Northern
Gateway and energy infrastructure in the 21st Century
Janet Holder,
Enbridge Executive Vice President, Western
Access, recently gave a speech at the Canadian
Club in Toronto, Ontario, Canada. Outlined below
are Janet's speaking notes from this event.
Thank you Jaime
and good afternoon everyone. I'm happy to be
back in Toronto, particularly at this beautiful
time of year. I lived here during my tenure as
President of Enbridge Gas Distribution. I
recognize more than a few faces in the audience
and I'm grateful for the opportunity to address
the Canadian Club today. Of course now I'm back
in my hometown of Prince George, BC, where I'm
heading up Enbridge's Western Access program.
It is my pleasure
to talk with you about what I believe is the
most important energy infrastructure project for
our nation in the 21st Century: Northern Gateway
Pipelines.
In fact, let me
remove a qualifier. Forget energy. I think
Northern Gateway is Canada's most important
infrastructure project today, period.
120 years ago,
when the Canadian Club was founded, Canada had
just completed another project vital to the
well-being of our country, the Canadian Pacific
Railway.
Like Northern
Gateway, the CPR looked west and created an
important transportation corridor to connect
markets and resources. In doing so it helped to
build and strengthen a fledgling nation.
Had the Canadian
Club had been founded just a few years earlier,
I am confident that the leaders of the day would
have stood at this podium and talked about the
importance of that thin band of steel extending
to the West Coast and helping to bind and
protect confederation.
Likewise, I'm sure
the creation of the St. Lawrence Seaway, a
little more than 50 years ago, attracted the
attention of the Canadian Club. The Seaway
proved to be an economic engine for Canada in
the mid-20th century. Since 1959 it has seen the
transit of nearly $400 billion worth of cargo,
connecting the interior of North America to the
markets of the world. i
Northern Gateway
is as important to Canada as the CPR and the St.
Lawrence Seaway. Its impact on our economy will
be of similar magnitude and its benefits will
reach down through several generations.
Today I'll discuss
why we need to move forward with this project as
a nation. I'll talk about why Torontonians
should care about a pipeline whose closest point
would lie nearly 3,000 km west of here. And I'll
talk about how we can build it safely,
respectfully and sustainably.
Northern Gateway
will fundamentally change the energy industry in
Canada. It will catapult our world-class energy
resources onto the global energy market and will
immediately diversify our customer base, a
critical step towards a stronger economy in
uncertain times.
But this will only
happen if, as a nation, we have the courage and
conviction to step out on the world energy
stage.
Canada has a
choice to make. We can wistfully gaze across the
Pacific at the growing Asian economies and wish
there was some way for us to fuel their growth
with our abundant energy resources.
Or we can act. We
can create a Northern Gateway.
Background
Let me provide a
little background on Enbridge and on the project
itself. Then I will give you the rationale for
this ambitious undertaking.
First of all,
Enbridge is a Canadian company. For example,
we've been here in Toronto for more than 160
years and we employ about 2,100 people in the
GTA region alone.
We operate the
longest and most complex crude oil pipeline
system in the world, safely and reliably
delivering nearly 2.2 million barrels of oil
every day to markets in Canada and the US. In
fact, when you fill up your car here in Toronto,
you are likely pumping fuel refined from crude
oil Enbridge transported.
We are also the
largest natural gas distributor in Canada,
heating over 2 million homes. Our natural gas
gathering, processing and transmission systems
extend from Northern BC to the Gulf of Mexico
and transport energy to consumers in nearly
forty states and two provinces.
We own and operate
a growing portfolio of renewable energy projects
with a combined generating capacity of nearly
1,000 MW.
Every action we
take adheres to our core values of Safety,
Integrity and Respect and all of our
relationships are based on that. Across North
America, we deliver the energy people count on
to live, work and prosper.
Northern Gateway
is an extension of that commitment, built on the
same core values that have made Enbridge a
trusted company for decades.
It's a dual
pipeline extending about 1,200 km from northeast
of Edmonton, AB to the established deep-water
port at Kitimat, BC. The westbound pipeline will
carry 525,000 bbl/day of petroleum from the
Alberta oil sands to Canada's west coast and the
eastbound pipeline will carry 193,000 bbl/day of
condensate back to Alberta where it will be used
to dilute bitumen so that it can flow through
the pipeline.
At Kitimat we will
build a world-class marine terminal with two
mooring berths for tankers and a total of 14
storage tanks.
I cannot overstate
the importance of this maritime access. Today,
Canada's proven oil reserves – the third largest
in the world – are landlocked. With Northern
Gateway and the port of Kitimat, this resource
can be sold virtually anywhere in the world.
