WARMING UP TO A PIPELINE: Enbridge Warms Up to New Alberta-to-B.C. Oil Pipeline After Carbon Compromise

CEO says he ‘definitely would consider’ backing a new pipeline to Canada’s west coast

By Thomas Seal and Katie Greifeld

Enbridge Inc. “definitely would consider” backing a new oil pipeline to Canada’s west coast, its chief executive said, giving an early vote of confidence hours after Prime Minister Mark Carney signed an energy deal with Alberta Premier Danielle Smith.

The Canada-Alberta pact opens the way to start construction on a new pipeline capable of carrying one million barrels a day of Canadian oil to the coast of British Columbia, from which it can be shipped to Asian countries that need the crude.

The accord, which was unveiled at a ceremony in Calgary on Friday, sets out environmental rules for oil producers that are less stringent than the Canadian government had previously proposed. It includes a carbon tax that will rise slowly over time, and a scaled-back version of a project to capture greenhouse gas emissions and store them underground. The carbon price and the carbon-capture system were conditions that Carney had laid down for federal support for the pipeline.

It’s “a big step forward for Canada,” Enbridge CEO Greg Ebel told Bloomberg Television, noting that new infrastructure is dependent on how oil producers react to the pipeline deal. “It’s definitely a page-flip.”

Ebel’s views have shifted on the attractiveness of a new pipeline over the past three months, underscoring the change in the regulatory environment under Carney. Enbridge proposed an Alberta-to-B.C. pipeline more than a decade ago and spent hundreds of millions of dollars “which got lit on fire by government agencies,” the CEO told Bloomberg.

In February, Ebel said Enbridge wouldn’t take on the development risk of a new west coast pipeline. Then in March, he softened his position and remarked: “I wouldn’t say a hard no.”

Smith told Bloomberg Television that the blocking of the Strait of Hormuz has bolstered Asian demand for new and reliable oil supplies — strengthening the case for a new Canadian pipeline.

“They will take whatever amount of energy we’re able to provide to them, and it will act as a hedge against that insecurity of what might happen in the Middle East,” Smith said. And Asian companies might also be logical investors in the pipeline itself, the premier suggested.

She said the potential owners of a new conduit could be a combination of Indigenous groups, foreign oil buyers and pipeline firms such as Enbridge, South Bow Corp. or Trans Mountain Corp., which is owned by the Canadian government.

Tim Hodgson, Canada’s energy minister, said he had not yet had talks with Smith about the possibility of Trans Mountain ownership in the pipeline, and would have to see what the province proposes first. He said Chinese investment in a pipeline could be possible, and pointed to LNG Canada as an example where there was a minority stake from PetroChina Co. “We are certainly open to investment from China and will evaluate each case as we would with any foreign investor in the country.”

Carney and Smith’s pact was slammed by B.C. Premier David Eby, who said Alberta is being appeased for indulging separatist agitators who are campaigning for the oil-rich province to break away from Canada.

“As a country, it’s time to stop rewarding bad behaviour,” he said in an emailed statement. “It cannot be the case that the projects that get prioritized in Canada are those where a premier threatens to leave the country.”

Smith has said she wants Alberta to remain part of Canada — but her government also made it easier for political activists to push for a referendum on secession.

Eby said his province still wants Carney’s government to keep a federal ban on oil tankers off its northern coast. He and the prime minister are due to meet next week to discuss other major projects in B.C., such as mines and liquefied natural gas terminals.

Smith said the oil industry will save $250 billion over the lifetime of the agreement because of a slower rise in the industrial carbon tax.

—With assistance from Isabelle Lee and Iain Boekhoff.

Bloomberg.com

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