TORONTO – Enbridge’s controversial Northern Gateway project could help boost the price Canadian oil producers see by opening up access to the Asian markets, Enbridge (TSX:ENB) chief executive Al Monaco said Wednesday.
Monaco said that without access to the West Coast, Canadian producers will face a further discounting in oil prices compared with international benchmarks caused by a supply glut at a key storage hub in Cushing, Okla.
The glut has caused oil priced at Cushing — the WTI benchmark — to trade at a discount to other international benchmarks.
“I don’t think that is a tenable situation in the longer term,” he said.
Monaco called the $6-billion pipeline project, which faces significant opposition from groups concerned about possible spills from the pipeline, or from a tanker on the West Coast, a strategic project for the country.
“The bottom line on Gateway I think is this: It is a highly strategic project to Canada and there is general agreement that accessing the Asian market is in our interest,” he told an investor conference Wednesday.
“As a resource driven economy, there’s no question that Canada needs access to tidewater and the project is going to generate billions in terms of spinoffs, thousands of jobs and benefits to communities.”
In addition to the Enbridge project, Kinder Morgan has proposed its own $4.1-billion Trans Mountain project that would expand an existing pipeline from Alberta to the Vancouver area.
A joint review panel has been holding public hearings on the Northern Gateway project this year and is expected to report by the end of next year.
B.C. Premier Christy Clark has also set out five conditions before her government will back the project, including provisions for aboriginal consultation and the province receiving a “fair share” of the economic benefits.
Northern Gateway would carry roughly 525,000 barrels of bitumen a day from Alberta’s oilsands producers to Kitimat, B.C., where it would be loaded on tankers headed for Asian markets.