Enbridge spending $100 million of Albertan, Asian money
Enbridge Inc. is spending $100 million of other people's money in their quest to sell British Columbians on the Northern Gateway oil pipeline and tanker project. The name tags, the logos, the websites and brochures say 'Enbridge'. But they are 100% paid for by multinational oil interests, who are the real beating heart, the driving force, and the soul of Gateway.
"Belief in the project is so strong that we have obtained $100 million of funding from a group of Western Canadian producers and East Asian refiners to get the project to regulatory approval," announced Patrick Daniel, Enbridge's CEO, in the summer of 2008.
"We are fully funded by [these] partners [for the regulatory phase]," Daniel explained.
Ten 'founder shipper' units, sold by Enbridge for $10 million each, comprise the fund and grant the buyers lower tariff rates on the proposed pipelines, first dibs on booking pipeline capacity, and the option to purchase a slice of the Gateway project itself.
Enbridge stands to gain from Gateway, as they do from every pipeline they build, but they are the middle party. They do not stand to gain the most.
Thus, Gateway is not really Enbridge's project. Rather, it is the project of those who
do stand to gain the most: the companies and governments fronting Enbridge the $100 million...the Gateway 'backers'.
Show Me The Money!
I'd like to know who the backers are, so that when I see an Enbridge Northern Gateway logo, a name tag or a business card, I can see through the messenger to the money.
Their identities, however, are being kept secret. CEO Patrick Daniel: "We would like to be able to tell you who [those] participants are. At this point, we are not able to do that because of the confidentially agreements we put in place."
British Columbians are left in the dark. Fortunately, there are some good guesses as to whose project this really is. Click here to jump to my rationale.
My Top Guesses
Gateway belongs to:
Some combination of Korea National Oil Corporation and GS-Caltex
Royal Dutch Shell
Singapore Refining Corporation (50% Chevron, 25% PetroChina)
These guesses are backed by some rationale, but are only guesses. I would also bet that one or more of the backers bought more than one Gateway unit either through the same entity or through an affiliate or subsidiary company (e.g. I wouldn't be surprised if both Royal Dutch Shell AND Showa-Shell Sekiyu K.K., Shell's Japanese refining affiliate) owned units.
The important thing to appreciate is that the Northern Gateway project is a pawn in the game of Albertan and Asian oil interests, with Enbridge acting only as salesperson.
In other words, you can tell a lot about who stands to gain the most from an idea by finding out whose signing the cheques of those arguing for it. Albertan and Asian oil companies, some potentially government-owned, are signing the cheques of those arguing for the Northern Gateway project. The benefits flow primarily to them...
secondarily to Enbridge;
thirdly to the North American oil lobby that is already trying to wring valuable concessions on US climate policy from the threat of Asian export;
This tar sands pipeline and tanker project wasn't conceived in BC to serve the interests of British Columbians
fourthly to those Albertans who benefit from every increase in activity and health of the oil companies;
and only lastly to the people and communities of BC left to live with the actual pipelines, tankers, and spills.
I'm convinced that even with $100 million to play with, and many undeniably well-intentioned and good people on their side, Enbridge will be unable to pull wool over this obvious truth: that the Gateway project is not in the best interests of British Columbians, Canada, or the climate.
Rationale Behind My Top Guesses
"...a group of Western Canadian producers and East Asian refiners"
Husky Energy, majority owned by a Hong Kong-based billionaire, has gushed about a new West Coast oil port. Husky
President John Lau has indicated full support for the idea: "The
project is very important from a Canadian oil
producers' point of view," he told Oilweek.
Suncor Energy's CEO Rick George speaks often about linking to Asia: "...Another opportunity is to connect oilsands production, via pipelines and tankers, to California markets and, ultimately to Asia," George said. "Supplying the energy hungry Asian economies is a more distant proposition. But at Suncor, we've learned to think very much about the long term." My read of that sentence spells G-a-t-e-w-a-y b-a-c-k-e-r.
Alberta Producers who are also Asian Refiners
Enbridge has said that Asian refinery support ranges "from Japan down to Singapore," with "South Korea... likely [joining] Singapore and Japan as customers."
When you look at the ownership of the refineries in these markets, many of them are wholly or partially owned by Shell, ExxonMobil, and Chevron; to a lesser extent ConocoPhillips (see image below, derived from a Wikipedia list). All of these companies are ALSO Alberta producers and ALSO own refineris in California, the other market for Gateway.
Linking the two operations via Gateway would mean more vertical integration for these players, which is generally a good thing for profits.
My money's on Shell, Exxon, and Chevron for sure.
Beyond Shell, Exxon, Chevron, and Conoco, the other privately owned independent-of-government refiners seem to be concentrated in Japan, South Korea, and Thailand. Any of these could be Gateway backers, especially those having or planning upgrades to handle additional heavy oil blends, but my top guesses rest with the companies that own both Asian refineries AND Alberta tar sands projects.
The Chinese, Japanese, and South Korean governments all own holdings in the tar sands, seeing them as a stable, long-term source of oil...if only they could get that oil back to home base!
Gateway would allow these Asian states the double energy security benefit of shipping oil they produced themselves back to refineries in their home countries.
The money behind the project used to be all China, back in 06'. But they pulled their support from Gateway in 2007 citing, among other grievances, "First Nations and regulatory issues". If we stand on the words of Enbridge CEO circa February 2008 China didn't throw into the new $100 million pot. But at that time 'talks were still continuing' with the Chinese; and the CEO of Japan's JACOS (see below) smells Chinese money 'beneath the surface', maybe through partial ownership of an Asian refiner (like their recent purchase of a stake in Singapore Petroleum Company, which owns half of a singapore refinery with Chevron). China is still hyper-interested in a 'strategic alliance' with Canada to get tar sands back to the motherland but it's hard to draw conclusions about their support for Gateway specifically.
Japan's state controlled oil sands producer, Japan Canada Oil Sands Ltd. (JACOS) wanted to get in on the Gateway action, but said they missed the first $100 million round, and are waiting to see if Enbridge will offer more units in the future.
South Korea's Korea National Oil Corporation (KNOC) bought the Black Gold tar sands project in 2006 in an effort to increase South Korea's energy self-sufficiency. KNOC is partnering with 13 other Korean companies, including refining giant GS Caltex (50% owned by Chevron), who will collectively "...seek opportunities to secure other downstream projects such as building oil refining facilities and pipelines," KNOC said.
China, Philippines, Taiwan, Indonesia, and Malaysia all have state-owned refineries. Any of these could be Gateway backers (see China note above).