New pipeline plans to bring oil to Asian markets

The energy distribution company Enbridge Inc. and PetroChina International are working together to develop a $2.5-billion pipeline to supply Asia with crude oil from Alberta's oilsands developments.

The project is one of a number of recent initiatives in the oilsands that have been spurred by strong oil prices.

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The proposed Gateway Pipeline would stretch 1,160 kilometres from Edmonton to a port in British Columbia likely Kitimat or Prince Rupert where the oil would be shipped to various locations in Asia and California.

The partners announced Thursday that they've signed a co-operation agreement for a 30-inch pipeline designed to carry 400,000 barrels per day. PetroChina would use about half that capacity.

Enbridge has been working on the project for three years but there are still hurdles to clear.

"There remains a great deal to be accomplished before the Gateway Pipeline can become a reality," said Patrick Daniel, Enbridge's president and CEO.

"Definitive long-term agreements for the sale of crude oil to the Chinese will need to be negotiated, as will longer term capacity commitments with other shippers," said Daniel, noting that concerns of affected aboriginal communities and environmental issues must also be worked through.

Enbridge predicts regulatory approval would have to be in place by 2006 to get the pipeline in use by late 2009 or 2010. That's when the company expects oilsands production to have ramped up sufficiently to require the pipe.

Enbridge, which operates in Canada and the U.S., transports and distributes energy, including distribution services in Ontario, Quebec, New Brunswick and New York.

PetroChina is that country's largest producer of oil and gas. It's a subsidiary of the state-owned China National Petroleum Corp.