ALF V1

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

EDMONTON - Comments made by the late Peter Lougheed hung over public hearings Monday about a pipeline that would ship bitumen from Alberta's oilsands to Asian markets.

Both sides in the debate tried to claim the support of the former Alberta premier who died Sept. 13.

Rick Neufeld, lawyer for pipeline proponent Enbridge (TSX:ENB), suggested Lougheed backed the line's construction.

"In one of his last interviews, didn't he say the (Northern Gateway) pipeline was essential for Alberta?" he asked while cross-examining Gil McGowan, president of the Alberta Federation of Labour.

In response, McGowan suggested Lougheed was sympathetic to the federation's concerns that too many oilsands projects were exporting raw bitumen and robbing Albertans of some of the benefits they would reap from upgrading it in the province.

"Lougheed took an activist approach to ensure we had a value-added industry," McGowan told the National Energy Board. "It wouldn't have been here without government policy and intervention."

The federation's previous testimony that the $6-billion project would make it harder to create upgrading and refining jobs in Alberta, as well as increase fuel prices throughout Canada, came under repeated attack in Monday's cross-examination.

Neufeld pointed out there is no shortage of bitumen currently available for anyone interesting in building a refinery. Nor has Calgary-based Enbridge ever said it would restrict access to bitumen.

He disputed the notion that pipelines encourage the export of raw natural resources. He noted that the Transmountain pipeline originally built to transport crude now moves both oil and refined products.

McGowan responded that the labour group believes projects such as Northern Gateway help price Alberta out of the market for new industrial development. He said the pipeline would only help speed oilsands development, creating demands for labour and materials that drive up their cost.

Neufeld also grilled federation adviser Robyn Allan over her testimony that the 550,000-barrel-a-day pipeline would drive up fuel costs in the rest of Canada.

"So if Canadian producers get higher netbacks in Edmonton, refineries will have to pay more in New Brunswick?" he asked.

Allan responded that oil shipped to Asia would no longer be available to North Americans, which will eventually raise its price.

"When you take oil out of North America and take it to Asia the price increase is going to affect all markets in the long run," she said.

Enbridge analysts have argued that the price of oil is set globally and the Gateway pipeline wouldn't change the price of the Venezuelan, European and Middle Eastern oil on which refineries in Central Canada rely.

In afternoon testimony, federation lawyer Leanne Chahley revisited potential Chinese ownership shares in the pipeline.

Cross-examining a panel of energy producers who hope to ship on Gateway, Chahley pointed out that one of them — Nexen — is being bought out by the Chinese National Offshore Oil Corp. Nexen holds one of 10 shares that give it an option for a five per cent ownership stake.

MEG Energy — owner of another of the ownership options — is about 15 per cent owned by the Chinese corporation.

Chahley also pointed out that Total E and P Canada, another hopeful Gateway shipper, is involved with two developments that include some level of Chinese investment.

The Canadian Press online edition, Monday Sept 24 2012
Byline: Bob Weber

Hearings dealing with the Northern Gateway Pipeline continued in Edmonton, Saturday, and for the first time backers of the project were given the chance to cross examine those opposing it.

The pipeline would run nearly 1,200 kilometres from Bruderheim to Kitimat, on the BC coast. The project would allow bitumen to be sold to Asian markets.

Over the past few weeks, groups opposed to the pipeline have been voicing their concerns to an independent joint review panel. Among them, the Alberta Federation of Labour, which contends the project would move jobs out of the province.

"Our concern is that once it's built, it will become a bitumen superhighway, taking not only raw bitumen from the oil sands out of the province to places like China and the United States, but along with that bitumen we're afraid that it's also going to transport literally tens of thousands of jobs in upgrading and refining," said Gil McGowan, President of the Alberta Federation of Labour.

"The project doesn't preclude refining. We will be able to move synthetic or diluted bitumen, or more conventional oil, so there's nothing to prevent refining from happening. Certainly the very value is in accessing large markets and if refining proves profitable or economic at some point, we can certainly move those products as well," explained John Carruthers, President of Enbridge Northern Gateway Pipelines.

The independent panel is set to make its decision on whether the pipeline should go ahead by December 2013. While the panel's input will carry weight, the final say goes to the Federal Cabinet. It's decision is expected in the summer of 2014.

