* Enbridge lawyer says economist wrong on impact
* Opponent says her analysis is based on Enbridge's reports
By Jeffrey Jones
CALGARY, Alberta, Sept 24 A lawyer for Enbridge
Inc said on Monday that a prominent economist opposed
to its Northern Gateway oil pipeline to Canada's West Coast is
wrong in her contention that the project will raise costs for
refiners, regardless of where their crude comes from.
At public hearings into the C$6 billion ($6.1 billion)
project, Enbridge attorney Rick Neufeld told British Columbia
economist Robyn Allan the company's market experts have shown
that Northern Gateway will not restrict crude supplies in other
markets on the continent, as she has concluded.
Allan, former chief executive of the Insurance Corp of
British Columbia, provided an economic assessment of Northern
Gateway early this year for the Alberta Federation of Labour,
which opposes the 525,000 barrel a day pipeline from Alberta to
Kitimat, British Columbia, for crude oil shipment to Asia.
Neufeld took issue with Allan's evidence that the export
pipeline would result in $2-$3 per barrel annual increases in
oil prices across the country between 2016 and 2046, including
for Eastern refineries now supplied almost exclusively with
imported oil priced against international benchmark Brent oil.
"Indeed that's what you've told people around the country,
and I'm suggesting to you, Ms Allan, that that's not the
evidence of these witnesses," Neufeld said at the proceedings in
Edmonton. "They did not suggest that Northern Gateway would
increase the price of Brent crude, and you were here for that."
The exchange was part of the first opportunity Enbridge has
had to cross-examine its opponents. Most of the testimony in
hearings before a federal Joint Review Panel into the
contentious Northern Gateway project has so far been about
environmental issues, but the Edmonton proceedings are delving
solely into economic impacts and benefits.
One aim of the project is to remove a price discount on
Canadian oil that currently exists due to an oversupply of oil
in traditional markets such as the U.S. Midwest. Enbridge said
Canadian producers would benefit by diversifying their markets
to include Asia, where prices are higher.
The Alberta Federation of Labour opposes the pipeline
because, the group says, it would mean the loss of oil
processing and refining jobs in Canada as the raw material gets
shipped across the Rockies to the Pacific.
Neufeld said Enbridge's evidence, prepared by consultants
Muse Stancil and Wright Mansell Research, did not show that the
pipeline would restrict oil supplies in North America, push up
gasoline prices for consumers, or have any impact on oil prices
in other parts of the world, as Allan has concluded.
Allan has argued that restricted supply in North American
markets as a result of oil being redirected to Asia on Northern
Gateway, and the international determination of crude prices,
will push up prices for all supply bought by Canadian refiners.
"In your view then, if Northern Gateway was to improve the
price - or reduce the discounting of Canadian crude, put it that
way - by $2 a barrel, the price of crude delivered by OPEC would
increase by $2 a barrel. That's your evidence?," Neufeld said.
Allan did not argue that point, saying she derived her
contentions by taking numbers and assumptions in Enbridge's
expert reports to their "logical conclusion."
"Based on the analysis that was provided in both the Muse
and the Wright Mansell reports, the redirection of supply takes
oil out of markets and when the supply goes down, the price goes
up," she said. "With the ... fact that the oil is going to be
redirected from Ontario and Quebec, that is going to affect the
Eastern Canadian market."
However, her written evidence criticizes Enbridge's reports,
saying they leave out a number of aspects that raise questions
about their reliability. Those include analysis of sensitivities
to prices, currency exchange rates, changes to supply as well as
other risks to the forecasts.
"All of those are standard business practice that would be
undertaken if the proponent's analysis was delivered to an
investor or a lender. In any of the other places where it needs
to prove its case, those standards would have been delivered,"