By Josh Wingrove and Jeremy van Loon

(Bloomberg) — Enbridge Inc.’s Northern Gateway pipeline might get a brand new lease on life because the Canadian authorities wavers on a deliberate tanker moratorium that was beforehand thought to spell the top for the challenge.

Officials are weighing what sorts of petroleum merchandise could also be exempt from any moratorium, and whether or not sure tankers may very well be allowed, based on individuals acquainted with the matter, who spoke on situation of anonymity as a result of the talks are non-public.

Prime Minister Justin Trudeau pledged in November to “formalize a moratorium on crude oil tanker traffic” on British Columbia’s northern coast. But cupboard ministers are noncommittal on its exact implications, whereas federals officers have usually declined to touch upon Northern Gateway’s prospects.

“It’s a formalized moratorium and, when we have worked out exactly what that means, we’ll let you know,” Transport Minister Marc Garneau, who’s accountable for implementing the measure, stated in an interview this month. Asked in a separate interview whether or not the moratorium pledge means Gateway is useless, he stated: “It’s premature to say anything.”

Oil Discount

The nation’s oil business, constrained by its reliance on the U.S. as the principle vacation spot for crude exports, is in search of new markets. Delays and opposition to pipeline initiatives are hampering that effort, resulting in bottlenecks and reductions in Canadian heavy oil, which trades about $14 a barrel decrease than North American benchmark West Texas Intermediate.

The 1,177 kilometer (731 mile) Northern Gateway would carry diluted bitumen from Alberta’s oil sands by British Columbia for cargo to Asia. The pipeline, now anticipated to price greater than the preliminary C$6.5 billion ($5.1 billion) price ticket, was first proposed a few decade in the past.

Alberta Premier Rachel Notley met with Trudeau Sunday night in Kananaskis, saying she spoke to the prime minister about “the importance of getting a pipeline built so we can get Alberta’s energy product to market.”

Several federal authorities officers declined this month to say Northern Gateway is useless, or whether or not the moratorium will quantity to a ban on tanker site visitors altogether. Trudeau stated in 2014 that Gateway “will not happen” if he turns into prime minister. His spokesman, Cameron Ahmad, acknowledged the prime minister’s earlier feedback in opposition to the pipeline whereas declining to touch upon whether or not his place stays the identical.

“We remain committed to a crude oil tanker ban on British Columbia’s North West coast,” Ahmad stated. “The government is currently conducting consultations and examining science and facts to ensure we protect Canadian coastlines.”

Changing Stand

Notley modified her skeptical stand on Northern Gateway after seeing progress on a number of the challenge’s hurdles and talking to individuals concerned who’re “optimistic” concerning the pipeline’s possibilities, stated the premier’s spokeswoman Cheryl Oates.

Enbridge’s shares had been down 1 % to C$53.28 at 10:36 a.m. Monday in Toronto. The inventory is up about 3.4 % since Northern Gateway was given the nod by the earlier authorities of Stephen Harper in June 2014. Energy shares within the Standard & Poor’s/TSX Composite Index are down 35 % as a gaggle over that interval.

Northern Gateway is the nation’s solely main pipeline proposal with federal authorities approval. Facing opposition from communities alongside the route, Enbridge continues to be working to construct help with aboriginal teams earlier than making a ultimate funding determination forward of its allow expiring on the finish of the yr.

With Kinder Morgan’s Trans Mountain enlargement and TransCanada Corp.’s Energy East initiatives going through hurdles of their very own, a shift within the authorities’s method to the tanker ban might give Gateway one of the best probability of shifting ahead.

The clock is ticking. Enbridge should file delivery agreements by the top of June and start building by Dec. 31 to keep away from shedding its allow. Amid the uncertainty, the corporate believes Trudeau doesn’t have the authorized authority to implement a blanket ban, based on individuals acquainted with the corporate’s pondering.

‘Building Support’

Enbridge needs to “move forward” on Northern Gateway, stated spokesman Ivan Giesbrecht when requested concerning the moratorium. “Building support is the number one priority right now,” he stated. Indigenous companions are in discussions with Trudeau’s authorities concerning the ban, whereas Enbridge isn’t a part of these talks.

British Columbia’s northern coast is dwelling to quite a few indigenous communities which have historically relied on the Pacific for meals and transportation. The Gitga’at who reside on the mouth of the Douglas Channel vigorously oppose oil tanker proposals, arguing a spill would devastate their lifestyle.

Canada may additionally face opposition from the U.S. if it tries to implement the ban in disputed waters on the Dixon Entrance boundary between British Columbia and Alaska, whose Governor Bill Walker is unaware of any proposed tanker ban within the area, based on a spokeswoman.

U.S. opposition “is a possibility,” Garneau stated. “We’re not sure at the moment. We’ll see how we go about it.”

Spill Response

Gerald Graham, a marine knowledgeable based mostly in Victoria, British Columbia, stated there are some examples of marine areas the place tankers are banned. They embody the Olympic National Marine Sanctuary off the west coast of Washington State. The International Maritime Organization designates so-called ATBAs — Areas to be Avoided — the place all ships or sure courses of ships are prohibited to guard the surroundings.

Enbridge has proposed a “world-class” response system and tug boat escorts for tankers within the 90-kilometer lengthy Douglas channel to handle oil-spill considerations. The British Columbia authorities has opposed each Northern Gateway and the Trans Mountain enlargement on the grounds not sufficient has been performed to mitigate dangers.

British Columbia gained’t help a heavy-oil pipeline except the challenge meets 5 situations, together with environmental approval and spill response. The province will “continue to work with industry, First Nations, communities and the federal and other provincial governments to ensure the five conditions are met,” Minister of Natural Gas Development Rich Coleman stated in an e-mail.

The debate hinges on “what petroleum products will be captured by the moratorium,” stated Kai Nagata of the Dogwood Initiative, an environmental group that opposes the pipeline. He added they had been instructed to count on laws on the moratorium this yr. “It would be quite a stunning reversal for people in British Columbia were the government to walk back its promises of a formal tanker ban.”

© 2016 Bloomberg L.P