Global Edmonton, Sat Sept 22 2012

The benefits to the oil industry of Enbridge Inc.'s proposed Northern Gateway pipeline may be exaggerated and its costs to the economy and environment underestimated, hearings into the project heard Tuesday.

The $6-billion pipeline has been touted as a way to link burgeoning production from Alberta's oilsands to growing markets in Asia, which would allow Canadian producers to improve profits by reaping higher prices for crude overseas.

But a lawyer for the Haisla First Nation, which claims much of the land the pipeline would travel though, said projections of nearly $1.5 billion a year in increased revenue by 2018 are inflated.

Hana Boye said the estimate Enbridge (TSX:ENB) is presenting at the National Energy Board hearings was developed with figures from the Canadian Association of Petroleum Producers which suggest oil supply in Western Canada will grow by 6.5 per cent a year between 2011 and 2020.

The proposed route for Enbridge's Northern Gateway Pipeline is from just north of Edmonton Alberta to Kitimat on the West Coast of B.C. EnbridgeThe proposed route for Enbridge's Northern Gateway Pipeline is from just north of Edmonton Alberta to Kitimat on the West Coast of B.C. Enbridge

That's different than what Enbridge is telling its own investors and shareholders, said Boye. The company's own estimate is 4.4 per cent growth — a difference of 500,000 barrels a day by 2020 that leads to a corresponding drop in revenues earned by producers.

"Have you given a different supply forecast to your shareholders than that provided to the panel?" Boye asked Enbridge's Gateway manager John Carruthers on Tuesday.

Carruthers acknowledged that different figures have been used at different times. Estimates can vary depending on assumptions of what the mix of varying crudes would be, he said.

"There would be times when we would see differences."

But the variances aren't big enough to change the project's economics, Carruthers said.

"The minor changes over time don't change the project need."

Boye added that the project could discourage the upgrading of oilsands bitumen in Alberta and that its cost to the environment hasn't been fully evaluated.

She pressed Enbridge over the use of diluent — lightweight solvents mixed with bitumen or other heavy crudes to make them flow through a pipe. Although the mix varies, roughly one-third of what would flow through the Gateway line would be diluent. The Gateway project includes a second pipeline that would import diluent from the B.C. coast back to Alberta.

Boye suggested the cost of that diluent has not been factored into calculations of producer benefit.

Ignoring the cost of diluent exaggerates the case for shipping raw bitumen outside Alberta for upgrading or refining, said Robyn Allan, an analyst for the Alberta Federation of Labour, who is advising the Haisla.

"There is no economic analysis ... that's been supplied to the hearings (of the impact) to the Canadian economy when we import condensate instead of upgrading in Alberta," she said outside the hearing.

"Importing condensate instead of upgrading (bitumen) is hollowing out the sector."

Claims analysis ignored side effects

Boye also questioned environmental economist Mark Anielski about his dollar-value calculation of the project's environmental impact. She pointed out that his analysis only included the 50-metre pipeline right of way and ignored possible effects outside that corridor.

Anielski responded those effects could exist, but there's no credible method of putting a monetary value on them.

"This kind of information is not available," he said. "To speculate would be unprofessional of me."

Anielski also acknowledged his report didn't put a value on a wide array of ecological effects from forests that would be disturbed by the pipeline — everything from erosion control to genetic diversity to pollination.

Enbridge has promised to plant a tree for every one cut down for the pipeline right-of-way, he said. The company is also working with the Nature Conservancy to protect land that would offset areas disturbed by the project.

The hearings are expected to continue in Edmonton throughout the week.

The Canadian Press, Tuesday Sept 18 2012

The benefits to the oil industry of Enbridge Inc.'s proposed Northern Gateway pipeline may be exaggerated and its costs to the economy and environment underestimated, hearings into the project heard Tuesday.

The $6-billion pipeline has been touted as a way to link burgeoning production from Alberta's oilsands to growing markets in Asia, which would allow Canadian producers to improve profits by reaping higher prices for crude overseas.

But a lawyer for the Haisla First Nation, which claims much of the land the pipeline would travel though, said projections of nearly $1.5 billion a year in increased revenue by 2018 are inflated.

