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Gateway Hearings Begin, Investors Take Note

January 10, 2012 by · Leave a Comment 

COMMENTARYProspectingJournal.com—While it would be great to uncover a gripping story about how foreign interests are trying to stop the flow of oil to China through the funding of noisy environmentalists, the current reality is that a lot of BC residents—aboriginal, non-aboriginal, environmental, non-environmental—are too busy pondering the pros and cons of the proposed Northern Gateway pipeline to care what the Natural Resource Minister says.

On the one hand are the potential jobs. Let’s face it: uttering the J-word in today’s market is like giving away winning lottery numbers. Once a thriving tourism and resource-based centre, Kitimat is now suffering the fate of many Northern communities, having gone through the greatest population decline in Canada in 2006. Towns along the way, from Whitecourt to Burns Lake (see below) have also felt the credit crunch and are quite likely tempted to promote anything that pumps money back into their communities. According to Enbridge, the project would generate about 3,000 construction jobs and 560 longer-term positions, as well as 1,150 manufacturing and maintenance jobs.

Source: http://northerngatewayalliance.ca/leaders.html

Then there’s the danger of the pipeline. A leak or burst could damage any of the 600+ streams it must cross, many of which are part of delicate salmon ecosystems. The pipeline also flies in the face of various aboriginal communities, whose opposition is, as of today, gaining strong momentum among Canadians. Though fairly insubstantial from a piece-by-piece, physical viewpoint (compared to the vast tracts of lands it would traverse), the pipeline will directly affect those whose lands it traverses. And if there’s ever an accident . . .

Yet the real threat is getting from Kitimat to the ocean. In an area known for shipwrecks and rugged beauty, tankers would have to leave the port via the narrow Douglas Channel and travel about 100 km, cross the path of Alaska cruise ships on the way to the Otter and Principe channels and make their way through the turbulent waters of Hecate Sound. Having fished in these waters since I was a kid, I can attest to the narrow and treacherous conditions. This area does not permit an easy in-out operation.

The Federal Government is (as we can gather from Joe Oliver’s comments) a strong proponent of the pipeline, citing the creation of jobs, the diversification of Canada’s oil exports and the opportunity for investors to profit through companies. Companies set to back the pipeline include Nexen Inc., Cenovus Energy Inc., MEG Energy Corp, Suncor Energy Inc. and Total E&P Canada Ltd. Oil exploration and production companies are also chomping at the opportunity to expand their customer base into Asia, with 2012 forecast to be a hotbed for M&A activity in the response to pipeline demand and ongoing growth from Asia.

As the hearings continue over the next 18 months, we will be watching the story closely, uncovering opportunities and pitfalls that potential investors should understand. Considering the fact that the pipeline would cross more than 1000 km of wilderness, intersect aboriginal lands, and dump out oil that would have to be carefully shipped through dangerous channels en route to an insatiable energy giant–expect a lot.

Chris Devauld
ProspectingJournal.com

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