Speculation About Chinese Oil Giant Premature: Enbridge

April 2, 2012 Updated: October 1, 2015

Calgary-based Enbridge Inc. is taking issue with a news report suggesting that China’s largest state-controlled oil company, PetroChina, could be contracted to build the proposed Northern Gateway Pipeline project.

A March 28 article in the Financial Post indicated that PetroChina is interested in building the controversial $5.5 billion project, which would run from Alberta to Kitimat, B.C., from where landlocked oil sands bitumen would be shipped to Asia.

“[Petrochina] have made the point to us that they are very qualified in building pipelines, and we will take that into consideration when we are looking for contractors,” outgoing Enbridge president and CEO Pat Daniel told the Financial Post.

“It’s an open bid process. They are a very big organization, they build a lot of pipelines, and they would love to be involved from what they have told me.”

The article went on to say that the company would “almost certainly” use non-unionized foreign labour, which would pose a problem for B.C.’s unions.

In a statement issued in response, Enbridge said it is too early to say who will build the pipeline, which is currently being reviewed by regulators.

“To speculate at this time about who might be contracted to build a project that has yet to receive regulatory approval is premature in the extreme,” the statement said.

“Construction of Northern Gateway would be through an open bid process, and to be successful any bid would have to meet Enbridge’s stringent requirements and meet all federal and provincial employment standards.”

The statement added that Enbridge is “firmly committed to hiring as many local people as possible to build and operate Northern Gateway and is not anticipating bringing in overseas workers to construct or operate the project.”

If the project does get the green light, MP Kennedy Stewart, the NDP associate critic for natural resources, says PetroChina stands a good chance of winning the contract because it’s financed by the Chinese state.

“You might have a pipeline company from the United States like Kinder Morgan that says, ‘We’ll build the pipeline.’ But they only have access to private money. The Chinese companies have access to state pension plans. So they can almost always out-bid any other company.”

He says if PetroChina wins the bid, the Chinese regime will have an equity stake in the pipeline, adding that China is “sticking a giant straw into Alberta and sucking all the oil out.”

“The Chinese state-owned companies are already buying up small oil companies in Alberta by the bushel load. So you can picture a scenario where basically the government of China owns the extraction company, owns the pipeline, owns the tankers.

He notes that last week’s federal budget contains “a very generous relaxing of restrictions” on temporary foreign workers, which would make it easier to bring in overseas labour.

Opposition Growing

Although supported by industry and the federal government, the Gateway project is strongly opposed by environmentalists, landowners, and B.C. First Nations, who say the majority of the benefits will go to Alberta’s oil sands sector and the risk of a spill is not worth it.

An Ipsos Reid poll released last week commissioned by Stewart found that opposition to the megaproject is growing.

Forty-two percent of British Columbians now oppose the pipeline, up from 32 percent in a December 2011 poll commissioned by Enbridge.

As for those in favour, 48 percent supported the project in December 2011, whereas in March 50 percent support it—an increase of only two percent over the same period.

The budget includes streamlining the environmental review process in order to fast-track energy projects such as Northern Gateway and take advantage of hungry Asian markets.

Major projects will now receive only one regulatory review, lasting at the most 24 months. The shorter deadline will be applied retroactively to projects already under review.

Finance Minister Jim Flaherty said new export markets for Canada’s energy and natural resources need to be developed to reduce dependence on markets in the United States.

“The booming economies of the Asia-Pacific region are a huge and increasing source of demand, but Canada is not the only country to which they can turn. If we fail to act now, this historic window of opportunity will close,” Flaherty said in his speech in the House.

Stewart says the changes will mean a shorter review time for Northern Gateway, and many of the approximately 4,500 who had signed up to testify will miss their chance.

“This process was slated to take quite a long time—three or four years. This will dramatically limit and curtail public participation in that process.”