A pipeline to the future

 

Introduction

 

Thank you Barbara for that kind introduction.  And thanks to all of you for being here today. I’m sure you’ve all been hearing and reading a lot in recent months about the Northern Gateway project – the pros and cons, the benefits and risks, and who does or doesn’t support the project.

Well, everyone is entitled to an opinion, and in the age of instant digital communication we are sometimes overwhelmed by opinions. 

Unfortunately what is lost - far too often - are facts, reasoned argument, and context. 

So what I’m hoping to do today is provide some basic information about Enbridge, and outline the strategic argument for Northern Gateway…  And most important of all I want to explain why – as a British Columbian – I believe the project can be built and operated safely, for the benefit of this province and our country as a whole. But first of all, I should tell you a little about myself. 

As I said, I’m a British Columbian. I was born here, grew up here, and my family has lived in BC for generations. I’m a proud British Columbian, with deeps roots in this province. I returned to Prince George last year after spending a number of years working across Canada. It was a decision I was happy to make - for two reasons: 

It was a chance to come home – something I had always planned to do – and it gave me the opportunity to work on a project that I believe is vitally important for both BC and Canada. I’m pleased to be able to tell you that just last week Enbridge opened an office in Prince George, to serve as our base of operations for Northern Gateway.

Who We Are

So who is Enbridge? 

First and foremost, we’re an energy transportation network – connecting supply with demand, delivering energy from those who produce it to those who use it.

We operate the longest, most complex crude oil pipeline system in the world, delivering around a billion barrels of oil every year to markets in Canada and the US – that’s 2 million barrels a day. Our natural gas gathering, processing and transmission systems extend from Northern BC to the Gulf of Mexico.

We’re also the largest natural gas distributor in Canada, heating over 2 million homes and businesses in central and eastern provinces – where most people know Enbridge as the local gas company. 

And we’re one of Canada’s largest producers and distributers of green and renewable energy: including wind power, solar power, geothermal energy and fuel cells - generating enough renewable energy to meet the needs of almost 300,000 homes.

We’re the second highest ranked of only six Canadian companies to make the Global 100 Most Sustainable Corporations list for 2012.   We’re part of the Dow Jones Sustainability Index, and we were recently added to the FTSE ‘4 Good’ index.

In short, Enbridge is a Canadian success story.  Across North America, we deliver the energy people count on to live, work and prosper. People rely on us to do that safely and reliably – and those goals are at the heart of everything we do.

For 60 years we’ve been building strong, stable and respectful relationships with our partners and customers, with landowners and the public, and with Aboriginal communities. We’ve built the largest crude oil pipeline system in the world, employing thousands of people and serving millions of customers – without generating much in the way of news headlines for much of that time.

That’s changed in recent years – and we now find what we do branded daily in the media as “controversial”. Frankly, I might wish to be a little less “controversial” – but we have no issue with public scrutiny. As a regulated industry that has always been part of our business. All we ask is that decisions that affect our industry are based on reasoned argument and scientific fact – and that public debate in Canada should recognize the role the energy sector plays in supporting our quality of life and our prosperity.

We all know how important energy is to the global economy and 

to a modern way of life. Right now we are warm, we have light,

we have food and we travel about freely because of our 

energy infrastructure and system working away behind the 

scenes. The energy of Western Canada – BC, Alberta and 

Saskatchewan – is one of the major cornerstones upon which 

Canada’s modern society and economy is built.

 

Why Northern Gateway?

So why is Northern Gateway so important? What does it mean for British Columbia, and for Canada? 

To answer that question we need some context.

We stand on the brink of a potentially historic shift in Canada’s trading relationships: From an overwhelming focus on north-south trade with the United States to a broader, more stable model, that would see Canada expanding trade with the growing markets of the Pacific Rim. Canada is the most trade-dependent nation in the G8, and for this country this is no small issue. It’s an effort to support and maintain the prosperity that has made Canada the fastest-growing economy in the G8 - and potentially an economic star of the 21st century. You notice I say ‘potentially’, because there’s a catch to expanding oil exports from western Canada to the Pacific Rim: we do not have the necessary pipeline infrastructure to grow that trade.

