review panel the AFL position reflects the views of Lougheed who urged the province to upgrade bitumen in the province rather the shipping the raw product — and value-added jobs down the pipeline.
McGowan also argued that Lougheed called for a more moderate pace of development in the oilsands to avoid the high inflation of a boom economy that causes construction costs to escalate. Building the $6 billion pipeline at this time would add to that inflationary cycle, aggravate shortage of labour and thereby discourage construction of local upgraders, he said.
That prompted Enbridge lawyer Rick Neufeld to suggest that Lougheed came out in favour of the pipeline in his last interview before he died on Sept 13.
"In one of his last interviews, didn't he say the (Northern Gateway) pipeline was essential for Alberta," Neufeld asked McGowan.
McGowan replied that the AFL is not opposed to new pipelines themselves, just the export of raw bitumen to foreign refineries.
"We're not opposed to accessing new markets, you're just selling the wrong product," McGowan said.
He also told the panel that without Lougheed's intervention, the province would not have a petrochemical industry."
"Lougheed took an activist approach," to establish a petrochemical industry, requiring that ethane feedstock be stripped off natural gas being shipped out of province. "It would not have been here without government intervention."
Neufeld disagreed that Northern Gateway will discourage local refining and said it carries no restrictions on the availability of bitumen for upgrading and refining in Canada.
Neufeld noted that Kinder Morgan's Transmountain pipeline, built in the 1950s from Edmonton to Vancouver, initially carried crude oil only and now also carries refined product.
Neufeld also asked McGowan if — in the wake a speech by Mark Carney, Bank of Canada governor — the AFL had changed its view that the Northern Gateway will promote Dutch disease in the Canadian economy and hurt the manufacturing sector.
In a speech on Sept. 7, Carney said Canada's reliance on oil is "unambiguously good" for the country, called for more pipelines and dismissed fears about Dutch disease.
McGowan dismissed Carney's speech as "political spin that may have come from the PMO ."
Figures in Carney's speech show the higher oil prices are part of the explanation for the higher dollar that hurts manufacturing, said McGowan. "So his lips say no, but his figures say yes."
Later, Neufeld challenged the credentials of economist Robyn Allan who advised the AFL and whose economic analysis shows Canadians will pay with higher prices at the pumps.
Enbridge's analysis dismissed Allan's analysis. Northern Gateway will take 525,000 barrels a day of bitumen out of Western Canada, resulting in higher prices to western Canadian producers.
But the new pipeline would not cause an increase in prices for imported oil paid by eastern Canadian refineries, said Neufeld.
Meanwhile, Canada's Buildings Trades Council, a national organization of construction unions and the Teamsters, came out in favour of the Northern Gateway project.
Canadian construction workers in both Eastern and Western Canada will benefit from thousands of jobs generated in building the pipeline, say the releases.
"The pipeline will further cement our place as an oil producing country in an increasing energy hungry world" and will contribute to Canada's reputation "an energy super power," said the organization, adding that every one dollar spent in construction generates two dollars in the economy.
Later in the day, an AFL lawyer questioned five companies who intend to use the Gateway pipeline to ship bitumen — Cenovus, MEG, Nexen, Suncor and Total.
Calgary-based MEG corporation is currently building a 470,000 a day pipeline from Fort McMurray to Bruderheim near Edmonton. About 130,000 barrels a day of condensate will be needed to blend with the bitumen to get it to flow in the pipeline. That supply will "come into Canada from somewhere," they told the panel.
The review panel must submit its recommendation by December 2013. The federal government will make the final decision.
The Edmonton Journal, Mon Sept 24 2012
Byline: Sheila Pratt
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