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Enbridge's Northern Gateway needs much more than this rubber stamp

The Northern Gateway pipeline project may have received its legal approval, but what's still missing is democratic legitimacy. Ottawa can talk about the West Coast oil pipeline's economic importance for Canada until it's blue in the face, but the project isn't going anywhere until government and the project's owners can offer the public stakeholders in British Columbia a better economic case for opening up their back yards to 1,177 kilometres of bitumen-filled steel pipe.

In theory, Ottawa's approval of the project should essentially be the green light Enbridge Inc. needs to start construction on the $7.9-billion project next year, putting it on track for completion in 2018. But practically, Northern Gateway is unlikely to proceed until Enbridge, and Ottawa, can win support from the large number of B.C. First Nations that still strongly oppose the project. On-the-ground protests and a stack of legal challenges are certain to impede the project's path. Heck, even the B.C. provincial government still has some concerns to be satisfied.

The bottom line is, Enbridge and Ottawa may have to sweeten the economic pot to mitigate the local fears and secure the grassroots support they are currently so acutely lacking. Legally, they may not need First Nations approval (the Supreme Court of Canada has said only that the government must "consult and accommodate" First Nations on resource development); politically and practically, it would be unwise to proceed without their broad consent.

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It seems a bit tacky, not to mention simplistic, to say this is all about the money; obviously, there are some serious concerns about running a pipeline – carrying a form of crude oil that many consider particularly environmentally damaging should it spill – through lands that the First Nations consider intrinsic to their heritage. But this is, at its root, an economic proposition: In exchange for the land and the risks, the pipeline offers profits and economic spinoffs that could seriously improve the well-being of the communities involved (many of which are, to put it mildly, economically humble). That's where the balance must be struck – and, based on the opposition, it clearly hasn't been. The concrete benefits on the table seem puny relative to the perceived risks.

Enbridge has offered the First Nations, collectively, a 10-per-cent stake in Northern Gateway – which Enbridge estimates will generate $280-million for aboriginal communities over the next 30 years. But that works out to a mere $230,000 per pipeline-neighbouring community per year (again, Enbridge's number).

Enbridge has also pledged to provide 15 per cent of the pipeline's construction jobs to the aboriginal community, but this, too, sounds grander than it really is. At the peak of construction, that's about 450 jobs – and construction will only last three years. Even if aboriginal workers hold down 15 per cent of Northern Gateway's considerably smaller post-construction staff (and there's no guarantee they will), that would mean a grand total of 84 long-term jobs for First Nations communities.

Yes, Enbridge is paying for skills training that the locals might be able to convert into better-paying jobs elsewhere after construction; it will bring business to local contractors and suppliers; the pipeline will have the usual economic spinoffs. But frankly, if it were my town, the concrete benefits being offered wouldn't look like much next to the environmental risks, no matter how safe its builders say the pipeline will be.

Still, the stake and the commitments Enbridge has pledged are hardly inconsequential in terms of the project's economics; what's so special about Northern Gateway that justifies such daunting opposition? Canada already has nearly 250,000 kilometres of oil and gas pipelines crisscrossing the country; roughly 40,000 kilometres of them are in British Columbia. About three million barrels of crude oil flow through Canadian pipes every day, and diluted bitumen has been transported by Canadian pipelines for more than three decades. Northern Gateway is not taking us into some strange and dangerous new world. Indeed – and it's no small point – the technology, risks and safety measures are much better understood than the alternative: Thousands of bitumen-filled rail cars rumbling daily across the province.

But dealing with indigenous interests is uniquely challenging in British Columbia, which is home to one-third of all of Canada's recognized First Nations, the vast majority of whom never signed government treaties with respect to their lands. The result is a complex and ill-defined mishmash of First Nations interests and territorial claims, probably the most legally complicated place in the country to pursue a major commercial project. This one, which spans the province, must address the concerns of not one or a few First Nations communities, but dozens.

And Northern Gateway is different – a big, high-profile project to transport some of the world's most controversial and, arguably, most environmentally unfriendly oil sources to some of the most lucrative (Asian) markets we're every going to see in our lifetimes. It's a potential pivot point on which the economic future could turn – for the industry, the province and many of the people along the route. The stakes, quite simply, are higher.

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If Ottawa and Enbridge want to turn the tide of First Nations opinion on Northern Gateway, it's going to take more. Maybe not just money – more accommodation and more decision-making power are also certainly part of the solution. But until they get the economic proposition right, the rest won't matter.

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More

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