(Adds quote from lawyer, oil by rail impact)
By Julie Gordon
VANCOUVER, Nov 13 (Reuters) - Canada will implement a
moratorium on oil tanker traffic along the northern coast of
British Columbia, effectively slamming the door on a
controversial pipeline project that was already facing massive
development hurdles.
In a letter released on Friday, Canadian Prime Minister
Justin Trudeau instructed Transport Minister Marc Garneau to
work with numerous other ministries to "formalize" the ban on
oil tanker traffic, a Liberal campaign promise ahead of the
federal elections last month.
Listed as one of seven "top priorities" for the Transport
Ministry, more details on timing are expected after Parliament
opens on Dec. 3.
The main casualty of the ban will be Enbridge Inc's ENB.TO
Northern Gateway pipeline, which would carry oil sands crude
from near Edmonton, Alberta, to a deepwater port at Kitimat,
British Columbia for export to Asian markets.
Efforts to move oil by rail to northern British Columbia
ports would also no longer be viable, but the moratorium would
not impact the proposed tripling of capacity on Kinder Morgan 's
Trans Mountain pipeline, as that project is in the south.
"It would appear that all oil transportation, including rail
and Northern Gateway, are dead in the water," said
Vancouver-based lawyer Merle Alexander, who has represented
aboriginal groups opposed to pipelines.
With a moratorium in place, the energy industry will likely
ramp up pressure on governments to approve other export
projects, like the Trans Mountain expansion and TransCanada
Corp's TRP.TO Energy East.
Kinder Morgan (N:KMI) Canada president Ian Anderson said the ban
should not affect the Trans Mountain project, if the company
demonstrates tanker traffic near the Vancouver port is safe.
Enbridge, meanwhile, said it remains committed to Northern
Gateway, and questioned the economic impact of an oil tanker ban
on northern communities and Western Canada as a whole.
Canada's previous Conservative government approved the C$7.9
billion ($5.9 billion) pipeline last year, subject to more than
200 conditions recommended by regulators. But the project has
faced staunch opposition from communities along its B.C. route
and an investment decision has been delayed.
Like the proposed Keystone XL pipeline to the United States,
Northern Gateway is loathed by environmentalists and Aboriginal
groups who fear it will hasten the development of Canada's oil
sands and exacerbate climate change. Many also worry about the
risk of a spill.
U.S. President Barack Obama rejected Keystone XL earlier
this month, leaving Canadian producers facing a looming capacity
crunch, with new output coming online but no new pipelines to
carry that oil from landlocked Alberta to market.
Energy East, which would carry Alberta crude to refineries
and an export port on Canada's East Coast, is currently under
review, as is the Trans Mountain expansion.
Shares of Enbridge closed down 0.9 percent at C$48.24 on the
Toronto Stock Exchange as the broader energy industry sagged on
slumping oil prices.
($1 = 1.3311 Canadian dollars)
(With additional reporting by Randall Palmer in Ottawa, editing
by G Crosse and Chizu Nomiyama)