CALGARY – The Northwest Territories is promoting the idea of a “made-in-the-North” oil pipeline as a means to get Canadian crude to international markets, bypassing jurisdictions that have been less than keen on such developments.
“Certainly the Northwest Territories is in a good location when it comes to the possible routing of the pipeline north,” David Ramsay, the territory’s industry minister, said in a recent interview.
Ramsay envisions a pipeline that would transport Alberta crude through the Northwest Territories and the Yukon to Alaska, where it could be shipped to Asia on tankers.
The line could also transport crude out of the Canol shale oil deposit, a potentially huge, but early stage, resource in the Northwest Territories’ Central Mackenzie Valley.
Producers in the oilsands have been anxious to get their crude to markets that can pay the best price, but a dearth of pipelines to tidewater has made that difficult.
Political opposition in British Columbia, which goes to the polls on Tuesday, could scuttle two West Coast oil pipelines that would connect Alberta crude to Asia.
Similarly, the fate of the contentious Keystone XL pipeline, which would enable oilsands crude to flow to U.S. Gulf coast refineries, remains up in the air as the State Department reviews a reworked proposal.
Ramsay ran the idea of a northern route by Alaska Gov. Sean Parnell last week at a conference in Houston, and got the message that the state would be interested.
Alberta is studying the viability of the idea and Ramsay believes the Yukon may support it, too.
Unlike in British Columbia, where opposition to West Coast oil pipeline proposals has been fierce, Ramsay believes communities in his territory would be on board.
“If there was pushback, it would probably be coming from southern Canada and some of the groups that are opposed to pipelines period, as opposed to groups in the Northwest Territories,” said Ramsay.
The shelved Mackenzie Gas Project had “buy in” from most aboriginal communities in the Northwest Territories, who negotiated a one-third equity stake in the pipeline, he noted, adding a similar model could work with an oil pipeline.
“We’ve had stranded gas in the Mackenzie Delta for 40 years,” Ramsay said, referring to the long-dormant 1,200-kilometre pipeline proposal to carry natural gas from near the coast of the Beaufort Sea to southern markets.
“Pipelines are of interest to us and we can be part of the solution.”
Enbridge Inc. (TSX:ENB) — one of the companies planning a B.C. pipeline — already has a line that ships crude from Norman Wells, Alta., to Zama, Alta.
But as far as getting involved in a plan to ship crude the other way, Enbridge CEO Al Monaco said last week that “we have no plans to look at that opportunity.”
He said the company has its “hands full right now” trying to win regulatory approval to build its $6-billion Northern Gateway oil pipeline to Kitimat, B.C.
The fact that a northern pipeline is even being discussed “shows you just how desperate Alberta is to find a way to get to market,” said energy consultant Doug Matthews.
That it’s being talked about by politicians right now, and not industry players, is noteworthy, he said.
“If the government of Alberta and the government of the Northwest Territories kind of get out in front and involve aboriginal people right from the very beginning, I think there’s a better shot to do something with this bitumen pipe than there was with the Mackenzie Gas Project,” he said.
But he expects bringing northern communities on side with an oil pipeline will be tougher than it was with a natural gas pipeline, since the damage from a potential spill would be so much greater.
In B.C., opposition to Northern Gateway and Kinder Morgan’s Trans Mountain expansion has been vociferous, but there’s been little outcry to plans to ship natural gas to the coast to be liquefied and sent abroad.
No matter the outcome of the election in British Columbia on Tuesday, Matthews said there’s little hope of Northern Gateway or the Trans Mountain expansion going ahead.
B.C. Liberal Premier Christy Clark says oil pipelines would only be allowed under certain conditions, while the New Democrats’ Adrian Dix has come out against them entirely.
“The North may indeed be the route to market,” said Matthews.