The Case for
Gateway
Canada is a
trading nation. In fact, of all the G8 nations,
Canada is the one whose economy is most
dependent on trade.
And our energy
trade is the cornerstone of Canada's economy. In
2011 Canada's single largest export was crude
oil; we exported $67 billion worth of it.
However, nearly
all of Canada's crude oil exports, about 99 per
cent, go to only one customer: the United
States. US demand is dropping, in fact according
to a TD Economics special report released
earlier this month there has been a 30% net drop
in their imports of oil and petroleum products
since 2005 ii . Their domestic supply is growing
and they do have a desire to be self-sufficient.
Us finding another customer won't hurt their
feelings.
Our most valuable
export commodity, and only one market. Does
anyone want to defend that business model?
At the same time,
the US has a wide range of oil suppliers to
choose from – 65 countries in fact iii . The
list includes such major petroleum exporters as
Saudi Arabia, Venezuela, Mexico, Nigeria and
Russia.
That's a dangerous
imbalance for Canada.
And we're feeling
the impact of our landlocked crude oil every
day.
Every day that
we're not able to access tidewater is a day of
lost opportunity on the world energy market.
When you hear that
world oil is trading at a little over $100 per
barrel, I want you to remember that's not the
price that Canada gets for its oil. Canada's
oil, because it is stuck in North America with
no outlet to other markets, sells at a discount,
up to $36 (as recently as March iv ). This
discount is not only due to lack of market
diversification but also as well as the
bottlenecks in Oklahoma.
That's tens of
millions of dollars a day and billions of
dollars a year in foregone revenue for all of
Canada.
What Gateway
Delivers.
Northern Gateway
will change that. At a single stroke, it will
diversify Canada's energy markets and
significantly boost the power of our nation's
most important economic engine.
Here's what
Northern Gateway will deliver:
Very
conservatively, an immediate $2 to $3 uptick
in the value of every barrel coming out of
Western Canada. Some are suggesting now that
number could be more like $8 to $10 for
every barrel.
A diversified
market for our most valuable export, with
access to the energy-hungry economies of the
Pacific Rim.
A $270 billion
contribution to Canada's GDP over 30 years.
If we just do the straight arithmetic, this
will be a $9 billion contribution per year
for three decades. Just to give you a sense
of scale, based on 2011 GDP numbers this is
slightly more than the entire contribution
of the Canada's mining sector to our GDP
($8.6 billion in 2011) and nearly double
what forestry and logging contribute. ($5.2
billion) v
Close to $1
billion in contracts, training, employment
and equity for Aboriginal communities and
businesses. (Including a 10 % equity stake
in the project)
$2.6 billion
in local, provincial and federal government
tax revenues.
$4.3 billion
in labour-related income.
Approximately
1,150 long-term jobs throughout the Canadian
economy and thousands of jobs during
construction.
That's a look at
the impact across Canada. Now let's look at the
potential impact here in Ontario.
We'll be buying
our pipe in Canada, so there will be a
tremendous impact on Ontario's steel mills and
manufacturing centres.
It's a $5.5
billion project, so the Toronto–based financial
and banking sector will be involved.
Northern Gateway,
as I will mention later, has opposition due to
its relationship with the oil sands. Here's what
the oil sands deliver to Ontario:
Over the next 25
years, the oil sands industry is expected to
purchase $63 billion worth of goods and services
from companies in Ontario.vi
Thousands of jobs.
More than half of the employment related to the
oil sands outside of Alberta is in Ontario and
by 2035 seven per cent of all oil sands related
jobs will be in this province. vii
According to the
Canadian Energy Research Institute, Ontario has
the most to gain of any province other than
Alberta.viii In fact, CERI paints a remarkable
picture of the impact Northern Gateway will have
on the economy of Ontario:
It will create
more than 16,000 person years of employment
in the province. ix
It will
generate more than $390 million in
provincial tax receipts. x
It will
generate $686 million in pay for Ontario
workers xi
And it will
boost Ontario's GDP by $1.2 billion. xii
And where are
those jobs? From services to manufacturing, the
oil sands bring benefits and jobs to Ontario.
Northern Gateway is good for Canada and it's
good for Ontario.
The controversy
Despite all these
local, provincial and national benefits, the
Northern Gateway project is subject to
considerable controversy. I know you have seen
the headlines and concerns in print. (Protests
just last week)
Much of the
controversy arises from that fact that this
energy megaproject will occur in a region where
oil pipelines have not existed for decades,
which naturally gives rise to concerns among
local residents about local environment. We
welcome the opportunity to engage in the
community.