Hana Boye said the estimate Enbridge (TSX:ENB) is presenting at the National Energy Board hearings was developed with figures from the Canadian Association of Petroleum Producers which suggest oil supply in Western Canada will grow by 6.5 per cent a year between 2011 and 2020.

The proposed route for Enbridge's Northern Gateway Pipeline is from just north of Edmonton Alberta to Kitimat on the West Coast of B.C. EnbridgeThe proposed route for Enbridge's Northern Gateway Pipeline is from just north of Edmonton Alberta to Kitimat on the West Coast of B.C. Enbridge

That's different than what Enbridge is telling its own investors and shareholders, said Boye. The company's own estimate is 4.4 per cent growth — a difference of 500,000 barrels a day by 2020 that leads to a corresponding drop in revenues earned by producers.

"Have you given a different supply forecast to your shareholders than that provided to the panel?" Boye asked Enbridge's Gateway manager John Carruthers on Tuesday.

Carruthers acknowledged that different figures have been used at different times. Estimates can vary depending on assumptions of what the mix of varying crudes would be, he said.

"There would be times when we would see differences."

But the variances aren't big enough to change the project's economics, Carruthers said.

"The minor changes over time don't change the project need."

Boye added that the project could discourage the upgrading of oilsands bitumen in Alberta and that its cost to the environment hasn't been fully evaluated.

She pressed Enbridge over the use of diluent — lightweight solvents mixed with bitumen or other heavy crudes to make them flow through a pipe. Although the mix varies, roughly one-third of what would flow through the Gateway line would be diluent. The Gateway project includes a second pipeline that would import diluent from the B.C. coast back to Alberta.

Boye suggested the cost of that diluent has not been factored into calculations of producer benefit.

Ignoring the cost of diluent exaggerates the case for shipping raw bitumen outside Alberta for upgrading or refining, said Robyn Allan, an analyst for the Alberta Federation of Labour, who is advising the Haisla.

"There is no economic analysis ... that's been supplied to the hearings (of the impact) to the Canadian economy when we import condensate instead of upgrading in Alberta," she said outside the hearing.

"Importing condensate instead of upgrading (bitumen) is hollowing out the sector."

Claims analysis ignored side effects

Boye also questioned environmental economist Mark Anielski about his dollar-value calculation of the project's environmental impact. She pointed out that his analysis only included the 50-metre pipeline right of way and ignored possible effects outside that corridor.

Anielski responded those effects could exist, but there's no credible method of putting a monetary value on them.

"This kind of information is not available," he said. "To speculate would be unprofessional of me."

Anielski also acknowledged his report didn't put a value on a wide array of ecological effects from forests that would be disturbed by the pipeline — everything from erosion control to genetic diversity to pollination.

Enbridge has promised to plant a tree for every one cut down for the pipeline right-of-way, he said. The company is also working with the Nature Conservancy to protect land that would offset areas disturbed by the project.

The hearings are expected to continue in Edmonton throughout the week.

The Canadian Press, Tues Sept 18 2012

Listen to the first segment of Part 3 of CBC's "As It Happens" for Tuesday, September 4th titled "Northern Gateway Hearings. The Alberta Federation of Labour says the Enbridge pipeline project will actually eliminate Canadian jobs":

http://www.cbc.ca/asithappens/episode/2012/09/04/the‐tuesday‐edition‐45/html

The Alberta Federation of Labour has two main criticisms of the Northern Gateway pipeline: (1) Canadian jobs would be created if the crude bitumen was refined in Canada and then exported rather than being exported directly; and (2) The pipeline will reduce the "Asian" premium, which means a higher price of oil in Canada and job loss due to the higher processing costs for Canadian refineries.

In about 200 words carefully explain why the creation of the Gateway pipeline from Alberta to Kitimat BC will raise the price of crude oil for Canadian refineries. Be sure to include proper references to your background material.

According to Gil McGowan (President of Alberta Federation of Labor), the creation of Northern Gateway pipeline will raise the price of crude oil for Canadian refineries. Oil refineries take crude oil as the raw material for production and convert it into consumable products like gasoline. Currently, the oil suppliers for Canadian refineries are primarily domestic, and the buyers/consumers of their refined products are primarily domestic as well.