This is important for all of us because oil exports have become the cornerstone of Canada’s economy.  In 2010 Canada’s single largest export was crude oil. We exported $50 billion worth of it – and nearly all of that went to just one customer: the United States. 

Our most valuable export commodity, and only one market - Can anyone defend that business model? You don’t have to be an economist to understand that dependence on a single customer for our most valuable export – putting all our eggs in one basket, if you like – is not exactly a smart strategy.

Every day that passes that we’re not able to access tidewater and the world energy market is a lost opportunity. Not just for Enbridge and the energy industry, but for Canada, for BC - for all of us who cherish our standard of living and value the public services supported by a thriving export economy.

Right now Canada is selling its landlocked oil at a heavy discount. A discount that adds up to millions of dollars a day - billions of dollars a year - in lost public revenue to invest in things like education, health care, and public infrastructure. 

For Canada, pipeline capacity is the key to increased energy market diversity – the ability to link Canada’s oil production with changing global patterns of demand. We have the oil needed by the growing economies of the Pacific Rim.

We’re one of the few places on earth that has the ability to increase production to meet that growing demand. What we don’t have right now is the pipeline capacity to efficiently and safely transport our oil to these new consumers. That, in a nutshell, is the strategic argument for Northern Gateway.

Our Approach

To make it happen we need two things:

We need approval from the regulator – the National Energy Board and the Canadian Environmental Assessment Agency - that Northern Gateway can be built and operated safely and is in the public interest (more on that process in a minute) AND we need your support - the support of British Columbians.

We need what many are calling the “social licence” to build an oil pipeline across northern BC. This is not a new challenge for Enbridge. Extensive consultation with communities is central to our project planning. That’s because we believe - I believe - that we have a responsibility to all stakeholders - communities, regulators, and the public - not just shareholders. Those aren’t just words. Our work on Northern Gateway has included the most extensive consultation process ever undertaken for a Canadian pipeline project: 

Over 2,500 meetings, 123 open houses, 150 presentations, and 64 workshops. In total, we’ve consulted directly with more than 17,000 people. That far exceeds anything required by the regulator. It’s what Enbridge felt was necessary. And those consultations have greatly influenced our development of Northern Gateway. 

They’ve resulted in numerous route changes. And they’ve provided valuable information that has helped frame our approach to safety and the environment - including our recent announcement of an additional 500 million dollars to directly address public concerns. 

These upgrades include: thicker pipe, more shut-off valves, more staff at remote locations along the pipeline – to make what was already a safe project even safer.

What is new, I believe, is the organized opposition to Northern Gateway, funded by groups with very deep pockets. They are trying to persuade British Columbians, in particular, that despite a decade of detailed planning and preparation, Northern Gateway is ill-conceived from an economic standpoint – and that Enbridge has not considered the engineering and environmental challenges associated with the project.

The Review Process

Well, nothing is further from the truth - and we’re not asking British Columbians to just take our word for it. As I’ve said, we’ve invested 10 years of research and planning into Northern Gateway. And now that work is subject to a rigorous public review that is examining all aspects of our proposal - in detail and in public. 

The review – by a joint panel representing the National Energy Board and the Canadian Environmental Assessment Agency - began work in earnest in January, with public hearings in communities along the proposed right of way. 

The Joint Review Panel has heard from Aboriginal communities – presenting traditional knowledge and their concerns about the impact of development on their traditional way of life. And they’ve heard from hundreds of individual British Columbians. 

Starting at the beginning of September the panel began hearing expert testimony, from Enbridge and from a range of other interested parties – including the BC and Alberta governments and various industry and environmental groups.

In Edmonton they sat for several weeks to examine evidence on the commercial need and economic benefits of the project.