We also know that
the project is a lightning rod for opposition
because of its connection to Canada's oil sands.
Opponents in Canada and primarily abroad see
stopping the pipeline as a way to stop oil sands
development. The majority of opponents to the
oil sands are not Canadian. And we have seen
different types of opposition including, as
media reports have suggested, millions and
millions of dollars crossing the border to stop
major Canadian development. As a country, we
need to give serious thought to what is an
appropriate balance – how do we increase
transparency and fairness around processes that
impact our country's future?
But in all of
this, we are eager to listen and engage on those
with a direct interest in the Project. There are
concerns from First Nations and Métis
communities – some near the proposed
right-of-way and others from different regions
in Canada.
For Enbridge, the
controversy may be a challenge, but it is
certainly no surprise. As one of the world's
leading energy delivery companies, we know from
long experience that it is not easy to build
consensus around energy projects. When I was
here in Toronto I experienced firsthand the
controversial power generation project in
Oakville. And, of course, Gateway has attracted
its fair share of celebrity opposition. We've
got everyone from Robert Redford to Kevin Bacon.
It's amazing that people seem to believe that
celebrities have more knowledge about the issue
than the general public.
It is not easy
whether we're talking about a new gas-fired
electricity generating station, a 2 km upgrade
to an existing natural gas pipeline in a
populated area, or a new 1,200 km oil pipeline
that will stretch across provinces. That is
simply the reality of today's world and the
reality of our operating environment.
Given the
importance of energy infrastructure to Canada's
current and future prosperity, we believe that
citizens across the country should get involved
in the discussion on Northern Gateway. They need
to weigh the pros and cons, and assess
Enbridge's approach to doing business, creating
shared value in the community and being a good
neighbour. The key, of course, is that the
discussion needs to be based in fact.
And the facts
about the project appear to be capturing the
public's attention. Support is growing. But
those in favour of the project need to speak up.
An Ipsos poll of 1000 BC residents released
earlier this year shows that nearly 50 per cent
of British Columbians are in favour of the
project, about 32 per cent are opposed and about
20 per cent are still undecided.
The percentage of
those in favour jumps to 55 per cent in Northern
BC, where pipeline is proposed to run.
This is a far cry
from the majority opposition that activists
claim in BC. It shows that most British
Columbians are open-minded and willing to
listen.
Most importantly,
the poll demonstrates the validity of a
time-honoured rule known as the "ABC" of
communications: awareness leads to buy-in, and
buy-in leads to commitment. The poll shows that
the more people know the facts around Northern
Gateway, the more likely they are to support it.
We're also seeing
that the public's understanding of the
importance of energy infrastructure development
in Canada is growing. Earlier this month the
Canadian Chamber of Commerce released the
results of a poll conducted by Ipsos.
The results showed
that, contrary to how the issue may be
represented by opponents of energy projects, the
Canadian public has a high level of support for
energy infrastructure development.
For example,
two-thirds of Canadians think it's possible to
protect the environment while increasing oil and
gas production.
Nearly twice as
many Canadians (57 % agree to 29 % disagree)
that the benefits of oil sands developments
outweigh the negatives.
And most
importantly for Northern Gateway, 75 per cent of
Canadians think it's important that Canada does
what is required to diversify our oil and gas
markets away from our reliance on the United
States.
Clearly, support
for the project and for diversifying our oil
markets is gaining traction across Canada.
Our approach
There are two
reasons why support is growing. One is that the
business case for the project is compelling. As
the global economy continues to struggle,
diversifying our crude oil market with Northern
Gateway helps Canada insulate itself from the
worst of the economic headwinds.
The second reason
behind growing support is Enbridge's approach to
the project and to its stakeholders, whether
they are in favour or opposed. I am convinced
this will be a decisive factor in the ultimate
success of the initiative.
We work hard to be
a good neighbour and to prove the quality of our
character as a company each and every day.
We have been
consulting with stakeholders, communities and
First Nations along the proposed right of way
for the past 10 years. We've held 2,500 public
meetings, 123 open houses, 150 presentation and
we've met with more than 17,000 people over that
time frame. We have taken consultation to a
whole new level.
Our approach is
transparent and inclusive. We will talk to any
stakeholder and respond to every concern. It's
not enough for us to answer the regulator's
questions. We must work to gain support in the
community halls and schools, meeting rooms and
kitchen tables all along the proposed route.
