Enbridge plans Gateway revamp

Enbridge Inc. is planning significantly greater aboriginal participation and control — perhaps even a majority — over the Northern Gateway oil pipeline, while eventually stepping back into more of an operator role, the proposed pipeline’s top executive confirmed Friday.

Extensive consultation with British Columbia’s First Nations and Metis communities on the controversial $7.9-bil- lion project has increased awareness at the Calgary-based company that it needs to better reflect their needs and interests and be more “inclusive,” project president John Carruthers said in an interview.

“We do recognize now, more than we did originally, that there needs to be a strong aboriginal and B.C. voice in the leadership,” he said. “We all share those values, but we do need to create an opportunity for First Nations and Metis to participate in decisions relat-

Could hand aboriginals majority ownership; stick to operations

ing to the project. We are open to change.”

Discussions are under way about moving the project’s control from Enbridge to a more independent entity, such as a limited partnership, governed by a board representing Enbridge, oil company shippers and aboriginal equity partners, he said.

There is also openness to significantly boost aboriginal equity participation, Mr. Carruthers said, as well as to recruit aboriginals to fill senior positions over time.

It was always Enbridge’s intention to make ownership changes after steering the project through the regulatory review process and whether that means aboriginals could end up as majority owners depends on the outcome of discussions, Mr. Carruthers said.

“We haven’t anything that definitive to this point,” he said. “That has to be developed in conjunction with aboriginal people.”

“Any changes in the governance and ownership would be intended to enhance that alignment between industry and First Nations,” Mr. Carruthers said.

An announcement is expected in the next few months.

When the project was announced, aboriginal communities on the pipeline right of way were offered a 10% equity stake, as well as jobs and business opportunities associated with construction. Some 26 aboriginal communities in Alberta and British Columbia took the offer.

But the small aboriginal participation relative to other major infrastructure projects — aboriginals were offered a 33% stake in the now-shelved Mackenzie Valley pipeline by oil company proponents as well as big leadership roles — has been a weakness of Northern Gateway and contributed to opposition.

Enbridge received approval for the project in June from Stephen Harper’s Conservative government, but was required to increase aboriginal support as part of 209 conditions imposed by the National Energy Board (NEB).

Opposition to Northern Gateway, which would cross the northern part of B.C. and transport bitumen produced in Alberta’s oil sands for export to Asia, remains intense and has resulted in several lawsuits from aboriginals and environmental organizations.

A proposed expansion of Kinder Morgan’s TransMountain pipeline in the southern part of the province has received a similarly hostile response. The TransMountain expansion is still under review by the NEB.

Meanwhile, other projects have been floated involving greater aboriginal control, including the Eagle Spirit pipeline-and-upgrader proposal supported by Fort McMurray aboriginal oil sands entrepreneur David Tuccaro, and headed by Calvin Helin, an aboriginal lawyer in Vancouver, and by Vancouver’s Aquilini Group. Enbridge is not working with those groups, Mr. Carruthers said.

The opposition to Northern Gateway prompted Enbridge CEO Al Monaco to recognize last summer that it was unlikely it would be ready to move oil from Alberta to the West Coast in 2018, as previously expected.

Enbridge, which has been taking the brunt of criticism against Alberta’s oil sands production, is said to be motivated to take a step back because of the project’s negative impact on its brand.

The project has also taken a heavy toll on its work force.

Enbridge announced last month that the executive in charge of the project, Janet Holder, executive vicepresident, western access, would be retiring at the end of the year.

Oil company shippers, including Suncor Energy Inc. and Cenovus Energy Inc., have also been pushing for changes. Jim Prentice spearheaded efforts on their behalf to find greater aboriginal alignment, but left to become premier of Alberta.

Even with a reduced role, Enbridge would still build the project and continue to participate in its leadership and management, Mr. Carruthers said.

While Northern Gateway’s profile has diminished in recent months as the company works behind the scenes to meet conditions, the project is making progress, he said. “It’s reflected in establishing that respectful dialogue,” he said. “The progress is on listening, dialogue and building partnerships. That takes time.”

Meanwhile, Enbridge and its partners are reviewing Northern Gateway’s cost estimate, which is expected to rise due to continuing delays.