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Northern Gateway pipeline hearings enter critical Q and A phase in Edmonton

EDMONTON - Hearings into the Northern Gateway project enter the critical question-and-answer phase Tuesday, with both builder Enbridge (TSX:ENB) and the Alberta government promising to make their case to build the controversial $6-billion pipeline.

Both the province and Enbridge are among many groups that will present experts to take questions from the three-member joint review panel and from interveners on the economic benefits of the project and whether the 1,170-km dual line is worth the environmental risk.

"The province has always been an advocate for getting our products to the west coast and the importance of all of Canada realizing the net benefit of a strong Alberta and a strong Canada," said Mike Deising, press secretary for Alberta's Energy Department.

"The province will now have an opportunity to send two technical experts in front of the panel to take questions relating to a written submission that talks about the importance of west coast access for Alberta energy products and the benefits that can be realized through energy corridors in getting our natural resources to tidewater."

The panel -- mandated by the federal government and the National Energy Board -- has been travelling around British Columbia and Alberta this year hearing submissions and concerns on the proposed pipeline, which would ship oilsands crude to terminals at Kitimat, B.C., to then be loaded on supertankers bound for new markets in Asia, particularly China. Kristen Higgins, with the National Energy Board, said the stretch run has begun.

"All the oral evidence and written evidence that is on the record, this is the opportunity for people to test that evidence," said Higgins.

The stakes are high. The line has become a political staring contest over profits between Alberta Premier Alison Redford and B.C. Premier Christy Clark. B.C. has intervener status at the hearings, and Clark has said the line as proposed is a one-sided deal that effectively asks B.C. to assume the majority of the risk for little reward.

While not giving a specific dollar figure or percentage, Clark has said she wants a larger share of profits from Alberta before B.C. will consider signing on. Redford has rejected oil royalty sharing, saying it would go against the principles of Confederation.

A study commissioned by British Columbia estimates $81 billion in tax revenue will be accrued by the pipeline over 30 years, with $36 billion going to the federal government, $32 billion to Alberta and just $6 billion to B.C. It's also projected to spur $270 million of GDP growth to B.C. over that period.

Alberta, in a research paper submitted to the hearings, reports that additional export capacity is critically needed as oilsands production continues to grow, that Asia is a rapidly growing market and that there will be a high price to pay for not acting.

"Canadian producers not having sufficient access to premium heavy crude refining markets could lose about US$8 a barrel for every Canadian heavy crude barrel, with a revenue impact averaging $8 billion per year from 2017 to 2025," said the report, completed for the province by Wood Mackenzie.

Enbridge plans to have its experts address the financial questions surrounding the pipeline — the economic impact along with the toll and tariff structure — at the Edmonton hearings. The more contentious issues will be addressed at upcoming hearings in B.C.

At Prince George, it will have its team take questions on the design and safety of the pipeline.

At Prince Rupert, it will discuss the shipping aspect and the measures it will take to prevent accidents and spills on the water and keep safe the tributaries of the Fraser, Skeena and Kitimat rivers.

"This (Edmonton on Tuesday) will be the first opportunity for Northern Gateway to lend its own voice to this important proceeding," said Janet Holder, Enbridge's executive vice president in charge of western access in a news release Friday. "Enbridge Northern Gateway believes that the concerns expressed by Canadians to date, and particularly those living in British Columbia, can be addressed in a reasonable and responsible way."

Critics disagree.

There have been protest rallies and demonstrations against the project in B.C., with naysayers pointing to this summer's U.S. National Transportation Safety Board report on the Enbridge pipeline spill in Michigan in 2010 as smoking-gun proof the company cannot do what it promises.

In the report, the U.S. safety board likened Enbridge to bumbling "Keystone Kops" for first failing to properly detect the Michigan line break, then compounding the mistake by pumping more oil through the breach rather than shutting it down.

More than 20,000 barrels of oil were spilled, fouling 50 kilometres of waterways and wetlands in and around the Kalamazoo River. Following that report, Enbridge announced another $500 million in safety improvements for Northern Gateway, including more shut-off valves, thicker pipe and more people staffing remote monitoring stations.

Prime Minister Stephen Harper's government is endorsing the need for infrastructure to get oil to the growing Asian market, but has said the Northern Gateway decision will be based on science, not politics.

The panel must file its report to the federal government by the end of next year.

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