And we're working
to do just that. We know we need to earn the
trust and confidence of our stakeholders and we
will do that the same way we have for more than
60 years, by being approachable, open and
responsive, the way a good neighbour should be.
We're also going
to great lengths to keep the pipeline and marine
operations safe.
Here are a few
examples among many:
Only
pre-screened, double-hulled tankers will be
allowed in the Douglas Channel, and they
will be tethered to custom super-tugboats
and navigated by certified, experienced BC
pilots.
We will be
adding navigational aids, radar and first
response capacity to enhance the safety of
the entire northwest coast.
We continue to
review and test new technology as it relates
to pipeline integrity, earlier detection of
pipeline faults, and for emergency response.
We have also
adjusted the proposed routing and waterway
crossings along the pipeline right-of-way in
response to community and stakeholder input.
The more people
learn about Gateway and Enbridge, the more trust
they will have in our commitment and ability to
build and operate this vital link in Canada's
energy supply chain in a safe, reliable and
sustainable way.
And don't forget
that pipelines have been shown to be the safest,
most efficient way to transport oil, and oil
tankers currently safely travel the Great Lakes
and Canada's east and west coasts.
The regulatory
process
Currently we are
in the midst of a regulatory review by the Joint
Review Panel, which operates under the auspices
of the National Energy Board and the Canadian
Environmental Assessment Agency.
We submitted our
regulatory application two years ago.
We're now into our
fifth month of community hearings, which are
expected to continue until the end of the
summer.
Formal hearings
should begin in September and be completed by
year-end. We hope to have a decision on Northern
Gateway by the end of 2013. As you can tell,
this is a long process.
The federal
government has recently announced that it is
working to streamline the regulatory process. We
welcome all initiatives that provide certainty
to the review process of projects like Northern
Gateway.
But the bottom
line for us is our commitment for consultation
for those with an interest in the Project.
Aboriginal
consultation
First Nations
along the proposed right-of-way have a profound
interest in the project and are a key focus of
the consultation process.
Just as I am proud
of the technological and engineering expertise
that we bring to the project I am also proud of
the innovative and collaborative approach that
we are bringing to our interactions with these
First Nations.
Working closely
with Aboriginal communities along the
right-of-way, sharing the benefits of pipeline
construction and finding opportunities for them
to participate in the project over the long term
is not only responsible and respectful, it just
makes sense.
The relationships
that we are forging with these communities are
critical to our success. We know that First
Nations are more than stakeholders. We work hard
to engage with them, understand their interests
and concerns and find out where we can work
together for mutual benefit.
Our 10 per cent
equity offering in the project to Aboriginal
communities along the proposed route is just one
example of this approach. We are also assisting
with the financing of these equity stakes so
that these communities can reap the long-term
benefits from Northern Gateway.
That's over and
above the training and labour opportunities and
the sourcing of goods and services before,
during and after construction.
Wrapping up
Before I wrap up
today, let me leave you with a few thoughts.
First, the case
for Northern Gateway is very strong. It's hard
to argue against the logic – the necessity – of
diversifying the market for Canada's most
important export. Gateway is the link between
the world's third-largest petroleum reserves and
the world's fastest-growing markets for energy.
It will have a transformative impact on Canada's
economy. Northern Gateway will bring thousands
of jobs to Alberta, BC and the rest of Canada
and help secure our future as an energy
superpower.
Second, Enbridge
is uniquely positioned to deliver on the promise
of Northern Gateway. Our long-term success is
based not only on our ability to safely build
and operate energy infrastructure, but also on
our ability to build respectful, stable and
strong relationships with landowners,
stakeholders and First Nations.
Third, the project
faces significant opposition, but frankly the
level of that opposition is often overstated by
activists who use old public opinion data that
is not even about the project. The number of
people who support Northern Gateway is growing.
The voices arguing against it will get louder
over the next several months, but we will stay
the course and invite Canadians to join in a
civil and fact-based discussion of the pros and
cons of the project.
Finally, Canada is
well-equipped to make a prudent, thoughtful and
balanced decision about Northern Gateway and
about all our energy infrastructure development.
Gateway is just one example of the smart,
sustainable and strategic projects Canada can
and should undertake to ensure that we get the
best value for our natural resources in a
competitive world market.
I hope my comments
here today have helped build support for this
game-changing project. At the very least, I hope
I've encouraged you to join the conversation.
And you'll find a lively discussion on our
website at www.northerngateway.ca
Canada is ready to
enter the global energy market, and Northern
Gateway is the key that unlocks the door. But it
is all Canadians – and that includes everyone in
this room today – who hold the key in their
hands.
