China is helping to finance the development of a proposed $5.51 billion dollar oil pipeline to Canada's West Coast that would open the Asian market to Canadian crude, which is now chiefly consumed by the U.S.
State-owned China Petroleum & Chemical Corp., or Sinopec, is among a consortium of Canadian oil producers and Asian refiners investing $100 million in Enbridge Inc.'s proposed Northern Gateway pipeline, Enbridge Chief Executive Pat Daniel said during a Web cast investor conference Thursday.
The Northern Gateway pipeline would pipe an average of 525,000 barrels of crude oil a day from Canada's oil-sands region to a port in British Columbia, from which it would be shipped to Asian markets. Regulators aren't expected to rule on whether the project can go forward until next year. If approved, construction is scheduled to be completed in 2016.
Canada's oil sands hold an estimated 170 billion barrels of oil, making it the second-largest oil reserve in the world, after Saudi Arabia's. The U.S. is the only export market for Canadian crude oil, and Canada is the U.S.'s largest single supplier.
"We think it is hugely in Canada's national best interest to have a second outlet for our crude oil," Mr. Daniel said, "...so that we can become a price-maker with regard to crude-oil pricing, instead of a price-taker."
Sinopec and other investors have put up $100 million to help Northern Gateway get through the regulatory process, which includes producing environmental-impact studies and consulting with native and environmental groups—some of which oppose the project.
Mr. Daniel said Enbridge itself has already spent $100 million on the regulatory process. The Calgary-based pipeline company applied for approval to build Northern Gateway in May, and expects Canada's federal energy regulator to approve it by the middle of 2012.
Mr. Daniel said confidentiality agreements prohibited him from naming the other investors, but said he could name Sinopec because the news had been previously reported by Canadian newspaper the National Post.
The proposal has met fierce criticism from native groups and environmental nongovernmental organizations. Some warn of the risk of spills from the pipeline or from oil tankers, while others are chiefly opposed to further growth of the oil-sands industry, which has come under fire for its substantial greenhouse-gas emissions and fears of water contamination.
Mr. Daniel said he is confident Enbridge could win over opposition. The company in November proposed giving a 10% equity stake to native groups in an attempt to win them over, Daniel said.
"That's been very well received and we're hoping to bring more First Nations on side as a result of that," he said.
U.S.-listed shares of Enbridge closed down 39 cents at $55.32 on the New York Stock Exchange Thursday.
