Thwarted on US oil pipeline, Canada looks to China

Environmentalists and First Nations (a Canadian synonym for native tribes) could delay approval all the way to the Supreme Court, and First Nations still hold title to some of the land the pipeline would cross, meaning the government will have to move with extreme sensitivity.

Alberta has the world's third-largest oil reserves after Saudi Arabia and Venezuela: more than 170 billion barrels. Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million in 2025, which the oil industry sees as a pressing reason to build the pipelines.

Critics, however, dislike the whole concept of tapping the oil sands, saying it requires huge amounts of energy and water, increases greenhouse gas emissions and threatens rivers and forests. Some projects are massive open-pit mines, and the process of separating oil from sand can generate lake-sized pools of toxic sludge.

Meanwhile, China's growing economy is hungry for Canadian oil. Chinese state-owned companies have invested more than $16 billion in Canadian energy in the past two years, state-controlled Sinopec has a stake in the pipeline, and if it is built, Chinese investment in Alberta oil sands is sure to boom.

"They (the Chinese) wonder why it's not being built already," said Wenran Jiang, an energy expert and professor at the University of Alberta.

In a report on China's stake in Canadian energy, Jiang notes that if every Chinese burned oil at the rate Americans do, China's daily consumption would equal the entire world's.

Harper is set to visit China next month. After Obama first delayed the Keystone pipeline in November, Harper told Chinese President Hu Jintao at the Pacific Rim summit in Hawaii that Canada would like to sell more oil to China, and the Canadian prime minister filled in Obama on what he said.

Jiang reads that to mean "China has become leverage."

But oil analysts say Alberta has enough oil to meet both countries' needs, and the pipeline's capacity of 525,000 barrels a day would amount to less than 6 percent of China's current needs.

"I don't think U.S. policymakers view China's investment in the Canadian oil sands as a threat," says David Goldwyn, a former energy official in the Obama administration.

"In the short term it provides additional investment to increase Canadian supply; that's a good thing. Longer-term, if Canadian oil goes to China, that means China's demand is being met by a non-OPEC country, and that's a good thing for global oil supply. Right now we are spending an awful lot of time finding ways for China to meet its demand from some place other than Iran. Canada would be a great candidate."

Pipelines are rarely rejected in Canada, but Murray Minchin, an environmentalist who lives near Kitamaat Village, says this time he and other opponents are determined to block construction. "They are ready to put themselves in front of something to stop the equipment," Minchin said. "Even if it gets the green light it doesn't mean it's getting done."

Enbridge is confident the pipeline will be built and claims about 40 percent of First Nation communities living along the route have entered into a long-term equity partnership with Enbridge. The communities together are being offered 10 percent ownership of the pipeline, meaning those which sign on will share an expected $400 million over 30 years.

But of the 43 eligible communities, only one went public with its acceptance and it has since reneged after fierce protests from its members.

Janet Holder, the Enbridge executive overseeing the project, says pipeline leaks are not inevitable, new technologies make monitoring more reliable, and tugboats will guide tankers through the Douglas Channel.

At the Kitamaat hearings, speakers ranged from Ellis Ross, chief of the Haisla First Nation in British Columbia, to Dieter Wagner, a German-born Canadian, retired scientist and veteran sailor who called the Douglas Channel "an insane route to take."