ALF V1

Bitumen pipeline placement

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.

No shortage of bitumen

Neufeld pointed out there is no shortage of bitumen currently available for anyone interested 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.

CBC News and iPolitics, Mon Sept 24 2012
The Canadian Press

AFL on witness stand at Northern Gateway hearings; President available to speak to media after testimony ends

Edmonton – AFL President Gil McGowan resumes his time on the witness stand today at the National Energy Board hearings in Edmonton, at the Westwood Conference Centre, 18035 Stony Plain Road.

McGowan is expected to deliver evidence until this afternoon and will be available to the media when he is finished.

The AFL opposes the Northern Gateway pipeline because it is designed to ship unrefined bitumen to China. Thousands of good jobs in refining and upgrading will be lost down the pipeline; the project is therefore not in Canada's public interest.

"Northern Gateway is not Canadian infrastructure. It is Chinese infrastructure," says McGowan.

"Enbridge compared this pipeline to the Canada Pacific Railway. It is certainly a nation-building project; it is certainly designed to guarantee energy security, but it will do those things for China, not Canadians," adds McGowan.

Northern Gateway will connect Chinese-owned oil sands production in Northern Alberta with refineries in China via the pipeline and oil tankers through Kitimat, BC. The National Energy Board must assess whether the project is in the public interest, and is empowered to reject the proposal under the broad definition of the "public interest" contained in Section 52 of the National Energy Board Act.

"The oil industry has told us this pipeline is about chasing a higher price for bitumen in Asia.

"The benefits are only for big, foreign-owned oil companies. Canadians lose the jobs and the industry. Northern Gateway makes northern Alberta into China's gas tank," says McGowan. McGowan adds that federal and provincial governments ought to cooperate to create refining jobs across Canada, and support pipelines that reach "our east, not the Far East."

The Northern Gateway pipeline creates only 224 permanent jobs and about 1,850 short-term construction jobs. Upgrading and refining those resources in Canada would create tens of thousands of permanent jobs.

"Evidence submitted to the NEB shows that if this pipeline is built, in addition to all the other bitumen pipelines that have already been approved, Alberta will only be upgrading 26 percent of its bitumen in 2025, down from about 60 percent today," says McGowan.

"That means that tens of thousands of quality jobs will be lost down the pipeline to places like China. Oil companies and the Chinese government may be happy with this situation. But this is clearly not in the best interest of ordinary working Canadians."

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For more information or to arrange for an interview with AFL President Gil McGowan, after he is finished delivering evidence, contact:

Shannon Phillips at 403-330-9878

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, Tues 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, Tuesday Sept 18 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

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

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

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

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