Now in Prince George they are reviewing engineering and environmental issues. And in December they’ll sit in Prince Rupert to examine all aspects of our marine terminal plan and the impact of Northern Gateway on the north coast.

It’s a rigorous and lengthy review – likely approaching four years by the time a decision is made.

I‘ve personally attended many of the hearings – and I believe it’s a process Canadians can have faith in: a process that will result in an informed decision on the benefits and risks involved in our project.

Enbridge has been working towards that goal for 10 years (these things are not for the feint-hearted). We believe we have solid answers to the concerns that have been raised, and we welcome a detailed, public examination of our engineering and environmental work and of the economic benefits that would result from this project.

Benefits to Communities

One criticism I’ve heard is that there are too few benefits for BC. I’d like to address that. At six billion dollars, Northern Gateway is the largest private infrastructure project in this province’s history. And we’ve worked long and hard to ensure that the opportunities for BC are real and substantial – amounting to over $800 million in goods and services sourced specifically in northern BC during the construction phase alone.

During the three to four years of construction we will need people, services and supplies: Everything from fuel to hotel rooms to meals - for the thousands who will build this project. 

Our regulatory application contains a detailed breakdown of what this will mean in dollar terms across Northern BC: Local goods and services spending estimated at $318 million for the Coastal Region, $400 million for the Prince George region, and $112 million for Northeast BC. 

And once Northern Gateway is built – it will support at least 560 permanent, long-term jobs in BC, and generate $1.2 billion in provincial tax revenues. And this doesn’t include the impact, for example, of potential spending associated with building the ocean-going tugs we will need, or the upgrading of marine safety facilities on the north coast.

I don’t know about you, but to me that seems like a lot of good jobs, economic activity and tax dollars flowing directly into this province.

Aboriginal Benefits

I also believe it’s important for First Nations to benefit from the project. Based on input from Aboriginal groups and stakeholders, we developed a package of environmental and economic commitments for Aboriginal communities.

That package includes:

o Ownership in the project

Commercial opportunities, jobs – and importantly, training

A Community Investment Fund (more on that in a moment)

Environmental stewardship programs

Marine Community Harvest Insurance

A Marine Conflict Avoidance Agreement

o And opportunities for coastal communities to provide marine services

As you may know, Northern Gateway has offered a 10% share in the ownership of the project – establishing long-term income for Aboriginal communities. 

I’m very pleased that, to date, 60 % of those communities – split pretty evenly between BC and Alberta and representing 60 % of the First Nations’ population along the proposed Right of Way - have agreed to be partners with us in the ownership of Northern Gateway.

That doesn’t mean these communities have no concerns or questions about the project. It does mean they’ve decided to work with Enbridge in addressing their concerns and securing real benefits for their communities.

 

 

Enhancing Safety

But when all is said and done, the key to public support for this project is the safety and protection of the environment.  This is your major concern – as it is mine. Over the decades, pipelines have proved to be by far the safest method of transporting the huge volumes of petroleum products moved around North America, each and every day. 

At Enbridge we’re obsessive about safety – and the major incident in Marshall, Michigan, in 2010 was a humbling experience. 

It prompted a lot of soul-searching, a determination to learn from the mistakes, and re-doubling of our efforts to maintain our position as an industry leader in safety and technology.

 

I can tell you we’ve reviewed our processes and procedures from top to bottom. And we’ve enhanced our focus on operational safety to prevent this from ever happening in the future.  

Enbridge has already implemented numerous changes based on our own detailed internal investigation, which was completed in the fall of 2010. Since then we have invested more than 2 billion dollars on measures to enhance safety throughout our system. 

But we know we can always do better. So going forward, our five year plan for pipeline safety and integrity now exceeds 4 billion dollars of capital investment. 

What this means for BC is that Northern Gateway will be the most advanced pipeline system ever built. For example, in planning the route we have made extensive use of LIDAR – a laser-mapping system that has been used extensively by NASA – to create high-resolution digital images that have allowed us to identify the safest place possible. 