With the pipeline in place, the expansion of Canadian crude oil industry to a world market would bid up the domestic price of crude oil to meet the world price (narrowing the gap between the domestic and the world price). This will be so as the result of a much higher demand from a worldwide refinery industry/oil market, particularly with access to the ones in Asia and West coast US. Mr. McGowan mentioned that the Saudi Arabia (currently the main oil supplier to the Asian market) when facing the Canadian entering their Asian oil market could lower their oil price to keep their market share. Thus, it would result in a reduced "Asian Premium". The "lowered" oil price in Asia market/world market would then still be higher than the current Canadian domestic price of crude oil because of the high demand. This would encourage Canadian crude oil export as long as it allows a higher margin of profit than selling the oil domestically. The potential shrinking supply of crude oil domestically would cause the domestic oil price to rise. In addition, the Canadian refineries' bargaining power would be reduced as the Canadian crude oil industry is open to the world market which would probably be reflected on an increase of price of crude oil as well.

Happy Trades Blog, September 10, 2012

Posted on September 10, 2012 by Mihaela Mardare — 1 Comment ↓

"Northern Gateway Hearings. The Alberta Federation of Labour says the Enbridge pipeline project will actually eliminate Canadian jobs"

http://www.cbc.ca/asithappens/episode/2012/09/04/the-tuesday-edition-45/.html

Gil McGowan, the president of the Alberta Federation of Labour was one of the guests of the September 4th "As it Happens" show at CBC Radio. The Federation is opposing the construction of the Gateway pipeline from Alberta to Kitimat BC because exporting the crude oil to Asian markets will lead in the long run to loss of jobs and raise of oil price for Canadians.

In Asia, especially in China, the price for oil is a little higher than in North America. If the cruel oil from Alberta will be exported in Asia, the price of oil will rise on Canadian market too. The Canadian consumers, businesses and refineries will be paying more for the oil they need. The higher costs of production for refineries will lead to loss of jobs.

Another reason of price rising for Canadian refineries is the high cost of transporting on rail as Texas-based energy consultant Muse Stancil said: "Northern Gateway allows the Canadian crude producers to both stop selling to their least attractive refiner clients (from a pricing prospective) and reduces their need to ship heavy crude via comparatively expensive rail transport." http://www.cbc.ca/m/touch/canada/story/2012/09/06/pol-cp-gateway-hearings-dutch-disease.html

The president of the Alberta Federation of Labour suggested as the best alternative for Gateway pipeline the export of gas: "we should give the world gas in their tanks and keep the jobs in upgrading and refining for ourselves". This will prevent of sending the high valuable jobs out of the country and raising the price of crude oil as a result of higher costs of production for Canadian refineries.

September 10 2012

Michaela Mardare, U of BC Blog

Explanation of why the creation of the Gateway pipeline from Alberta to Kitimat BC will raise the price of crude oil for Canadian refineries.

Segment III titled, "Northern Gateway Hearings. The Alberta Federation of Labour says the Enbridge pipeline project will actually eliminate Canadian jobs"

http://www.cbc.ca/asithappens/episode/2012/09/04/the-tuesday-edition-45.htlm

It is true that the creation of the northern gateway pipeline will rise the crude oil price for the Canadian refineries. Despite the fact that Enridge alleged that there are thousands of new jobs created from the pipeline project, this economic benefit is deemed as insufficient to outweigh the enormous job losses from the refinery sector (as mentioned by Gil McGowen, president of Alberta Federation of Labour Union).

According to an economist from the CBC radio, the reason behind such detrimental impact to the refinery industry is because even though Canada is being paid with the so-called Asian premium when they agree to take China's offer. Consequently, the oil supply in Canada becomes more scarce due to large amounts of exports. This, in turn, rises the market price for oil which adversely affects the Canadian consumers, refinery industry, and oil upgraders plants, as oil in home country becomes more expensive. In effect, some oil refining firms choose to exit the market due to negative profits, which results in many job losses within Canada. The amount of job losses exceeds that of the new jobs generated by Enridge, and thus an approximation of $750m hit in the Canadian GDP.

The Get Out of Fail Free Card Mission, Sept 07 2012

Masters Student, U of BC

(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

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