Enbridge Won't Appeal Ruling -- WSJ
September 21 2016 - 3:03AM
Dow Jones News
By Paul Vieira
OTTAWA -- Enbridge Inc.'s plans to build a pipeline that
connects the landlocked Alberta oil sands with the Pacific Coast
are headed back to the drawing board after both the company and the
Canadian government on Tuesday said neither would appeal a
high-court ruling quashing the Northern Gateway project.
Returning Gateway to the consultation phase is latest setback
for the Canadian energy industry, which is struggling with lower
commodity prices and a lack of pipelines to move oil and gas
reserves to the coasts and on to faster-growing markets overseas.
Without new energy corridors, Canada will remain entirely dependent
on U.S. demand, and energy analysts warn that prices for Canadian
oil and gas will continue to trade at a discount to the U.S.
benchmark price.
For Enbridge, the delay highlights pressure on the company to
find other ways to grow. It agreed earlier this month to acquire
Spectra Energy Corp. for $28 billion . Enbridge's Canadian rival,
TransCanada Corp., also agreed to acquire Columbia Pipeline Group
Inc. after the White House rejected the Keystone XL project.
Calgary-based Enbridge said it remains committed to the Gateway
project, valued at 7.9 billion Canadian dollars ($6 billion) and
first approved by the former Conservative government in 2014. In
June, Canada's Federal Court of Appeal overturned the government
approval, saying it didn't fulfill its duty to properly consult
aboriginals.
"We believe that meaningful consultation and collaboration, and
not litigation, is the best path forward for everyone involved,"
John Carruthers, president of Enbridge's Northern Gateway unit,
said Tuesday.
Enbridge's struggles with Gateway highlight the clout that
aboriginals are gaining in the construction of North American
energy infrastructure. Aboriginals in British Columbia, Canada's
westernmost province, have been among the most vociferous opponents
of the Gateway pipeline, arguing that its construction poses an
environmental risk to their communities.
In the U.S., the Obama administration earlier this month halted
construction of the Dakota Access Pipeline amid escalating
opposition by Native American and environmental groups, led by the
Standing Rock Sioux tribe.
Canada's Resources Minister Jim Carr on Tuesday said he was
reviewing government options on how to proceed. "The court was not
critical of Enbridge or the [energy] regulator, but critical of the
[Conservative] government because it didn't do its job. So we are
not going to contradict the court's judgment in this case," Mr.
Carr told reporters in Ottawa.
Options could include a fresh round of consultations. On another
western Canadian pipeline, Kinder Morgan Inc.'s Trans Mountain
pipeline, Mr. Carr appointed a panel to speak to parties affected
by the project, and their findings would influence the Liberal
Cabinet's final decision on Trans Mountain, due by end of the
year.
Even before the court ruling, the Gateway project was under a
cloud of uncertainty because of local opposition from aboriginals,
environmentalists and lawmakers. Prime Minister Justin Trudeau also
raised concerns about the proposed route traversing a Pacific Coast
rain forest.
In May, Enbridge asked the country's energy regulator for a
three-year extension on the deadline to begin construction on
Gateway, arguing that it needed time to strike partnership
agreements with Pacific Coast aboriginal groups.
Judy McKinnon contributed to this article.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
September 21, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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