In planning for Northern Gateway, we also developed a new, collaborative, design framework in which all the various engineering, environmental and scientific disciplines worked closely together on key issues such as water crossings and marine risk assessment. 

And Northern Gateway will have the most advanced instrumentation and control systems ever used in pipeline design. To ensure we have the maximum information possible at all times – this means safer operations and quicker reactions.

Marine Safety

We’ve taken the same approach to tanker safety, working closely with shipping experts, marine scientists, the BC marine industry and local communities – To complete risk assessments and develop solutions to increase marine safety.

Northern Gateway’s marine plan proposes working with the Canadian Coast Guard to enhance navigational aids and land-based radar to the BC north coast. 

The plan includes the operation of custom-built tugboats to provide escort for tankers including tethered escort for laden tankers calling at the Kitimat Terminal. These vessels would also have first response and ocean rescue capabilities available to all marine traffic.

Northern Gateway would add emergency response equipment that does not now exist on the north coast – exceeding government regulation and increasing response time.

We are proud to be the first project on the BC north coast to make these commitments to marine safety.  I believe these measures are important in a time when marine shipping on BC’s north coast, once dominated by forestry related activity, is increasing through growth in containers, coal, grain - and soon – LNG trade. 

Resources and marine shipping has long been an important part of BC history. Northern Gateway would not be introducing tankers to the Douglas Channel for the first time – they’re already there. 

According to the Port of Kitimat, about 1,500 tankers carrying methanol and condensate have visited Kitimat in the past 25 years – That’s 3,000 safe transits transporting petroleum products.

The number of all ships servicing industry arriving at Kitimat during that time was about 6,000 vessels – or 12,000 safe transits of this broad and deep waterway – a credit to the professionalism of the BC maritime industry. 

What we’re suggesting is not revolutionary. In 2009, Canada exported approximately 55 million barrels of oil by tanker from Vancouver. According to Transport Canada, in total there are about 20,000 oil tanker movements in and out of Canadian ports each and every each year – 20,000! About two thirds of those on the East Coast, where the safety record is excellent. 

We’ve also looked at well-established oil terminal operations in Norway, Scotland, and Sweden - where tankers have for decades operated safely alongside existing tourism and fishing industries.  Based on best practices from these areas, we developed what we believe to be a realistic and safe marine plan – which was presented in our TERMPOL submission to Transport Canada as well as in our application.

In February, Transport Canada filed a positive review of that plan – a detailed assessment by the various agencies that regulate marine shipping in British Columbia – namely …. Transport Canada, the Canadian Coast Guard, Environment Canada, Fisheries and Oceans Canada and the Pacific Pilotage Authority. 

The review made a number of helpful recommendations, and we are committed to implementing them. 

It’s important for the public, particularly BC residents, to know that we’ve done our homework and that our marine plan has been thoroughly reviewed.

I believe the TERMPOL review underlines that what we’re proposing is well planned and above all safe – and indeed would enhance safety for all shipping on BC’s north coast.

Conclusion

So to sum up: It’s the task of the federal panel reviewing Northern Gateway to decide if the project is in the public interest – and if it can be built and operated safely. I believe it is in the best interests of British Columbians. I feel passionate about that – and that’s why I returned home to take this job. 

In a rapidly changing global economy, it will provide jobs and much-needed public revenues – for BC, and for Canada as a whole. 

It can help ensure energy security for our country – and it can help British Columbia cement its place as Canada’s gateway to the Pacific Rim, generating new opportunity and prosperity for years to come.

Most important of all – I believe Northern Gateway can be built and operated safely, to the highest standards possible.  This is my province, my home – and I wouldn’t be standing up here if I didn’t believe it could be done safely and with minimal risk.

Thank you once again for allowing me to speak to you today. Now I would be happy to answer some of your questions.

 

END