Coastal First Nations Oppose Canada Tar Sands Pipeline

Opposition Could Block Project, Creating Financial Risks for Oil Sands Operations

The Coastal First Nations, a coalition of aboriginal communities in Canada's Great Bear Rainforest, publicly announced their strong opposition this week to the Northern Gateway pipeline, a project would would run tar sands oil from Alberta to a port near the Pacific Ocean.

Enbridge Inc.'s plan is to open export markets for tar sands oil outside the United States — notably China. However, the Coastal First Nations see the pipeline as a major threat to their territory and way of life.

"Our decisions are based on the safety of the project and how it will impact our culture," said Art Sterritt, executive director of Coastal First Nations. "We have invested several hundred million dollars to create a sustainable economy on the coast; we are not going to jeopardize it with one project that can destroy all that."

"We are still gatherers, and the ocean is our supermarket," Sterritt explained. "To jeopardize that so we can eat bologna and spam with the rest of the country is not acceptable. If there was no danger to our environment, to our culture, we would sit down and talk to Enbridge, but they haven't even made it over the first hurdle: not jeopardizing our culture and the very existence of our society."

Daniel Bida, a gas and utilities analyst with Riskmetrics, says Enbridge has reason to be concerned that the First Nations' opposition will stop the pipeline.

"They have to go through numerous tribal lands, and that's a front-and-center issue for the company. No company, other than TransCanada, has an aboriginal relations department," Bida said.

Enbridge has made considerable investments in wooing the First Nations, according to Bida, but that investment may not pay off. Though the company is only at the permitting phase and has not invested much in the pipeline project yet, the potential upside for the company from a pipeline with consistent oil flow toward China is huge. But Sterritt was emphatic that there was nothing Enbridge could do to get them to embrace the project.

"There is nothing they can offer up. They tried to offer equity and we said no. We don't base our decisions on financial considerations," Sterritt said.

The company declined to comment on the opposition from the Coastal First Nations.

"Enbridge is in the final stages of preparing its Northern Gateway regulatory application, which we expect to file with the National Energy Board in coming weeks," Jennifer Varey, senior manager for corporate and business communications at Enbridge, wrote in an email. "As such, it would not be appropriate to conduct in-depth media interviews this close to the filing."

Sarah Burt, an attorney with Earthjustice, believes the stakes are much higher than just a loss to Enbridge. They extend to the entire oil sands industry.

The Alberta Clipper pipeline and the Keystone pipeline into the U.S. are currently tied up in litigation. In February, two oil companies even joined in the opposition to the Alberta Clipper pipeline.

In addition, demand for oil in the U.S. has declined, and it's possible that U.S. climate legislation will make it difficult to import the carbon-intensive oil produced from Alberta's tar sands. Regardless of legislation, oil sands extractors are facing a tough public relations battle in the U.S., where companies like Whole Foods have already publicly committed to boycotting the fuel.

"The [Northern Gateway] pipeline is important conceptually," Burt explained. "It allows the oil companies to say that it doesn't matter if they can't export to the U.S., they'll just export to China. Currently there are no pipelines that allow for shipping to China."

Though the National Energy Board and the Canadian Environmental Assessment Agency have not yet begun the regulatory review process for Northern Gateway, making the pipeline far from certain, the forward movement on a pipeline for export to China has great financial implications for oil companies.

"If they can't get the oil to China, their investment in extraction, research and development, refining contracts won't see the continued exponentially high return on those investments," Burt said.

Andrew Logan, director of the oil program at the sustainable investment organizations Ceres, goes even further.

"The coastal First Nations action is part of a larger picture of very strong First Nations opposition to the pipeline all the way from its source to its outlet. It's very hard to imagine this pipeline getting built," he said.

"That has very significant implications for producers who will then be completely reliant on the U.S. market and will be at the whim of U.S. policy makers who appear increasingly interested in regulating the carbon content of fuels. Producers are eager to diversify their markets and it's hard to see that will be able to pull that off soon, making the long term viability of oil sands dependent on the industry's ability to get the carbon content under control. "

Logan also explained, "We are seeing real concerns among refiners who would be the ones buying the output and responsible for the emissions because of uncertainty around climate policy. They are reluctant to commit to long-term contract with oil sands producers and there is also concern among oil sands producers about what they will get for it. Will they have to accept a heavy discount because of the high content of bitumen (the carbon-intensive, heavy crude oil)?"

Sterritt says that the Coastal First Nations are not looking at their opposition to the pipeline in terms of tar sands extraction overall.

"We never try to impose our will on First Nations in other areas. The pipeline is only a concern to us because it will be transporting something toxic onto the coast," he said.

However, the group was joined by more than 150 First Nations, including those in tar sands country in Alberta, in opposing the pipeline. "In the larger strategic plan, their concern for their environment matches our concern," Sterritt explained.

Given what the Coastal First Nations see as the grave risks of a pipeline through their territory, it was no accident that the public statement was made to coincide with the 21st anniversary of the Exxon Valdez oil spill.

"We understand that tar sands is about as big a polluter as you can get," Sterritt said.

The Coastal First Nations are concerned with greater environmental issues including carbon sequestration in the Great Bear Rainforest, he said.

"In that light, it would be much better if toxic industries were not allowed to carry on, but that's not our conversation today," he said. "There's such imminent disaster looming from tanker traffic. There will be oil spills in our traditional areas from tankers. We commissioned studies of tankers around the world — in Alaska, in Saudi Arabia and elsewhere — and there are oil spills every year, every month and there are always going to be large ones.

"We aren't going to wait around for that to happen. We are going to stop this today."

 

See also:

State Department Signs off on Controversial Tar Sands Pipeline

Canadian Fund Warns of Sticky Risks in Tar Sands Investment

Dirty Oil Video: Canada's Tar Sands Explained

(Map source: Enbridge)

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